Kakao Games posted its first annual deficit since its founding last year. Analysts said results were weak as development expenses at subsidiaries rose amid a lack of new releases. The company projected profitability will improve starting in the second half of this year as it rolls out major new titles.
On the 11th, Kakao Games said last year's annual revenue fell 26% from a year earlier to 465 billion won. It swung to an operating loss of 39.6 billion won from a year earlier.
Despite aggressive structural reforms and expense efficiencies last year, delays in launching major new titles appear to have led to the company's first deficit since its founding. "Odin," a key intellectual property (IP) that accounts for a significant share of total revenue, entered a stabilization phase with declining revenue as the service lengthened, and lackluster updates and the failure to release supporting new titles on time also affected results.
Fourth-quarter revenue came to 98.9 billion won, down 26% from a year earlier. In particular, the mobile game institutional sector recorded 69 billion won, a 39% drop from a year earlier, due to poor performance of new releases.
The operating loss widened to 13.1 billion won. On a quarterly basis, it marked five straight quarters of deficits since the fourth quarter of 2024.
Cho Hyuk-min, chief financial officer (CFO) of Kakao Games, said on a conference call held right after the earnings release that "2025 was a year of strengthening the structural fundamentals by streamlining the portfolio through selection and concentration and securing flexibility in resource management," adding, "In 2026, we will improve profitability and move to normalize results."
Kakao Games sold equity stakes in Sena Technologies, Kakao VX and Neptune last year to exit noncore businesses, and it strengthened its structural base by refocusing its strategy on its core business of games. This year, it plans to diversify game genres and accelerate platform expansion into PC online and consoles. After ensuring the quality of major games and validating them in the market, it plans to target the global market from the second half to secure growth momentum.
Cho, the CFO, said, "The exact reason for last year's deterioration in results was that new releases were delayed while development expenses at development subsidiaries were rising," adding, "In the first half, we will maintain a conservative expense execution stance, manage profit and loss volatility on the stable revenue base of key titles, and from the third quarter, we will launch major new titles to speed up profitability improvement."
In the first quarter, it will introduce SMiniz, a mobile casual game inspired by artists under SM Entertainment. In the second half, it will release the major new titles "OdinQ" and "ArcheAge Chronicle," being developed by Lionheart Studio, and expand key IP such as "Odin" and "ArcheAge" to global platforms including PC online and consoles.
It also plans to sequentially unveil new titles including the strategy adventure role-playing game (RPG) "Dungeon Arise," the 2.5D massively multiplayer online role-playing game (MMORPG) "Project OQ," the open-world zombie survival simulator "God Save Birmingham," and the subculture-raising simulation "Project C."
Kakao Games said marketing expenses are expected to increase from the second quarter as new titles launch, but on an annual basis they will be managed at around 10% of revenue.
Han Sang-woo, CEO of Kakao Games, said, "We plan to make visible the new titles we have been preparing, building on the structural reforms we have established so far," adding, "We will focus our capabilities on game development to expand our own IP and present well-made new titles diversified by platform, genre and region."