NCsoft, a leading South Korean game developer, reported its first quarterly operating loss since the second quarter of 2012, with a 14.3 billion won loss in the third quarter. The company has attributed this downturn to weak performance of its new games and increased marketing expenses.
In a regulatory filing on November 4th, NCsoft announced its consolidated third-quarter revenue of 401.9 billion won, operating loss of 14.3 billion won, and net loss of 265 billion won. While revenue increased by 9% compared to the previous quarter, it declined by 5% year-on-year. The operating loss was primarily driven by increased marketing expenses.
Mobile game revenue stood at 253.4 billion won, down 7.5% year-on-year but up 16% compared to the previous quarter, driven by the performance of "Lineage M." PC online game revenue decreased by 13.4% year-on-year and 6% quarter-on-quarter to 807 billion won.
The company attributed the increased marketing expenses to the launch of new games and major updates for existing titles. However, despite the increased marketing efforts, the performance of new games such as "Battle Crush" and "Hyeon" has been disappointing.
To address these challenges, NCsoft plans to focus on expanding its core intellectual property (IP) and acquiring new IPs. The company is set to launch a new game based on the Lineage IP, "Journey of Monarch," in the fourth quarter. Additionally, NCsoft is developing several new games, including "Aion 2," "LLL," and "Taektan," with plans for release next year.
As a result of the disappointing performance and increased competition, NCsoft has announced a restructuring plan that includes layoffs and the spin-off of several of its game development studios into separate subsidiaries. The company aims to reduce its workforce by 1,000 employees to improve efficiency and focus on its core business.
Hong Won-jun, NCsoft's CFO, stated in a conference call that the company expects to reduce its workforce from the mid-4,000s to the 3,000s by next year through layoffs, spin-offs, and project closures.
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