The gaming industry’s famous 3N -- Nexon, NCSoft and Netmarble -- have all suffered earnings shock in the second quarter of this year, due to the absence of new releases and increased labor costs from pay raises.
The Tokyo-listed Nexon, the biggest of the three game developers, saw its revenue and operating profit plunge 13 percent and 42 percent to 56 billion yen ($507.3 million) and 15.7 billion yen due to lackluster results in Korean and Chinese markets.
MapleStory, one of Nexon’s most popular games in Korea, registered lower-than-expected sales after the game was embroiled in a nationwide scandal in May for manipulating the draw probabilities of random cash items. Following the incident, many users migrated to Lost Ark, a similar game developed by Smilegate. As a result, Nexon’s PC game sales in Korea dived 10 percent to 20.8 billion yen.
Dungeon&Fighter, Nexon’s cash cow in China, is also slowly losing momentum, as the number of monthly active users and paying users continued to decline from January to June. Nexon’s total sales in China therefore dropped 37 percent to 13.3 billion yen.
Nexon’s balance sheet was aggravated by a salary raise of 8 million won ($6,900) the company offered to each employee in February.
To seek a turnaround, Nexon is developing seven titles -- Project Magnum, Overkill, Mabinogi Mobile, Project ER, Project SF2, TalesWeaver M and Project HP.
Meanwhile, NCSoft secured sales worth 538.5 billion won, mostly unchanged from the previous year, but its operating profit plummeted 46 percent to 112.8 billion won.
The main attributor to the decline was a drop in daily sales of extreme pay-to-win games LineageM and Lineage2M -- mobile versions of the firm’s 23-year-old hit PC game Lineage.
Analysts cast a gloomy outlook for NCSoft, as a similar game called Odin: Valhalla Rising, the first self-made label of Kakao Games, enticed fatigued Lineage users looking for something new.
To expand its user base currently confined to Asia, NCSoft aims to launch LineageW, a global version of the LineageM series with a less competitive pay-to-win system to target European and North American markets.
NCSoft’s new title Blade & Soul 2, whose launch was delayed from May 6 to Aug. 26, also played a part in the company’s weakening clout. The new title has garnered 7.4 million users in preregistration.
NCSoft in March gave a salary raise of 13 million won and 10 million to developers and other staffers, respectively.
Netmarble took the greatest hit among its competitors, as its sales and operating profit nosedived 15.8 percent and 80.2 percent to 577.2 billion won and 16.2 billion won, respectively, but industry watchers expect an immediate rebound, considering it has blockbuster games scheduled to launch in the second half of this year.
An open world role-playing game, Marvel Future Revolution, is slated to launch globally on Aug. 25. The game features many of Marvel Comics’ beloved characters, such as Iron Man, Doctor Strange, Captain America, among others. Marvel Future Revolution will be followed by the release of Seven Knights 2, Seven Knights Revolution, BTS Dream and Merge Kuya Island.
But what has drawn attention is Second Country: Cross Worlds. Though launched on June 10 in five countries including Korea, Japan and Taiwan, the game reaped 69.3 billion won in 20 days and took up 12 percent of Netmarble’s total sales in the second quarter. Second Country: Cross Worlds is set for global launch in the first quarter next year.
To diversify, Netmarble on Aug. 2 acquired a Hong Kong-based social casino game company SpinX Games for 2.5 trillion won, which will bring in a constant flow of cash for Netmarble.
Netmarble in February granted a universal salary raise of 8 million won to all employees.
By Kim Byung-wook (
kbw@heraldcorp.com)
