NCSOFT posts quarterly loss amid challenging game market

(NCSOFT)

NCSOFT has reported a quarterly loss, marking its first in 12 years, as the South Korean game developer struggles in a harsh market climate. On Monday, the company announced that it recorded revenue of 401.9 billion won ($291.5 million) and an operating loss of 14.3 billion won for the third quarter of this year, with a net loss of 26.5 billion won.

Revenue from mobile games, a core segment for the company, totaled 253.4 billion won, driven in part by a 49 percent increase in sales from Lineage M, which saw a boost following the release of the “Reboot World” update in June. Player engagement metrics remained steady. However, revenue from PC online games declined 6 percent from the previous quarter to 80.7 billion won.

By region, NCSOFT reported revenue of 286.2 billion won from South Korea, with 49.4 billion won from Asia, and 28.2 billion won from North America and Europe. Royalty income totaled 38.1 billion won.

Operating expenses rose to 416.2 billion won, up 2 percent on-year, primarily due to a substantial 76 percent increase in marketing costs, which reached 48.7 billion won as the company promoted new releases and major updates for its live games.

To regain momentum, NCSOFT is restructuring its business model and pursuing a studio-based approach. The company plans to establish four independent corporations to focus on game development and new ventures. These studios will oversee intellectual properties (IP) like Throne and Liberty (TL), LLL, and TACTAN, while a newly formed AI-specialized company will focus on advancing and commercializing AI technology.

The company emphasized the importance of swift content development, saying that operating each division like a venture company will enable agility.

NCSOFT said it is addressing stagnant growth and high operational costs by restructuring. With upcoming voluntary retirement programs and project cuts, the company aims to reduce its headquarters workforce from around 4,000 to about 3,000 employees.