Gaming Stocks Showing Weakness, Is the Answer Blockchain and P2E?…Securities Industry Says 'Not Sure'

On the morning of November 18 last year, visitors are enjoying the latest games at the international game exhibition 'G-STAR 2021' held at BEXCO in Busan. Photo and article content are unrelated. Photo by Yonhap News.

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[Asia Economy Reporter Lee Myunghwan] Game-related stocks have continued to decline this year. The gaming industry is seeking a breakthrough by presenting blockchain and P2E (Play to Earn) as new growth engines, but the securities market remains cautious in its evaluation.

According to the Korea Exchange on the 12th, Krafton, which surged to the mid-500,000 KRW range last November, has been falling daily after its new title "New State" performed below expectations. Comparing the closing price on November 17, last year's peak at 567,000 KRW, to the closing price on the 11th, it has dropped 50.35%, halving its value. Kakao Games also saw its flagship title "Odin" experience a decline in revenue, with its stock price falling more than 20% from 93,000 KRW on January 3, the first trading day of the year, to 72,700 KRW on the 11th. NCSoft also dropped nearly 32% from 667,000 KRW on January 3 to 453,500 KRW on the 11th due to delays in new releases.

Typically, game stocks move based on the performance of new titles or new services. However, as the effect of new releases has been minimal, the gaming industry is promoting blockchain and P2E services as future growth drivers. Kakao Games announced plans to strengthen its blockchain-based business using its self-issued coin "Bora." Netmarble, Com2uS, and Wemade have also either released or are preparing to release P2E games.

However, the outlook for these services is not bright. The Game Rating and Administration Committee under the Ministry of Culture, Sports and Tourism has banned the domestic release of P2E games due to concerns over gambling. As a result, the gaming industry is focusing on launching P2E games primarily in overseas markets.

The securities industry's view on blockchain and P2E is also skeptical. Kim Hajung, a researcher at Daol Securities, said, "P2E is one of the challenging areas undergoing trial and error, and while it diversifies the payers for game companies, it does not increase revenue," advising caution in investing in P2E games.

Lee Sojung, a researcher at SK Securities, noted, "Since President Yoon Seok-yeol's campaign promises are user-friendly toward gamers, some regulations on P2E services by game companies are expected to be eased," but added, "If punitive provisions are introduced simultaneously, the responsibilities of game companies will expand, becoming a burden."

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