[Click eStock] "NCSoft, Limits of Lineage-like... Need for Strategic Change"

'Lineage-like' Growth Strategy Hits Limit
Need for Multiple Releases and Results Beyond Existing Style

Korea Investment & Securities maintained a 'Neutral' investment rating on NCSoft on the 23rd, stating that the possibility of performance improvement in 2024 is limited.

Researchers Jeong Ho-yoon and Kim Ye-rim from Korea Investment & Securities said, "This year, 5 to 6 new titles are scheduled to be released, including the global launch of Project TL and the launch of Blade & Soul 2 in China." However, they added, "Since these games have low expectations for revenue, the possibility of performance improvement in 2024 is limited." They estimated 2024 sales and operating profit at 1.81 trillion KRW and 78 billion KRW, respectively. The two researchers stated, "Given investors' high concerns about growth, a strategic shift and subsequent confirmation of results must precede any reversal in the stock price."

NCSoft's stock price has fallen below the 170,000 KRW level, setting new lows. Although the company renewed its system with co-CEOs and communicated growth strategies with shareholders, the stock price has not rebounded. Korea Investment & Securities analyzed that investors remain highly concerned about NCSoft's continued adherence to a Lineage-like centered growth strategy, despite changing market conditions and gradually shifting user preferences.

NCSoft's past main lineups?Lineage M, Lineage 2M, and Lineage W?each recorded sales of about 1 trillion KRW within one year of release. The company employed a strategy of developing MMORPGs based on its strong intellectual property (IP) and generating large-scale revenue from a single game through high loyalty to the IP and aggressive monetization models, which proved successful.

Researchers Jeong Ho-yoon and Kim Ye-rim said, "However, users' dissatisfaction has increased, and gameplay styles have changed, making it difficult to generate large-scale revenue through high-intensity monetization as in the past." They added, "Moreover, NCSoft has mostly exhausted its IPs with highly loyal users, such as Lineage 1, Lineage 2, and Blade & Soul, during its past growth phase. While there is no need to stop developing Lineage-like style games, a strategic shift toward diverse styles and focusing on the fun of the game itself rather than monetization models is necessary." They further noted that regularly releasing more than five games with annual sales of 100 billion to 200 billion KRW (daily average sales of 300 million to 600 million KRW) is needed to normalize profit levels and expect stock price increases.