Emerging Challengers Chasing NC... 3N Generation Shift Theory 'Circulating'

Kim Taek-jin, CEO of NCSoft

NCSoft, Nexon, and Netmarble (3N), which have dominated the domestic gaming industry for over a decade, are now being threatened by emerging challengers. Although the 3N companies released new titles this year to compensate for their lackluster performance, the market response has not been as favorable as before. Meanwhile, rising stars like Kakao Games, Krafton, and Pearl Abyss are aggressively closing the gap.

The Shaken Status of 3N

According to the gaming industry on the 30th, NCSoft faced a backlash immediately after launching its new title, Blade & Soul 2 (B&S2). B&S2 was an ambitious project personally led by CEO Kim Taek-jin, but the market reaction was cold. As the response to B&S2 diverged from expectations, NCSoft’s stock price plummeted. NCSoft’s market capitalization shrank from around 18 trillion won to 14 trillion won last week, losing nearly 4 trillion won. Moreover, NCSoft once again faced criticism over its excessive monetization structure. Sensing a serious backlash, NCSoft hurriedly issued an official apology and implemented revisions the day after the release. NCSoft stated, "We will listen to user feedback and strive to reflect it in our services."

Nexon, which had been thriving in China with over 1 trillion won in sales from Dungeon & Fighter (DNF), has recently suffered revenue hits due to a decline in users. Neople, the developer of DNF, saw its Chinese revenue drop 26% from 1.074 trillion won in 2019 to 791.1 billion won last year. Nexon’s Chinese sales in the second quarter of this year also fell 30% year-on-year due to the decrease in DNF users. Furthermore, the release of the long-delayed DNF mobile version, postponed for a year, remains uncertain. There are also reports that Tencent, which handles local publishing (distribution and service), is focusing on Pearl Abyss’s Black Desert instead of Nexon. A Nexon official said, "We are preparing measures for mid- to long-term growth."

Netmarble experienced an earnings shock in the second quarter of this year, with operating profit being the weakest among the 3N. Netmarble recorded sales of 577.2 billion won and operating profit of 16.2 billion won, plunging 15.8% and 80.2% respectively compared to the previous year. However, with titles like Ni no Kuni: Cross Worlds released in June and the new Marvel Future Revolution receiving favorable reviews, there remains a chance for a rebound in the third quarter. Still, the absence of an overwhelmingly dominant "number one game" remains a challenge for Netmarble.

Emerging New Gaming Companies

The companies threatening the 3N are Kakao Games, Krafton (2K), and Pearl Abyss. Kakao Games’ new mobile title Odin: Valhalla Rising has dethroned the once-dominant Lineage M and Lineage 2M, holding the number one spot in sales on both major app markets for nearly two months. Kakao Games is expected to grow rapidly starting from the third quarter, reflecting Odin’s success. Securities firms predict Kakao Games’ sales will exceed 1 trillion won this year.

Krafton, which has consistently challenged the 3N, surpassed them in operating profit in the second quarter of this year. Krafton posted sales of 459.3 billion won and operating profit of 174.2 billion won. The revenue from PlayerUnknown’s Battlegrounds Mobile hit an all-time high. Krafton’s global performance is particularly notable, with 94% of total sales coming from overseas markets. The cumulative downloads of PlayerUnknown’s Battlegrounds Mobile India, released last month, surpassed 50 million.

Pearl Abyss is raising market expectations with the Chinese launch of its new titles DokeV and Black Desert Mobile. When Pearl Abyss unveiled DokeV at the German game exhibition Gamescom 2021 on the 26th, its stock price surged. Moreover, Pearl Abyss has begun full-scale entry into the Chinese market, which is worth nearly 50 trillion won. Black Desert Mobile has started pre-registrations on its official Chinese website and others. In addition to iDreamSky, Tencent, China’s largest game company, is also directly co-publishing, lending strong support.

Experts have assessed that if a major hit emerges from these rising forces, the 3N structure of the domestic gaming industry could be fundamentally shaken. Professor Wi Jeong-hyun of Chung-Ang University, president of the Korea Game Society, said, "NCSoft fell into the addiction of loot boxes and kept releasing similar games, leading to the misconception that the 3N structure was solid." He added, "The enthusiastic response to DokeV shows that users have been craving new intellectual property (IP)."

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