NCSOFT reported an operating loss of 129.5 billion won in the fourth quarter of last year, significantly below market expectations. Annually, the company posted an operating loss of 109.2 billion won, marking its first deficit since its founding 26 years ago. A sharp decline in mobile game sales, poor performance of new releases, and significant restructuring expenses have shaken the company's core business structure. NCSOFT plans to focus on transitioning to an independent studio system, strengthening its global market strategy, and commercializing artificial intelligence (AI) in pursuit of a significant rebound starting this year.
Park Byeong-mu, co-CEO of NCSOFT, noted during a conference call on Dec. 12 that 'the stagnation of the MMORPG (massively multiplayer online role-playing game) market is due to the repetitive release of existing “Lineage-like” games, which have not brought significant changes to user experiences.' However, he added that 'Throne and Liberty (TL)' has secured a cumulative user base of 7 million in North America and Europe, confirming that a demand for new forms of MMORPG still exists in the global market.
He announced a specific plan to launch 'Aion 2' in the second half of 2025, starting in Korea and Taiwan, before expanding to North America and Europe. Park stated, 'From the second quarter, we will enhance user communication to publicly share key features of the game before its release, and if we can present new user experiences similar to those of past titles such as 'Aion' and 'Blade & Soul,' there is ample room for the market to grow again.'
NCSOFT plans to invest between 60 billion and 70 billion won annually to secure new intellectual properties (IPs) and expand genres. Since last year, it has focused investments on subculture and shooting games and is also considering entering the action RPG sector. Although mergers and acquisitions (M&A) are being actively pursued, they have not materialized this year due to pricing differences, and the company intends to continue negotiations with domestic and foreign corporations. It is also keeping the door open for M&A opportunities using treasury stocks, but if they do not come to fruition, the company plans to increase shareholder value through additional stock buybacks.
Hong Won-jun, CFO of NCSOFT, emphasized during the conference call that 'the fourth-quarter operating loss significantly reflected one-time expenses resulting from large-scale organizational efficiency efforts.' He noted that this was an unavoidable choice to secure long-term competitiveness.
He also stated, 'Starting in 2025, we plan to distribute 30% of the consolidated net income attributable to the controlling shareholders as cash dividends over three years, excluding the profits from the sale of NC Tower in Samseong-dong from the dividends, and to reduce the total number of issued shares by 1.9% (approximately 410,000 shares) to decrease the proportion of treasury stock from 11.7% to 9.98%.'
The headquarters has completed a large-scale restructuring by reducing personnel from 5,000 to about 3,100 by early 2024. Park emphasized, 'About 1,000 employees have moved to independent studios, and around 800 to 900 have participated in voluntary retirements,' stating, 'There will be no additional large-scale reductions.'
The headquarters plans to directly operate existing IPs (Lineage, Aion, Blade & Soul) while developing new IPs and various genres through independent studios or publishing to enhance development efficiency. Park acknowledged, 'We humbly accept the criticism that we were lacking in development, publishing, and marketing last year,' and explained, 'We will maximize game quality and marketing return on investment (ROI) through organizational efficiency and studio dispersion.'
The release schedule for new titles will be completely reorganized. The MMORTS (massively multiplayer online real-time strategy) game 'Tactan' is expected to finalize its launch timing within the first or second quarter of 2025, while the open-world MMO shooter 'LLL' aims for a launch in the second half of 2025, undergoing focus group testing (FGT) and closed beta testing (CBT) starting in the second quarter to enhance quality. Park explained, 'Instead of necessarily participating in large gaming expos, we will efficiently market based on user test results,' and indicated plans to showcase more than six shooting games, including PvP, PvE, and MMORPG formats, to the global market by 2026.
AI commercialization was also highlighted as a key growth engine. NCSOFT is utilizing its self-developed AI technology accumulated over 7 to 8 years and integrating external solutions such as Stable Diffusion and Copilot across various fields including game development, operations, quality assurance, and translation. The company plans to further enhance in-game functions like text-to-speech (TTS), automated animation, and real-time translation. Additionally, it is pursuing the provision of AI solutions to other industries like finance, healthcare, and education to secure new revenue sources.
In the fourth quarter, the share of overseas and royalty sales stood at 39%, showing growth influenced by the sales of the 'Guild Wars 2' expansion and TL's global performance. CFO Hong remarked, 'This year, we will further strengthen our publishing capabilities targeting the North American and European markets, and we are considering expanding our presence in the Middle East and South Asia,' adding, 'Given that the Saudi Public Investment Fund (PIF) holds equity, we are paying attention to the potential of entering the Middle Eastern market.'
Park stated, '2024 was a year of restructuring, and starting in 2025, we can begin to see a rebound in performance through the launch of global new titles,' adding, 'While this is the most challenging time, we will prepare for the 'post-Lineage' era with efficient marketing and publishing capabilities.' He further stated, 'We aim to create growth opportunities across various genres, moving beyond a focus on MMORPG, through stronger communication with users and investors, and by securing NCSOFT's sustainable competitiveness through AI and M&A efforts.'