By Yoon Sung-won
NCSOFT posted 30.4 billion won ($26.91 million) in operating profit in the first quarter, down 59.8 percent from 75.8 billion won last year, on poor online game sales, the company said Thursday.
Sales stood at 239.5 billion won, down 0.6 percent from a year earlier, and net profit was 17.4 billion won, decreasing also by 73.7 percent year-on-year, the game company said in its regulatory filing.
The poor quarterly earnings came as a shock as they are way below the market prospect of 80 billion won in operating profit and 260 billion won in sales. Poor sales of existing online games and increased payroll on a special incentive have led to the profit decrease.
In particular, the sales generated by "Lineage," which has been NCSOFT's largest income source for more than a decade, stood at 51.5 billion won, down 35 percent from 78.9 billion won the year before.
On the contrary, the royalty gain was 63.5 billion won, a 53 percent jump from the previous quarter's 41.5 billion won. The increased royalty gain was largely made from its partnership with Netmarble Games. NCSOFT is estimated to have collected 40 billion won in royalties in the first quarter by providing its intellectual property for "Lineage 2" for Netmarble's mobile game "Lineage 2: Revolution."
NCSOFT said the profit will rebound as it is aggressively pushing the mobile game business.
The company is planning to roll out the much-hyped mobile game "Lineage M" in Korea in mid-June. Based on features of the computer online version of "Lineage," the game has drawn high expectations in the market, with over 3 million users already having pre-booked to play it.
"We will expand our presence in the mobile game market by releasing Lineage M in the first half of this year," NCSOFT CFO Yoon Jae-soo said in a conference call, Thursday. "The game is drawing much attention as it has attracted a record number of users pre-booked for it."
Besides "Lineage M," NCSOFT has released "Lineage: Red Knights," "Final Blade" and "Pro Baseball H2" in the Korean mobile game market. In particular, "Pro Baseball H2" is ranked at the ninth spot on the top 10 grossing chart as of Thursday.
The CFO said it will release more diverse mobile and virtual reality (VR) games based on intellectual property of its existing games such as "Blade & Soul" and "Aion."
Despite the decrease in profit, NCSOFT closed at 372,000 won on the Seoul bourse, Thursday, up 2.62 percent from the day before, on the back of expectations over the success of "Lineage M."