Nexon, NCSOFT, and Netmarble Expecting Positive Second Quarter Performance

Jul 13, 2020

It is estimated that sales and operating profits of South Korea’s top three gaming companies (Nexon, NCSOFT, and Netmarble) in this second quarter made huge jumps compared to that of the second quarter last year. Medium-sized gaming companies are expected to see some positive effects from relaxation of regulations on web board games that took effect in the second quarter.
According to FnGuide, NCSOFT is estimated to had made $529 million (635.6 billion KRW) in sales in the second quarter which is a 55% jump compared to that of the second quarter last year. When this amount is combined with its first quarter sales of $583 million (700 billion KRW), NCSOFT is estimated to had made more than $1.08 billion (1.3 trillion KRW) in sales in the first half alone. If that is the case, it is likely to be a company that will make at least $1.67 billion (2 trillion KRW) in sales in 2020.
NCSOFT became a billion-dollar company after launching Lineage M in 2017. It is estimated to had made $205 million (245.9 billion KRW) in operating profit in the second quarter which is a 90% jump compared to that of the second quarter last year.
Its positive performance is the result of long-term success of “Lineage M” and “Lineage 2 M”. Its forecast in the second half is also promising as it is looking to provide the two games globally after carrying out scheduled promotions and updates.
It has prepared a lineup of serious mobile MMORPGs (Massively Multiplayer Online Role-Playing Game) such as “Blade & Soul 2”, “Aion 2”, and “Trickster M”. The fact that its consolidated subsidiary Ntreev woke up from a long sleep is also acting as a positive factor for the forecast of NCSOFT.
Netmarble is estimated to had made $54.3 million (65.2 billion KRW) in operating profit in the second quarter that is 96% and 220% jump compared to that of the second quarter last year and the first quarter respectively. This positive performance is the result of the success of its new games that were released in the first quarter and the omission of marketing costs used to release these games. It is estimated to had made $509 million (611.3 billion KRW) in sales.
Its operating profit, which has been its chronic Achilles Heel, is expected to go through a gradual improvement. The level of Netmarble’s dependence on other companies’ intellectual properties (IP) is lower than that of the past. “A3: Still Alive”, which is currently at the top of sales after it was released in the first quarter, and “Stone Age World” that was recently released and is drawing popularity are based on its own IPs. “Seven Knights” and “Magumagu” that are based on its IPs and expected to be released in the second half will be part of its main lineup.

Nexon, NCSOFT, and Netmarble Expecting Positive Second Quarter Performance

According to the guidance of Nexon’s performance, Nexon is estimated to had made a maximum of $604 million (725 billion KRW) and $232 million (279 billion KRW) in sales and operating profit respectively in the second quarter. Compared to its sales and operating profit from the second quarter last year which were $476 million (571.2 billion KRW) and $115 million (137.7 billion KRW), it is expected to experience 27% and 102% jumps respectively.
Its outstanding performance is the result of the success of its new game “KartRider Rush+” and its global games “MapleStory” and “V4” and enhanced gaming service and contents by focusing monetizing live games.
It is going to release “Dungeon Fighter Mobile” in China next month. It already has more than 5 million pre-subscribers. It expects that same positive effects of Dungeon Fighter Mobile’s original “Dungeon Fighter”, which recorded an operating profit rate of 90% and created more than $833 million (1 trillion KRW) in sales, will be reenacted by Chinese consumers.
The main reason why these gaming companies are expected to had made positive performance all together is because more people are spending more hours on games due to increased free time resulting from the COVID-19 pandemic. Unlike the manufacturing industry, it is relatively easy for the gaming industry to release new games overseas as there is not much physical involvement involved. The fact that games have been established as cultural contents from people who are in their teens to their 40s is another reason why gaming companies are enjoying positive performance continuously.
Relaxation of regulations on web board games that took effect in April is also expected to have some positive impact on the gaming industry. NHN and Neowiz are expected to had made $337 million (404.6 billion KRW) and $56.2 million (67.5 billion KRW) in second quarter sales respectively which are about an 10% increase compared to that of the second quarter last year. Even when their second quarter sales are compared to their first quarter sales that experienced a boost from seasonal effects, they are also experiencing 2% and 10% increases respectively.
Staff Reporter Lee, Hyeonsoo | hsool@etnews.com

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