Cash hoard of Korean game companies shrinks 42% in H1

Jin Young-tae and Susan Lee 2022. 9. 23. 12:03
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Cash hoard of South Korean game companies has thinned by more than 40 percent due to spending mostly unrelated to their core game business amid stagnant earnings.

According to disclosures with the Financial Supervisory Service (FSS) and financial market tracker FnGuide on Thursday, cash and equivalent assets of 29 listed game companies in Korea shrank 42 percent to 4.29 trillion won ($3 billion) by the end of June from six months earlier.

Out of the top 10 largest market-cap game companies, DoubleU Games was the only company that saw an increase in its cash hoard over the last six months.

Krafton, industry No. 1 in terms of market cap, shaved cash reserves from 3.02 trillion won to 1.19 trillion. Of 4.3 trillion won raised from its IPO in August last year, it pledged to invest 70 percent in global M&As. It acquired U.S. game developer Unknown Worlds in October last year and E-Mart's headquarters building in the affluent Seongsu-dong area for 1 trillion won together with Mirae Asset Group. In the first half of this year, it spent about 10 billion won each to buy a figure design and manufacturing firm and a graphic novel studio.

Mid-tier game companies Pearl Abyss and Wemade were also eager about real estate investments. Pearl Abyss’s cash assets slimmed from 243.9 billion won at the end of last year to 199.2 billion won at the end of June after its purchase of a new head office building in Gwacheon, a city in Gyeonggi Province. Wemade made real estate investments in Pangyo, also in the Gyeonggi Province area, as well as Yeoksam in Seoul.

The game companies could be too short in cash to make timely investments for new games and strategic moves if much of their assets are piled in real estate properties, industry observers said.

Kakao Games and Com2uS mainly focused on investing in blockchain companies.

After acquiring a stake in Lionheart Studio, the game developer behind the blockbuster mobile game “Odin: Valhalla Rising,” Kakao made a strategic investment of around 18.5 billion won in U.S. game studio Playable Worlds that is due to release a cloud-based MMORPG and a metaverse service next year. Com2uS invested more than 10 billion won in Com2Verse, its metaverse subsidiary.

Big-name game companies such as NCSoft, Netmarble, and Nexon Games also lost a large amount of their cash from financial activities such as repaying corporate bonds and paying taxes from selling company stakes.

Cash reserves of NCSoft plunged from 255.9 billion won to 216.8 billion won, Netmarble from 1.35 trillion won to 706 billion won, and Nexon Games from 58.7 billion won to 41.1 billion won during the six months.

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