The game industry is rolling out shareholder return policies one after another to counter prolonged stock underperformance. Given the sector's nature—where earnings and share prices are highly volatile depending on whether new releases are hits—it is difficult to lift share prices with one-off results alone. Companies are seeking to restore investor sentiment and enhance corporate value through medium- to long-term shareholder return plans that encompass dividends and share buybacks and cancellations.
On the 25th, according to the game industry, Kakao Games held an extraordinary shareholders meeting the previous day and passed two items to pursue a medium- to long-term shareholder return policy. Accordingly, it will reduce about 1.54 trillion won in capital surplus and transfer it to retained earnings, securing funds that can be used for future shareholder returns. Earlier, Kakao Games canceled 500,000 treasury shares last month, and the remaining roughly 350,000 shares will be used to operate a restricted stock unit (RSU) program for employees.
Executives also bought treasury shares, emphasizing a commitment to boosting shareholder value and responsible management. Co-CEOs Kim Tae-hwan and Lee Si-woo and Chief Financial Officer (CFO) Shin Kwon-ho recently purchased a total of 500 million won worth of treasury shares through on-market partitioning buys. As a result, Kim and Lee now hold 16,793 shares and 23,358 shares, respectively. This is Kim's first time holding treasury shares since taking office.
Neptune also held a board meeting on the 13th and decided to cancel 1,081,286 of its 1,801,049 treasury shares. The amount equals about 2.31% of total shares outstanding, and treasury shares will fall to 719,763 after the cancellation. Since last year, Neptune has been securing resources for shareholder returns by reducing a total of 220 billion won in additional paid-in capital and transferring it to retained earnings.
Pearl Abyss, which scored a global hit this year with "Crimson Desert," said it will pay its first cash dividends since its founding. The company said it plans to pay each year the larger of 10 billion won or 10% of net income. Earlier, in June, Pearl Abyss also canceled about half—1,403,945—of its 2,803,945 treasury shares, and in the second half it plans to buy an additional 100 billion won worth of treasury shares.
Krafton in February announced a policy to invest more than 1 trillion won over three years from 2026 to 2028 to enhance shareholder value. That is up 44% from the previous three years. During this period, the company will pay 100 billion won in cash dividends annually for a total of 300 billion won and acquire more than 700 billion won in treasury shares for full cancellation. For the first time since its founding, the company is paying cash dividends while also launching a 200 billion won share buyback in February this year, carrying out an aggressive shareholder return policy.
Smaller game companies are also expanding shareholder return policies. Mgame paid a quarterly dividend for the first time since its founding last month. The dividend was 110 won per share, totaling 2 billion won. On the 15th, it canceled 430,000 treasury shares, and by the end of September it plans to buy an additional 503,778 shares, investing about 2 billion won. Com2uS canceled treasury shares equal to 5.1% of total shares outstanding early this year, and afterward, CEO Nam Jae-gwan bought 10,100 treasury shares on the market, lifting the equity stake to 0.1%.
The backdrop to game companies expanding shareholder returns is the prolonged slump in game stocks. Domestic game stocks have remained undervalued despite improved earnings. Analysts say it is hard to restore investor sentiment with one-off results in a sector where earnings and share prices are highly volatile depending on whether new releases are hits. In response, game companies are moving beyond ad hoc measures to adopt medium- to long-term policies that present in advance the criteria and timelines for dividends and share buybacks and cancellations, increasing the sustainability and predictability of shareholder returns.
The maturation of Korea's game industry is also a key reason behind the expansion of shareholder returns. In the past, game companies concentrated the cash they earned on developing new titles, acquiring studios, and securing intellectual property (IP). But as major game companies have scaled up and generated stable cash flows based on long-running IP, they are responding to market demands to balance growth investment with shareholder returns.
A game-industry official said, "In the past, reinvestment for future growth, such as developing new titles, was prioritized, but recently, returning stable revenue to shareholders has also become an important criterion for evaluating corporate value," adding, "Moves by game companies to pursue both earnings growth and shareholder returns will continue for the time being."