Game Stocks Rose Amid COVID-19... NC Laughs While Netmarble Cries

Q1 Operating Profit Up 203% · Down 40%

[Asia Economy Reporter Oh Ju-yeon] The first-quarter earnings of major game companies NCSoft and Netmarble sharply diverged. Although both were spotlighted as representative beneficiaries of the novel coronavirus disease (COVID-19), differences arose in marketing expenses and revenue from existing games.

According to the Financial Supervisory Service's electronic disclosure system on the 14th, Netmarble's consolidated operating profit for the first quarter of this year was 20.4 billion KRW, down 39.8% year-on-year, falling short of market expectations. This was considered remarkably low for a company with a market capitalization of 8.9 trillion KRW.

The biggest factor was the increase in marketing expenses to 95 billion KRW due to a concentration of new releases in March, and a continuous decline in revenue from existing games where cash should have been generated. For Lineage 2 Revolution, first-quarter revenue was 58.6 billion KRW, down 20.6% year-on-year, while Everyone's Marble and Blade & Soul Revolution decreased by 39.9% and 45.4%, respectively. Although Marvel Contest of Champions' revenue increased by 3.4% (74.6 billion KRW) year-on-year, revenue from other games showed a declining trend. The launch effect was minimal even for new titles that had large-scale marketing expenses. The new release 'A3: Still Alive,' launched on March 12, recorded daily sales of about 80 million KRW.

Amid poor performance, the first-quarter operating profit margin was only 3.8%, down 3.3 percentage points from 7.1% in the first quarter of last year.

In contrast, NCSoft clearly benefited from COVID-19. NCSoft's consolidated operating profit for the first quarter of this year was 241.4 billion KRW, up 203.6% year-on-year. Revenue increased by 103.8% to 731.1 billion KRW, and net income rose 161.7% to 195.4 billion KRW.

By individual games, first-quarter revenues for Lineage and Lineage 2 were 44.8 billion KRW and 26.4 billion KRW, up 116.43% and 22.22%, respectively. The mobile game Lineage M also increased from 197.8 billion KRW to 212 billion KRW, a 7.2% rise. Accordingly, the operating profit margin recorded 33.0%, improving by 10.8 percentage points compared to 22.2% in the first quarter of last year. Lineage 2M also saw significant growth with revenue reaching 341.1 billion KRW.

This was directly reflected in the stock price. NCSoft's stock price rose 33.27% this year, from 541,000 KRW at the beginning of the year to 721,000 KRW as of the closing price on the 13th. Following a new intraday high the previous day, it surged to 758,000 KRW intraday on the same day, setting a new 52-week high.

During the same period, Netmarble's stock price rose only 15.17%, from 93,000 KRW to 104,000 KRW. Moreover, a securities firm report suggested that the current stock price level was burdensome relative to its performance, leading Netmarble to plunge 8.17% to 95,500 KRW as of 9:30 AM that day, erasing much of the year's gains.

This content was produced with the assistance of AI translation services.