MGAME has broken its record for the highest performance based on its long-standing intellectual properties (IPs) such as "Yeolhyeolgangho Online" and "Knight Online," which have been around for over 20 years. It has driven its performance upward by achieving a resurgence in the global market. However, some are raising concerns that the high dependence on long-standing games could lead to a decrease in revenue due to the mobile-centric restructuring of the gaming industry.
According to the Financial Supervisory Service electronic disclosure system on the 22nd, MGAME's revenue for the first half of this year was 47 billion won, with an operating profit of 9.2 billion won. This represents increases of 25.5% and 95.7%, respectively, compared to the same period last year, setting a record high for first-half revenue. For the second quarter, revenue was 20 billion won, and operating profit was 2.7 billion won. Compared to the same period last year, revenue increased by 10.2%, achieving the maximum revenue record for the second quarter. Operating profit rose by 293.4% compared to the second quarter of the previous year, which reflected one-time costs (ordinary development expenses). However, net profit decreased by 56.0% compared to the same period last year, which included compensation received from a Chinese gaming company that illegally operated "Yeolhyeolgangho Online."
The rise in MGAME's performance is due to the popularity of its PC massively multiplayer online role-playing games (MMORPGs) "Yeolhyeolgangho Online" and "Knight Online" in China and North America and Europe. Released in 2004, "Yeolhyeolgangho Online" gained early popularity after its launch in China in 2005, then began an unusual resurgence starting with a siege war update and a Double Eleven event in 2019. "Knight Online" is an even older long-running game, which was released domestically in July 2002 and globally in 2005. The game successfully experienced a resurgence in North America and Europe, thanks to the popularity of new servers launched during the COVID-19 pandemic.
It is positive that MGAME has secured a stable cash cow. While most mid-sized game companies rely on in-app purchase structures centered in the domestic market and mobile publishing, MGAME has secured stable operating profit based on overseas revenue. As of the end of last year, MGAME's proportion of overseas sales reached approximately 56%. This has allowed MGAME to draw an upward curve over the past 10 years. Before the COVID-19 pandemic in 2018, MGAME's revenue was 27.3 billion won. Since then, it has grown to 37.6 billion won in 2019, 42.3 billion won in 2020, 55.7 billion won in 2021, 73.6 billion won in 2022, 81.6 billion won in 2023, and 83.4 billion won in 2024, more than tripling its revenue in six years.
However, some are expressing concerns that the high dependence on long-running games could lead to a decrease in revenue. In fact, both "Yeolhyeolgangho Online" and "Knight Online" are operated through publishers overseas, and it is difficult to provide services in China without going through a local publisher. As a result, the structure is such that rather than securing revenue through direct publishing, only limited profits are recovered after excluding fees and operating expenses. Consequently, MGAME's operating profit margin dropped from 66.5% in 2022 to 24.9% last year, a decrease of 41.7 percentage points. The cost of sales, which consists of outsourced labor costs, server costs, and license fees, increased nearly 70% from 10.3 billion won in 2022 to 17.5 billion won in 2024.
However, it is noted that due to the characteristics of mid-sized game companies, it is realistically difficult to invest large sums of money into new game development. Since competing with large game companies in securing development personnel or marketing expenses is challenging, a strategy that secures stable revenue based on already validated IPs has become a survival method. In fact, MGAME describes this operational structure as a 'selection and concentration' strategy. The company states that the global competitiveness of its long-standing IPs remains valid, and it plans to expand its mobile portfolio based on this. MGAME's newly launched mobile MMORPG, "Yeolhyeolgangho: Return," reached a peak of 5th in sales rankings on Google Play on the 15th and is currently maintaining the 11th position.
A gaming industry insider noted, "In a situation where the domestic gaming industry is stagnant, and especially when small to mid-sized gaming companies are facing liquidity crises, it is rare to see examples like MGAME, which consistently maintains profitable operations with its own funds. However, while MGAME has seen its major IPs achieve a resurgence after experiencing a decline without distinct new hits since 2013, it is positive for the company to diversify its portfolio into mobile and other areas in preparation for another potential downturn."