Game firms nervous over government's profit sharing system

Kim Hoon, who is in charge of the development of the PURPLE platform at NCSOFT, explains the details of the firm's new PC-mobile interconnected game platform during a news conference at the company's R&D center in Seongnam, Gyeonggi Province, in this 2019 file photo. / Courtesy of NCSOFT

By Kim Jae-heun

Local game companies are anxious over the government's proposed measure for firms to share their profits with those that have been hit hard by the COVID-19 pandemic.

The plan was put forward by the ruling Democratic Party of Korea (DPK), which wants profitable IT firms, platform operators and game developers, among others including conglomerates, to aid small business owners.

“We are feeling pressure from lawmakers' remarks proposing the profit sharing system during our public disclosure season. We voluntarily helped internet cafe owners last year, and the public image that game companies have taken all the benefits of the pandemic has become a burden to us,” a game industry source said.

Top game firms NCSOFT, Nexon and Netmarble are the three main targets in the IT leisure sector, as they achieved stronger business performances last year. The government's strict social distancing rules forcing people to stay at home induced many to play games online.

NCSOFT saw sales of 2.41 trillion won and an operating profit of 824.7 billion won in 2020, up 42 percent and 72 percent, respectively, year-on-year.

NCSOFT's successful business performance is attributed to its popular video game, “Lineage,” with the mobile editions, “Lineage M,” and “Lineage 2M,” ranking as the top two highest grossing games. NCSOFT is also preparing to launch Lineage 2M in Taiwan during the first half of this year, as well as on K-pop entertainment platform “Universe” to beef up profits.

Nexon's annual revenue is expected to exceed 3 trillion won for the first time. In the third quarter of last year, the game company's accumulated sales reached 2.52 trillion won. Nexon revealed that its estimated sales climbed to between 650 and 700 billion won in the fourth quarter of 2020.

Nexon's popular mobile games include: “KartRider Rush+,” “V4” and “The Kingdom of the Winds: Yeon,” with the latter ranking among the top 10 highest grossing games on Google's app store, since the launch of its mobile edition seven months ago.

Netmarble's annual revenue is very likely to pass 2 trillion won, after it disclosed accumulated sales of 1.86 trillion won by the third quarter of last year.

However, game companies say that the government has been treating them unfairly for a long time, as games are still perceived with negative prejudices often related to violence and addiction.