The Mixed Fortunes of '3N' and the Continued Growth of '2K'

Gaming Industry Q1 Performance Review

'As Expected, Lineage' NC's Surge
Operating Profit Reaches 244.2 Billion KRW
Nexon and Netmarble Fall Short of Expectations
Lack of Major New Releases Causes Decline

Krafton Achieves Highest Quarterly Sales
Kakao Games Benefits from 'Odin'

[Asia Economy Reporter Seungjin Lee] The performance of the "3N (Nexon, NCSoft, Netmarble)," known as the leaders of the domestic gaming industry in the first quarter, showed mixed results. While NCSoft achieved its highest quarterly sales ever, prompting remarks like "As expected, Lineage," Nexon and Netmarble fell short of expectations. The latecomers, the "2K (Krafton, Kakao Games)," continued their growth momentum, closely chasing the 3N.

Mixed Fortunes for 3N

On the 13th, NCSoft announced first-quarter sales of 790.3 billion KRW and operating profit of 244.2 billion KRW, representing increases of 54% and 330% respectively compared to the same period last year. The sales figure marked the highest quarterly sales in company history. Net profit was 168.3 billion KRW, up 110% year-on-year.

NCSoft's performance was driven by Lineage W. Mobile game sales rose 97% year-on-year to 640.7 billion KRW, with Lineage W accounting for 373.2 billion KRW in sales, leading the overall performance. Since its release in November last year, Lineage W has recorded total sales of 730.8 billion KRW over five months.

NCSoft's sales by region were 503.4 billion KRW in Korea, 210.7 billion KRW in Asia, and 37.4 billion KRW in North America and Europe. Royalty revenue was 38.8 billion KRW. Overseas and royalty sales accounted for 36% of total sales, a 200% increase compared to the same period last year.

Without major new releases last year, Nexon and Netmarble saw their first-quarter results decline. Nexon's first-quarter sales grew slightly by 3% year-on-year to 943.4 billion KRW (converted from JPY to KRW), but operating profit fell 11% to 399.2 billion KRW. Nexon successfully launched "Dungeon & Fighter Mobile" domestically in March, but the related earnings are expected to be reflected from the second quarter onward.

Netmarble posted an operating loss of 11.9 billion KRW in the first quarter, turning to a deficit. This was due to extended development schedules for new titles caused by COVID-19 and increased labor costs from expanding new game development personnel. Netmarble paid 186.8 billion KRW in labor costs in the first quarter, a 30% increase compared to the same period last year. Do Gi-wook, co-CEO of Netmarble, said, "From the second quarter, we will release various new titles we have been preparing, so sales are expected to improve," but added, "Due to increased marketing and labor costs, profitability improvement will likely occur in the second half."

2K Chasing 3N

Krafton recorded first-quarter sales of 523 billion KRW and operating profit of 311.9 billion KRW, up 13.5% and 37% respectively year-on-year. The sales figure marked the highest quarterly sales ever, closely trailing Netmarble's sales of 631.5 billion KRW.

Krafton's strong performance was largely due to the significant growth of its core intellectual property (IP), PUBG Mobile, in the Indian market. Dong-geun Bae, Krafton's Chief Financial Officer (CFO), said, "This quarter, mobile games stood out in the Indian service," adding, "The number of paying users and profitability indicators are rapidly increasing with products tailored for local users." PUBG Mobile's revenue in India hit a record high in April, increasing its contribution to overall sales. Krafton expects to more than double its sales in the Indian market this year.

Kakao Games saw a significant increase in first-quarter sales and operating profit, driven by the success of "Odin." With the upcoming release of the major new title "Uma Musume Pretty Derby" scheduled for the second quarter, growth is expected to continue. Kakao Games reported first-quarter sales of 266.3 billion KRW, up 105% year-on-year, and operating profit of 42.1 billion KRW, up 170%.

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