Delays in New Releases Such as "Subnautica 2"
Declining Revenue Ranking for "Game for Peace" in China
Hiring Freeze Amid Transition to AI-First Strategy
Krafton's growth momentum has stalled. This is due to delays in new releases and a decline in the revenue ranking of "Game for Peace," the Chinese version of its main revenue source, "Battlegrounds Mobile." Amid these challenges, the company announced a freeze on hiring as it transitions into an "AI-first" company, meaning it will halt new recruitment.
On November 4, Bae Donggeun, Chief Financial Officer of Krafton, stated during the third-quarter earnings conference call that the release timing for the ocean adventure game "Subnautica 2" and the global hit "Palworld" mobile version is currently being coordinated for either the first or second half of next year. He emphasized that "improving the level of completion is more important."
Amid the absence of AAA-level new releases, the company did not specify concrete launch schedules for these two games. Additionally, a legal dispute with former management of Unknown Worlds, the developer of "Subnautica 2," remains a variable. The game was originally scheduled to be released in early access this year.
As a result, the revenue structure centered on "Battlegrounds" is expected to continue for the time being. However, there are opinions that a more conservative approach may be necessary, given the drop in the revenue ranking of "Game for Peace."
In response, CFO Bae said, "It would be more appropriate to get an answer from our partner company," and refrained from further comment. However, he added, "It seems people consider 'Delta Force' Mobile as a competitor, but this game received a major update, including a new mode, in mid-September. I do not consider these effects to be the so-called 'new normal.'" He expressed his expectation that, given Krafton's competitive service of "Game for Peace," its ranking would rebound.
Furthermore, Krafton stated that it is also restructuring its organization to transition into an AI-first company. When asked whether this plan is related to reducing labor costs, the company did not deny the connection.
CFO Bae explained, "Company-wide, we have frozen hiring except for teams developing original intellectual property and deep learning-related AI personnel," adding, "Rather than reducing costs by becoming AI-first, we have halted recruitment across the company so that each individual can increase productivity."
He further elaborated, "AI technology is a new technology that can have an enormous impact on productivity, so in order to utilize it effectively at the company-wide level, every individual must become more productive." Any changes to the five-year franchise IP strategy announced earlier this year will be organized and disclosed at a later date.
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