[Asia Economy Reporter Seungjin Lee] Domestic game companies are tightening their belts. The salary increases raised competitively during the COVID-19 period to secure developers have boomeranged back. Game companies are minimizing new hires this year to reduce operating costs.
Regardless of last year's performance, game companies have commonly decided to lock the doors to the hiring market this year. This is to cut costs.
During the COVID-19 period, game companies achieved good results even without special new releases. This was because people stayed home longer, increasing the time spent playing games. With no new releases, marketing costs naturally decreased. Meanwhile, as the developer manpower shortage continued, game companies raised salaries by tens of millions of won at once to attract developers.
However, the situation changed rapidly this year. The global economic recession continues, and with the endemic phase, people’s gaming time has decreased. On the other hand, many new titles accumulated over time are being released all at once, intensifying marketing competition. Ultimately, to reduce costs, companies must either reduce hiring or proceed with restructuring.
NCSoft spent 2.0127 trillion won on total operating expenses last year. Of this, labor costs accounted for 42.1%, about 900 billion won. NCSoft is preparing to release new titles such as ‘Throne and Liberty (hereafter TL)’ this year. Marketing expenses are bound to increase significantly.
Hong Wonjun, NCSoft’s Chief Financial Officer (CFO), said, “In 2023, the increase in personnel will not be significant for cost efficiency. The employee growth rate dropped from 13% in 2020 to 9% in 2021 and about 2% in 2022. This year will not be much different.”
Krafton has decided to freeze the salaries of team leaders this year. Additionally, through a conservative hiring plan, they will not hire new employees unless they are essential personnel.
Last month, Kim Changhan, CEO of Krafton, said in the internal communication program ‘Krafton Live Talk,’ “Although the global economy is in a difficult recession this year, it is also an opportunity to build an efficient organization. We will do our best to strengthen organizational capabilities and achieve financial performance.”
Other game companies are in similar situations. Including Netmarble, which recorded a loss last year, and Kakao Games, which achieved record-high performance, both plan to operate their workforce conservatively. In the case of Kakao Games, labor costs increased by 50% in one year. Especially, game companies plan to hardly hire non-development personnel this year.
DevSisters, well known for ‘Cookie Run,’ recently undertook restructuring. They disbanded the intellectual property (IP) related team and reassigned about 40 employees within the company. This is effectively a layoff notice. Such restructuring movements have already started since last year. Vespa, which succeeded with the mobile game ‘King’s Raid,’ decided on a 12 million won salary increase but faced consecutive failures of follow-up titles. Eventually, they notified most employees of recommended resignation.
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