No Rebound in Q3... Game Companies Expected to See Consecutive Earnings Declines

NCSoft announced that it will participate in the international game show G-STAR for the first time in 8 years since 2015. The photo shows the NC logo. (Photo by NCSoft)

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Major domestic game companies are expected to post poor earnings in the third quarter following a weak second quarter. Although new titles are lined up for release, it will take time for their performance to be reflected, leading game companies to face a gloomy year-end.

According to the third-quarter estimated earnings of game companies compiled by financial information firm FnGuide, NCSoft shows the largest decline. NCSoft is projected to record sales of 423.8 billion KRW and an operating profit of 18.4 billion KRW in Q3, representing a 30% and 87% decrease respectively compared to the same period last year. Both figures have also decreased compared to Q2, showing a clear downward trend this year.

NCSoft's poor performance is largely due to the prolonged absence of new titles. The decline in the Lineage series, except for Lineage M, continues. Although the new puzzle game 'Puzz Up Amitoy' was released last month, its earnings will be reflected in Q4. However, due to the nature of puzzle games, it is difficult to achieve high sales comparable to the Lineage series, making a performance rebound by Q4 unlikely.

Netmarble is estimated to record losses for the seventh consecutive quarter. Q3 sales are expected to be 656 billion KRW, down 5.5% year-on-year, with an operating loss of 13.8 billion KRW. However, the deficit has narrowed compared to the 37.2 billion KRW operating loss in the previous quarter. This improvement is partly due to the performance of 'Tower of God: New World' released in July and 'Seven Knights Growth' released in September. Netmarble plans additional new releases this year, but increased marketing expenses make a turnaround to profitability within the year difficult.

Most domestic game companies are in similar situations. Sales of existing titles continue to decline, and new releases have not achieved significant success. Kakao Games is expected to record an operating profit of 27.3 billion KRW in Q3, down 37.5% year-on-year. Com2uS is estimated to continue its operating loss of 1.8 billion KRW, following Q2.

On the other hand, Nexon continues its dominance in Q3. Sales and operating profit are expected to increase by 15.5% and 32.5% year-on-year to 1.088 trillion KRW and 404.1 billion KRW respectively. This is due to the steady popularity of existing titles in the global market and the positive reception of 'Dave the Diver,' which was globally released in June.

Images of Netmarble's entries at the international game exhibition 'G-STAR 2023'. From the left, 'Demis Reborn', 'RF Project', 'Seven Deadly Sins: Origin'. (Photo by Netmarble)

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Game companies are set to showcase a large number of new titles at the upcoming international game exhibition ‘G-STAR 2023.’ Some new releases are scheduled as early as the end of this year, with plans to use G-STAR as a springboard for a performance rebound next year.

NCSoft, participating in G-STAR for the first time in eight years since 2015, will exhibit a total of seven titles including 'LLL,' 'Battle Crush,' 'Project BSS,' 'Project G,' 'Project M,' and 'Throne and Liberty.' Among these, 'Throne and Liberty' is scheduled for release at the end of the year, and the latest version will be demonstrated on-site. Netmarble will showcase three titles: 'The Seven Deadly Sins: Origin,' 'RF Project,' and 'Demis Reborn.' The success of these titles is crucial for turning a profit.

WeMade will present two titles: 'Legend of Mir' and 'Fantastic4 Baseball.' Companies like Krafton and Webzen have yet to disclose specific titles. G-STAR is scheduled to open from the 16th to the 19th of next month at BEXCO in Busan, spanning four days. This year’s G-STAR will be the largest ever, with a total of 3,250 booths.