Kakao Games’ Q3 OP down 48% on year amid weak economy

Kakao Games Corp., the gaming unit of South Korea’s platform giant Kakao Corp., saw its third-quarter sales decline by nearly 14 percent and operating profit 48 percent due to factors triggered by the weak economy.

Kakao Games disclosed Wednesday that it posted 22.6 billion won ($17.3 million) in operating profit in the July-September period, down 48.4 percent from the same period a year ago, on sales of 264.7 billion won, down 13.8 percent.

Net profit plunged 67.3 percent to 3.7 billion won during the same period.

The operating profit is 18.4 percent below market expectations compiled by Yonhap Infomax.

By platform, sales of mobile games stood at 183.8 billion won, down 6.7 percent from a year ago. Sales of PC games came to 11.5 billion won in the third quarter while those of other platforms including sports and wireless communications businesses 69.4 billion won, down 28.2 percent.

“The weak economy weighed on the non-gaming sector, resulting in an overall decrease in revenue,” the company said.

Mobile sales, however, rose from the previous quarter as the performance of new games, including “Ares: Rise of Guardians,” offset the natural decline in the sales of existing games.

Operating expenses decreased by 8 percent to 242.1 billion won during the same period. The biggest spending was payment commissions (104.3 billion won), followed by labor costs (51.1 billion won), depreciation expenses for tangible and intangible assets (21.7 billion won), marketing expenses (13.2 billion won), and other expenses (51.9 billion won). Corporate tax expenses stood at 10 billion won.

Kakao Games, in the meantime, unveiled its multiplayer role-playing game (MMORPG) “ROM: Remember of Majesty,” scheduled for release in the first half of next year, “Goddess Order”, and “Project V.”

It also shared plans to launch “Odin: Valhalla Rising” in North America and Europe, “Eversoul” in Japan, and “ArcheAge War” in Taiwan and Japan.