Korean Game Maker NCSoft Suffers Steep Decline in Income
NCSoft, a prominent Korean game maker, has experienced a significant downfall in their latest financial report. According to Korea Times, their operating income has plummeted by 71.3% to 35.3 billion won ($26.9 million), while their profit has dropped by 74.3% to 30.5 billion won ($23.2 million) compared to the previous year. This decline in earnings falls well below expectations, with NCSoft’s flagship title, Lineage W, recording a 54% decrease in sales, reaching 102.8 billion won ($78 million).
Since January, NCSoft’s stock price has witnessed a sharp decline of 36.6%. This downward trend has persisted into August, indicating a lack of investor confidence in the company. The company heavily relies on the domestic market, as highlighted by Korea Times, with 64.8% of its sales coming from Korea. Moreover, this income slump follows a similar pattern observed in their January financial report, where income declined by 57% year-on-year.
Impact of Chinese Gaming Market
An unexpected ray of hope may lie in the concerns surrounding the Chinese games market. Increased regulatory scrutiny and the prolonged licensing freeze that paralyzed China’s mobile gaming industry have left investors anxious. The news of further crackdowns, this time on non-gaming apps, might prompt these nervous investors to explore investment opportunities in other Asian markets.
Despite previous attempts to address the company’s financial situation, such as implementing a significant 20% staff reduction, it appears that these measures have had little effect on reversing NCSoft’s trajectory. The company’s fortunes have shifted dramatically, considering that Lineage W propelled them to the Top 50 Game Makers of 2022 list in August last year, marking their most successful launch.