Shaky Game Stocks... "Things Aren't Going Well"

From NCSoft to Pearl Abyss, NHN, and others, average returns fall short
Hit by Chinese games' success... New release delays add to woes
Netmarble, with investors like Kakao Games and Big Hit Entertainment, holds up ahead of IPO

Photo by Getty Images Bank

[Asia Economy Reporter Minwoo Lee] Game stocks, considered part of the growth-leading sectors 'BBIG' along with bio, battery, and internet, are struggling. From the 'leading stock' NCSoft to mid-sized companies, they are all falling below average returns.

As of 9:29 AM on the 25th, NCSoft's stock price recorded 821,000 KRW, down 2.4% from the previous day. This contrasts with the early last month when it was close to 1 million KRW. Since mid-month, it has been on a continuous decline. Since the 13th, when the KOSPI 2400 level began to waver, it has dropped about 8.5%, exceeding the index's decline rate of 3.9% during the same period.

Pearl Abyss, a representative game stock in the KOSDAQ market, also showed weakness. At the same time, it recorded 181,900 KRW, down 0.1% from the previous day. Since closing at 198,300 KRW on the 13th, it has fallen about 9%. During this period, its market capitalization ranking slipped out of the top 10. This contrasts with its position within the top 10, such as ranking 6th on July 10. NHN has also not escaped poor performance. Its stock price has fallen about 17% over 11 consecutive trading days this month.

Game stocks were considered beneficiaries of the non-face-to-face (untact) lifestyle due to reduced outdoor activities caused by the novel coronavirus infection (COVID-19). However, with several new mobile releases in the first half of the year intensifying competition, individual game performances have declined. Nexon's 'Baram-ui Nara: Yeon' is a representative example. Since its release on July 15, it ranked 2nd in revenue on Google Play. Lineage 2M fell to 3rd place for the first time since its release in November last year. Additionally, games from Chinese companies have occupied top revenue ranks, narrowing the position of domestic listed game companies.

Only Netmarble, the industry's second largest, held its ground. As of 9:29 AM on the day, it recorded 150,500 KRW, up 0.6% from the 13th. This was partly due to the success of new releases this year such as 'The Seven Deadly Sins' and 'A3: Still Alive,' as well as the IPO expectations of companies it has invested in. Netmarble holds 5.64%, 25.04%, and 3.94% stakes in Kakao Games, Big Hit Entertainment (the agency of BTS), and Korea Kakao Bank, respectively.

Jaemin Ahn, a researcher at NH Investment & Securities, explained, "Due to the nature of the game industry, fortunes vary depending on each company's new releases. The stock prices diverged because representative titles have recently underperformed or new releases were delayed. It is hard to say that the momentum of the entire sector has disappeared."

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