Following the '3N', Mid-sized Game Companies Also Show Gloomy Q2 Results (Comprehensive)

[Asia Economy Reporters Kang Nahum and Boo Aeri] Following the 'earnings shock' experienced by major game companies such as NCSoft, Netmarble, and Nexon in the second quarter of this year, mid-sized game companies also reported disappointing results. This was due to a combination of increased labor costs, a decline in game users, and rising marketing expenses.

Pearl Abyss announced on the 12th that it recorded sales of 88.5 billion KRW and an operating loss of 6 billion KRW in the second quarter. Sales decreased by 32.8% year-on-year and 12.3% quarter-on-quarter, and operating profit turned to a loss.

Deferred overseas sales and increased labor costs were the causes of the poor performance.

In particular, despite steady sales performance in North America and Europe for Black Desert, which was converted to direct service, accounting deferrals continued to have an impact. Previously, royalty revenue was received and immediately reflected as sales, but with direct service, the company explained that some performance was deferred based on the provisional value of game items.

Moreover, labor costs, including 10 billion KRW in incentives paid to all employees in May, increased by 48.5% compared to the previous year.

Com2uS recorded its highest-ever quarterly sales but saw a significant decrease in operating profit. Com2uS posted consolidated sales of 152.9 billion KRW and operating profit of 11 billion KRW in the second quarter. Sales increased by 3.6% year-on-year, while operating profit decreased by 71.2%.

Com2uS explained that the decrease in operating profit was influenced by increased marketing expenses and labor costs due to new game releases.

However, the long-term success of its flagship title, Summoners War: Sky Arena, the continued popularity of its baseball game lineup, and the performance of the new release Summoners War: Chronicle drove the record-high sales.

Gamevil, part of the same group, also experienced a downturn. Gamevil recorded sales of 29.6 billion KRW and operating profit of 2.9 billion KRW in the second quarter, representing decreases of 26.9% and 73.1% year-on-year, respectively. A slight decrease in equity-method investment income and increased labor and marketing costs affected the results.

Neowiz reported sales of 58.9 billion KRW and operating profit of 5.2 billion KRW in the second quarter, down 18% and 71% year-on-year, respectively.

Declines in game sales from its Japanese subsidiary and mobile games impacted the results. By segment, PC and console game sales were 26.9 billion KRW, down 9% year-on-year. Mobile game sales were 31 billion KRW, down 26% year-on-year.

Expectations for a Second-Half Rebound Through Global Market Expansion and Securing New Growth Engines

These game companies plan to improve their second-half performance through new game releases and overseas expansion. Pearl Abyss is scheduled to enter the Chinese market with titles such as EVE Echoes and Black Desert Mobile. Black Desert Mobile obtained a game service license (panho) in China on June 28. Pearl Abyss also plans to unveil new content at the global game show Gamescom on August 25.

Com2uS is actively pursuing new revenue streams through platform diversification and business partnerships. It is preparing to enter the cloud gaming service market through global partners and is expanding new users by offering Summoners War: Sky Arena on cloud gaming platforms accessible via PC and mobile.

Gamevil is expanding its platform business. Previously, Gamevil opened its game-specialized platform 'Hive' for use by other companies. It also plans to closely advance its virtual asset platform business. The company intends to actively create various business opportunities based on blockchain technology and virtual asset platforms, including blockchain games and NFT (non-fungible token) marketplaces.

Neowiz plans to release the Nintendo Switch version of 'Skul' this summer. Indie games such as 'Unsouled' and 'Blade Assault' are in the final stages of preparation for release within the year. Mobile games will focus on increasing sales through updates centered on 'Druwa Dungeon' and 'Death Knight Raising.' 'Kingdom: Flames of War,' utilizing the Bless intellectual property (IP), is scheduled for release in the Japanese market through GameOn.

Additionally, Neowiz plans to become a competitive developer through multiple new projects under development, including 'P's Falsehood' and the next installment of 'A.V.A (Alliance of Valiant Arms)'.

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