NCsoft net plunges 74% on weak game sales

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NCsoft net plunges 74% on weak game sales


NCsoft, one of Korea’s leading game makers, reported its first-quarter earnings plummeted 74 percent compared to a year ago. The plunge in profit led local analysts to speculate that the game behemoth may be in for a major overhaul, shedding its heavy reliance on computer-based services for a deeper reach into mobile services.

“NCsoft recorded sales revenue of 239.5 billion won ($212 million) and a net profit of 17.4 billion won during the first quarter of 2017,” the game developer said in a report. First-quarter revenue fell 1 percent year on year compared to 2016 while its net profit plunged 74 percent.

NCsoft’s weak performance this year follows its most profitable in 2016. Last year, NCsoft’s yearly revenue was 983.6 billion won as net profit hit 271.4 billion won.

Earnings from its flagship game Lineage fell from 83.1 billion won in first quarter of 2016 to 51.5 billion won this year.

“For Lineage, important updates of contents often lead to drastic changes in profit,” said Kim Dong-chan, an assistant manager. “We haven’t had any major updates since September of last year, which is why we believe we witnessed such a fall in the figure.”

“Furthermore, with the new game [Lineage M] slated to be released during the first half, we think some gamers decided to wait and limit their spending in the existing games to have something to spare when the new game comes out,” he added. Lineage M is the replica of the original Lineage that will be played on mobile devices rather than computers.

The game developer’s labor costs jumped 33 percent during the first quarter, data showed. NCsoft also has increased the size of its workforce 20 percent, a move intended to bring in talent to expand the company’s share in the mobile-game industry.

In line with the figures, local analysts predict that NCsoft may be shifting its main platform of service from computers to mobile devices.

“The share of profit from mobile service will take up a large portion of NCsoft’s overall performance upon the release of Lineage M,” said Lee Kyung-il, an analyst from Baro Investment & Securities. “Along with it, the main platform of NC’s service will go from PC to mobile.”

The game giant, however, refuted the projection, saying its strategy is to balance its business between computer and mobile games.

“We continue to develop PC games,” said Kim of NCsoft. “Upon the success of Pro-baseball H2 [mobile game] and Lineage RED Knights [a mobile turn-based RPG game], we are just trying to be more aggressive in mobile services.”

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