NCSOFT seeking changes for greater global appeal

By Kim Bo-eun

NCSOFT said Monday that it is seeking fundamental changes to its existing games to expand its global user base, as the game developer is focusing increasingly on overseas markets for revenue.

"If you look at our strategy for massively multiplayer online role-playing games (MMORPGs) now, we recognize that needs are more detailed, and we see a wider variety of customer segmentation that we need to address to be able to cater to this market," Lee Jang-wook, the company's senior managing director for investor relations, said in a conference call to release NCSOFT's first-quarter earnings.

"What we are trying to do now is not just take what we have done in Korea, change the language and launch it in the global market. We are trying to change the games themselves so that they have a stronger appeal and attractiveness to a global user base, in terms of the overall business model," he said.

The Asian market is a strong region that drives NCSOFT's overseas sales. While the game developer saw 24.1 billion won in sales in the U.S. and European markets in the first quarter, sales came to 13.8 billion won in Japan and 12.2 billion won in Taiwan.

NCSOFT launched “Lineage 2M” in Taiwan and Japan on March 24, which drove a quarter-on-quarter rise in sales.

"There have been quarter-on-quarter sales increases of 5.6 billion won in Taiwan and 800 million won in Japan, respectively," Lee said.

"Leveraging our experience in launching Lineage M and 2M overseas, we are committed to achieving even more meaningful performances in the global market."

NCSOFT saw an earnings shock for the first quarter, attributed to increased labor expenses and marketing costs for games such as “Lineage 2M,” “Trickster M” and “Blade & Soul 2.”

The game developer posted 512.5 billion won in sales, down 29.9 percent year-on-year, and 56.73 billion won in operating profit, down 76.5 percent from the same quarter of 2020. Net profit came to 80.2 billion won, down 59 percent year-on-year.

The company said that labor costs increased to 232.5 billion won ― up 26 percent from the previous quarter ― due to a bigger workforce, as well as regular bonuses and a one-time special performance-based payment.

Lee said the company's labor costs are set to see double-digit growth this year, as NCSOFT is among the game companies that raised developers' salaries substantially to attract talented employees earlier this year. NCSOFT said the rise in labor costs will be canceled out by growth in sales, based on new game launches this year.