KRAFTON's new business, which joined the '10 trillion club' in operating profit last year with its flagship intellectual property (IP) 'Battlegrounds,' is struggling. The new IP 'inZOI' has received criticism from users for ‘lack of content.’ The Indian business, considered one of the potential future revenue sources, also appears to be failing to generate revenue compared to its investment.
◇ New IP ‘inZOI’ aiming for the second The Sims… “Optimization is difficult, and content is lacking”
KRAFTON's 'inZOI' is a life simulation game where users become new employees of a company managing virtual reality, controlling and observing characters known as 'Joy.' It is evaluated as aiming to be the second 'The Sims.' The Sims, a life simulation game released in 2000, has exceeded cumulative sales of 200 million copies. Users can experience a 'demo' version of inZOI from the 20th until the early access release date of the 28th.
inZOI is a major new title being released by KRAFTON after Battlegrounds. In particular, KRAFTON has garnered expectations from users by introducing artificial intelligence (AI) technology into inZOI. It has showcased AI-based creation tools such as a '3D printer' function that creates 3D objects based on images, 'video to motion' that creates character movements from uploaded videos, and 'text to image' that generates images from prompts.
However, among users who have experienced inZOI, there are analyses pointing to the so-called 'optimization' issues, as well as a fundamental lack of content. There are negative evaluations stating that the process of forming relationships between characters and the development of actions and dialogues are unnatural, detracting from immersion. Conversely, there are positive evaluations indicating that characters can be customized to user preferences and that the cutting-edge graphics provide abundant visual appeal.
The need for high-spec PCs to play the game is also causing dissatisfaction among users. KRAFTON recommends Intel i7-12700K CPUs and NVIDIA RTX 3070 graphic cards for inZOI, which are comparable to the highest specifications of AAA games and each costs around 500,000 to 600,000 won. KRAFTON emphasized that it is not yet a formal launch, noting, “We plan to continue optimization work by introducing features that automatically set options for optimal experiences based on specifications without separate settings.” They also indicated that downloadable content (DLC) and updates will be provided for free until the official release.
◇ ‘BGMI’ performing well, but the valuation of investment corporations has 'dropped'
KRAFTON's investment in the Indian business, which it has been focusing on, is also failing to shine. While 'Battlegrounds Mobile India (BGMI)' has been updating its maximum revenue, the other new businesses are incurring net losses. KRAFTON identified India, with its high proportion of young people, as a future global market and established the local corporation 'PUBG India' in November 2020.
According to KRAFTON's business report, the company invested the most money in 'Nasadiya Technology (Nasadiya),' which recorded an impairment loss of 21 billion won last year. An impairment loss refers to accounting treatments that reflect a loss in the financial statements when the actual value is significantly lower than the book value.
Previously, KRAFTON secured a 17.1% equity stake in Nasadiya for 52.2 billion won in August 2021. Nasadiya is a company that provides a web novel serialization platform. KRAFTON is reported to have invested with the purpose of utilizing the IP owned by Nasadiya in the development of new games.
In addition to Nasadiya, five out of the six Indian companies KRAFTON invested in are recording losses. Looking at the scale of current net losses, they are as follows: ▲Nasadiya 2.4 billion won ▲Northwin Gaming 3.4 billion won ▲Nautilus Mobile 300 million won ▲Mebigo Labs 4.7 billion won ▲Anycast Technology 3.2 billion won ▲Talent Unlimited Online Services 6.6 billion won.
An industry official noted, “KRAFTON appears to have invested in India for long-term goals,” stating, “While the growth potential of the Indian gaming market is positive, it will be difficult for companies to generate revenue immediately.”