Kakao Games Barely Avoids Deficit... "Closing Non-Gaming Businesses and Improving Structure" (Comprehensive)

Sales of 193.9 Billion KRW, Operating Profit of 5.7 Billion KRW
Plan to Reduce Non-Game Business... Focus Resources on Games

Kakao Games saw a significant decline in operating profit on the indicators due to the domestic game market slump and business restructuring, including the sale of its subsidiary Senatechnology. The company plans to lay the groundwork for a resurgence by increasing focus on game development and services through the streamlining of non-core businesses and improving its organizational structure.

Kakao Games announced on the 6th that it recorded consolidated sales of 193.9 billion KRW and operating profit of 5.7 billion KRW in the third quarter of this year. Sales decreased by 14.3% compared to the same period last year, and operating profit dropped by 80.1%.

Kakao Games explained, "From this performance onward, it is a reorganization phase to 'focus on core businesses.' Factors such as the sale of shares in Senatechnology within other business sectors and partial withdrawal from Kakao VX's business were reflected as discontinued operations in the disclosure."

Mobile game sales amounted to 126.6 billion KRW, down 31.1% from the same period last year, while PC online game sales increased by 196.3% to 34.2 billion KRW.

Other sales (non-gaming sector), including golf-related businesses, recorded 33.1 billion KRW, up approximately 7.1% from the same period last year.

Kakao Games plans to accelerate the reduction of non-gaming businesses and focus resources on its core gaming business to seek a turnaround in performance. Han Sang-woo, CEO of Kakao Games, said during a conference call immediately after the earnings announcement, "Besides the partial sale of shares in Senatechnology, Kakao VX is also continuing workforce reallocation and voluntary retirement efforts mainly related to non-core businesses."

He added, "As part of the strategy for future growth, we plan to make focused investments. While there will be workforce reductions, we also believe that reallocation is important. We are prioritizing the efficiency of non-core businesses above all."

He further stated, "The key themes for future growth are, first, expanding global performance; second, expanding PC and console; third, diversifying genres; fourth, service innovation using artificial intelligence (AI); and finally, improving user engagement. Visible results from these efforts can be expected starting with the release of new titles next year."

Chief Financial Officer (CFO) Cho Hyuk-min also said, "Under an emergency management system, we have been working to improve financial structure and performance by withdrawing from non-core assets and liquidating held assets. Financially, we are focusing on balancing cost increases by improving workforce efficiency, including subsidiaries."

However, regarding the sale of subsidiary Kakao VX, he said, "No decisions have been made so far."

The company plans to release the PC hack-and-slash action RPG 'Path of Exile 2,' which has proven its popularity with a classic IP in the global market, in early access form on December 7, offering domestic users a unique experience.

From next year, the release of global blockbusters considering various platforms such as mobile, PC online, and console is expected to become visible. New titles based on expanded platforms, including 'Chrono Odyssey,' 'ArcheAge Chronicle,' and 'Project Q (tentative name),' developed with subsidiaries and partners, are emerging, raising expectations.

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