Top game developers report weak 3rd quarter

Korea’s top three game developers suffered, as a group, an earnings drop year on year in the third quarter, with only Nexon reporting a rise compared to the same period in 2017.

Nexon, Netmarble and NCSOFT announced quarterly earnings Thursday and Friday. Combined, their revenues dropped 15.5 percent year on year to 1.6 trillion won ($1.4 billion) July to September, while their collective operating profits slumped by 30 percent to 444.4 billion won.

Earnings of Netmarble and NCSOFT fell year on year as they both released a smaller number of games in the local market. Industry watchers say that may be the result of the 52-hour work hour that went into effect on July 1.

NCSOFT released no new games in the local market this year. Some projects were postponed as the company decided that more time is needed to improve the quality of the games before presenting them to users, said a company spokesperson.

The fall was also in part the result of a strong comparison period, he added. NCSOFT had a record-breaking third quarter 2017 with the success of its Lineage M mobile game.

Netmarble’s operating profit for the third quarter fell 39.8 percent to 67.3 billion won, while revenue was 526 billion won, down 9.6 percent year on year. Netmarble released a smaller number of games in Korea this year.

On a positive note, Netmarble noted in its third quarter report that sales increased in large game markets like the United States and Japan. The company’s foreign sales reached 382.4 billion won in the July-September period, taking sales in overseas markets, as of the third quarter, to 1.07 trillion won, a 20 percent increase compared to the same period last year.

Nexon was the only one of the three to report year-on-year growth in both revenue and profit. The company, with stock trading in Japan, brought in 696.1 billion won in the year’s third quarter, a 15 percent increase year on year. Operating profit grew 4 percent to 238.1 billion won during the same period.

“The long-term successes of Dungeon Fighter and Maple Story led growth,” Nexon said in a statement. “Darkness Rises, Maple Story M and Choices: Stories You Play boosted global revenue.”

To drive up earnings, all three companies are actively developing new games for next year’s first quarter. NCSOFT, for example, is preparing to release five massively multiplayer online role-playing games (MMORPG).

But with regulations on the rise, local game companies are operating in a tough business environment.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]