Last year, Smilegate, which ranked third in operating profit among domestic game companies, has faced a red flag in its mid- to long-term growth strategy due to the sharp decline in popularity of its core IP (intellectual property rights) "Lost Ark." Lost Ark, a key game that accounts for nearly half of Smilegate Group's total operating profit, has recently seen a deterioration in user sentiment.
According to GameTricks, a PC room game market share analysis site, as of Nov. 11, Lost Ark has not ranked in the top 10 in PC room market share. This marks its first drop from the top 10 since it fell out on 4th, continuing a five-year streak of being in the rankings. Lost Ark has not once fallen out of the top 10 since the Season 2 update in 2020.
The background of the decline in users is attributed to a combination of excessive growth demands that arose after the introduction of Season 3 in the second half of last year, content fatigue, and an unstable in-game economy. In particular, the recently introduced "gem tuning system" has been criticized for its proposed transaction restrictions, which have undermined the investment value of existing users. Delays in improving the supporter class structure and fatigue with the reward system are also cited as sources of dissatisfaction.
Jeon Jae-hak, the director of Smilegate RPG, which oversees Lost Ark, announced improvements reflecting user feedback, such as the introduction of character-bound gold, easing raid difficulty, and enhancing horizontal content through the company's official YouTube channel last month. However, responses within the game community have indicated that the measures are "too slow and lack effectiveness."
These circumstances have reflected in the performance chart. Smilegate RPG recorded a revenue of 475.8 billion won and an operating profit of 223.3 billion won last year, representing decreases of 9.1% and 17.0%, respectively, compared to the previous year. Smilegate RPG is a key subsidiary of Smilegate that develops and operates Lost Ark. Given that Lost Ark accounts for about 43% of the group's total operating profit (514.6 billion won), the slowdown in popularity could impact the overall performance stability of the group.
In response, Smilegate is seeking breakthrough with its new lineup. The mobile massively multiplayer online role-playing game (MMORPG) "Road Nine," which was released last year, recorded approximately $30 million (about 41.8 billion won) in revenue within 40 days of its launch, and this year, the company plans to consecutively introduce new IPs such as "Eclipse: The Awakening," developed by NPIXEL, and "Chaos Zero Nightmare" by Super Creative. "Lost Ark Mobile" is also under development, aiming for release next year.
A Smilegate official noted, "We are aware of the users' complaints regarding Lost Ark, and recently, Director Jeon Jae-hak has been continuing communication through broadcasts," adding, "We plan to hold a live broadcast this month to share opinions with users."