As the won-dollar exchange rate continues to soar in the 1,500-won range, Korea's game industry is quietly benefiting from foreign exchange gains. Krafton said every 5% rise in the won-dollar exchange rate increases its net income by about 61.3 billion won. Given the nature of the game industry, it is not directly affected by raw material price fluctuations from a stronger dollar, and with a high share of overseas sales, it can benefit from the exchange rate.
According to the Seoul foreign exchange market on the 15th, on the 12th the won-dollar exchange rate closed at 1,519.8 won. The won-dollar rate has stayed in the 1,500-won range for the 20th trading day since on the 15th of last month. On the 5th, it surged to 1,559.5 won during trading, the highest level since the financial crisis. The rate, which was in the 1,400-won range early this year, has faced stronger won-weakening pressure due to economic uncertainty compounded by Middle East tensions.
In general, a weaker won is negative for most domestic corporations, but some game companies expect to improve results through foreign exchange gains. Domestic game companies earn a significant portion of their revenue overseas, and, given the nature of intellectual property (IP), they are not directly affected by raw material price fluctuations. According to the Korea Creative Content Agency (KOCCA), in 2024 the domestic game industry's exports totaled $8.50346 billion (about 11.5985 trillion won), accounting for 60.4% of total content industry exports.
Accordingly, game companies with a high share of overseas sales see results expand further from exchange rate effects when game sales rise. Even without changes in volume, they can enjoy increased sales and profit when converting overseas revenue into won. In particular, Krafton, Pearl Abyss and DoubleU Games are seen as major beneficiaries of foreign exchange gains from a stronger dollar, as overseas sales account for most of their total revenue.
Pearl Abyss posted first-quarter revenue of 328.5 billion won and operating profit of 212.1 billion won, with operating profit soaring 26-fold from a year earlier, marking a successful turnaround. Crimson Desert, released in March, became a hit mainly in the West, pushing the overseas sales share to 94%. As most revenue came in dollars and euros, foreign exchange gains from the rising exchange rate also supported the improvement in results.
On top of that, the value of the company's foreign-currency assets is rising. Pearl Abyss held 548.8 billion won in foreign-currency assets in the first quarter on a won-converted basis, 91% of which was in dollars. In its first-quarter report, the company said a 5% rise in the won-dollar rate would increase pre-tax total comprehensive income by about 23.2 billion won. With the strong-dollar trend continuing into the second quarter, the exchange rate effect is expected to persist.
Krafton reported first-quarter revenue of 1.3714 trillion won and operating profit of 561.6 billion won, achieving its best quarterly results ever. Its flagship intellectual property (IP), PUBG: Battlegrounds, remains highly popular, especially in China and India. In particular, Krafton earns a large share of its revenue as royalties from overseas publishing partners, so sales convert directly into profit without additional expense burden, amplifying the impact of the rising exchange rate.
In fact, Krafton said in its first-quarter report that it recorded 52.7 billion won in translation gains on overseas operations as it converted overseas subsidiary results into won due to the high exchange rate. Krafton analyzed that a 5% rise in the won-dollar rate would increase profit or loss for the period by about 61.3 billion won.
DoubleU Games posted first-quarter revenue of 204.9 billion won and operating profit of 68.4 billion won, up 26.6% and 25.1%, respectively, from a year earlier, both reaching a record high for a quarter. Notably, all of DoubleU Games' revenue comes from overseas. IPs such as DoubleU Casino and DoubleDown Casino generate stable dollar revenue in the United States, and i-gaming subsidiary SuperNation is also generating foreign-currency revenue in the United Kingdom and Sweden. As a result, a higher exchange rate translates directly into improved results when converted into won.
DoubleU Games manages a significant portion of its cash as dollar assets and maintains a no-debt management stance, so it has little burden from foreign-currency liabilities due to exchange rate fluctuations. In fact, the company recorded 5.5 billion won in foreign exchange gains and 11.7 billion won in translation gains in the first quarter, benefiting from the higher exchange rate.