NCSOFT Reports Q3 Net Loss Due to Rising Operating Costs.


Seoul: NCSOFT Corp., a leading South Korean game developer, announced on Monday that it experienced a net loss in the third quarter, largely attributed to increased operating costs stemming from the launch of new game titles and significant updates within its portfolio. The company reported a net loss of 26.5 billion won (approximately US$19.3 million) for the July-September period, a stark contrast to the net profit of 44 billion won it posted during the same period last year.

According to Yonhap News Agency, the company’s regulatory filing detailed a shift to an operating loss of 14.3 billion won from a previous profit of 16.5 billion won a year ago. Additionally, NCSOFT’s sales witnessed a 5 percent year-on-year decline, totaling 401.9 billion won. The game developer cited increased promotional costs for new games and unfavorable currency exchange rates as primary factors contributing to the financial downturn.

NCSOFT recently launched a new massively multiplayer online role-playing game (MMORPG) titled
“Throne and Liberty” and a switching role-playing game called “Hoyeon” earlier this year. The company achieved revenue of 286.2 billion won in South Korea, 49.4 billion won in Asia, and 28.2 billion won in North America and Europe. In terms of game types, sales from mobile games grew by 16 percent year-on-year to 253.4 billion won, whereas sales from online computer games decreased by 6 percent to 80.7 billion won.

In response to its underwhelming performance, NCSOFT plans to establish four new firms through a split-off, which will include independent game studios and an artificial intelligence company. During a conference call, Hong Won-jun, NCSOFT’s chief financial officer, disclosed that the company aims to finalize a restructuring plan to address its management crisis by the end of the year. Additionally, NCSOFT is seeking to diversify its game offerings and is in the process of forming partnerships with one domestic and one overseas game studio, although further details were not provided.

Looking ahead
to next year, NCSOFT intends to launch five new titles, including the shooter game “LLL” and the MMORPG “AION2,” as part of its strategy to capture a larger share of the global market. Despite the challenging quarter, shares in NCSOFT rose by 1.15 percent to 219,500 won on the main Seoul bourse, although they underperformed compared to the broader Korea Composite Stock Price Index’s 1.83 percent gain. It is important to note that the earnings report was released after the stock market had closed.