Expansion of Legacy IPs Including LineageM's Entry into China
Aion2 Set for Q4 Launch; Seven New Titles Planned for Next Year
Workforce Optimization Targeting Overlapping Functions and Inefficient Organizations
NCSoft delivered a surprise performance in the second quarter of this year, driven by increased game sales. The company believes that if the stable regional expansion of its legacy intellectual properties (IP) continues and new releases, starting with 'Aion2', are added, it will be possible to achieve annual sales in the 2 trillion won range next year.
NCSoft announced on August 12 that its consolidated operating profit for the second quarter of this year was provisionally tallied at 15.1 billion won, up 70.5% from the same period last year. During the same period, revenue rose 3.7% to 382.4 billion won. However, due to factors such as exchange rate fluctuations, the company posted a net loss of 36 billion won, turning to a deficit.
Sales from both mobile and PC online games increased compared to the previous quarter and the same period last year.
Mobile game sales reached 219 billion won, up just 0.3% year-on-year and 6% quarter-on-quarter. Among these, Lineage2M expanded its global service to Southeast Asia, achieving sales of 48 billion won, a 27% increase from the previous quarter.
PC game sales totaled 91.7 billion won, up 6% year-on-year and 10% quarter-on-quarter. Notably, Aion recorded sales of 13 billion won, a 53% increase from the previous quarter, driven by the launch of new servers.
By IP, 'LineageM' was the largest contributor at 121.1 billion won, followed by Lineage2M (48 billion won), LineageW (47.6 billion won), Lineage2 (22.7 billion won), Lineage (20.7 billion won), Blade & Soul (19.5 billion won), and Guild Wars 2 (15.8 billion won).
By region, sales were 244.8 billion won in Korea, 69.1 billion won in Asia, and 26.2 billion won in North America and Europe. Royalty revenue was recorded at 42.3 billion won. Overseas and royalty sales accounted for 36% of total revenue.
Hong Wonjun, Chief Financial Officer (CFO), said during the second quarter earnings conference call, "We have confirmed that legacy IPs continue to drive solid results," adding, "Next year, we will continue to expand the regional reach of our legacy IPs, with LineageM and Lineage2M targeting China and LineageW expanding into Southeast Asia."
He added, "If new game sales are added to the stable regional expansion of our legacy IPs, we believe the previously announced revenue forecast of 2 trillion to 2.5 trillion won for next year, as stated by Co-CEO Park Byungmoo, is fully achievable."
NCSoft plans to launch the highly anticipated MMORPG Aion2 in Korea and Taiwan in the fourth quarter. Based on feedback from the user focus group test (FGT) conducted at the end of June, the company is currently enhancing the game's content.
For next year, NCSoft has announced plans to release seven new titles. 'Breakers' is scheduled for the first quarter, 'Timetakers' for the second quarter, and 'LLL' is planned to launch no later than the third quarter. Four spin-off games will be released on a quarterly basis. CFO Hong stated, "We will ensure that releases are evenly distributed throughout the quarters."
Additionally, NCSoft aims to strengthen its competitiveness in the mobile casual game sector. To this end, the company recently established a Mobile Casual Center and appointed Arnel Chemman as the new executive director. CFO Hong explained, "Securing mobile casual games is a key strategy for entering the global market. We are continuously seeking investment and M&A opportunities, and we plan to further enhance our offerings by integrating our AI technology."
Meanwhile, the company will continue its workforce and cost optimization efforts this year, following last year's initiatives. Co-CEO Park Byungmoo said, "In the first half of this year, we optimized about 100 employees through overseas branches and subsidiaries. In the second half, we plan to streamline 200 to 300 employees by targeting overlapping functions and inefficient organizations."
He added, "These measures are being taken to ensure the company's long-term health next year and beyond. Please understand that this may cause some fluctuations in operating profit."
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