NCSOFT headquarters in Pangyo, Gyeonggi Province / Courtesy of NCSOFT

NCSOFT is gearing up for a rebound next year by decentralizing its workforce and development capabilities and cutting its payroll expenses, which have been weighing heavily on the game developer's profitability.

NCSOFT held a shareholder meeting on Thursday, approving its October proposal to create four spinoff companies for more agile operations.

The spinoff companies are three game studios — FirstSpark Games, BigFire Games and Ludius Games — and an artificial intelligence (AI) development firm named NC AI. They are scheduled to begin operating as unlisted companies on Feb. 1.

FirstSpark Games will be in charge of the operation of the massively multiplayer online role-playing game (MMORPG) Throne and Liberty. BigFire Games will operate the third-person shooter title LLL, currently under development.

Ludius Games will be in charge of running the real-time strategy game TACTAN: Knights of the Gods. NC AI, which previously existed as NC Research under its headquarters, and will be tasked with upgrading the scalability of NCSOFT's large-scale language model, Varco.

NCSOFT co-CEO Kim Taek-jin said the spinoffs are aimed at "ensuring the company's creativity and ambition, as well as securing the groundwork for sustainable growth," adding that those independent studios will pursue the company's future intellectual property (IP) development.

These spinoffs represent the latest phase in NCSOFT's ongoing structural overhaul. NCSOFT already established two spinoff companies in August: NC QA, responsible for quality assurance services, and NC IDS, which manages application software development and supply.

The restructuring efforts align with the company's view that its workforce is excessively centralized to its headquarters compared to other game companies, burdening its expense structure.

As of the third quarter, labor accounted for 43 percent of NCSOFT's total operating costs, while those of similar-sized game studios, remained below 40 percent. This cost structure led to a sharper decline in the company's operating profit compared to its revenue, primarily due to high fixed costs, including payroll expenses.

To address this problem, the company launched voluntary redundancy programs to streamline its organization. While this raised market concerns about the game developer's future, analysts believe the company has successfully seized a crucial opportunity for its survival.

"NCSOFT is expected to achieve meaningful profit growth in 2025 by expanding revenues through the release of new titles, while reducing fixed costs through voluntary retirements," Kyobo Securities analyst Kim Dong-woo said.

NCSOFT plans to expand its portfolio next year with the release of major new titles. The company plans to launch three in-house developed titles: the MMORPG Aion 2, the LLL and the TACTAN. Additionally, in collaboration with external studios, NCSOFT will release five more games in the second half of 2025, including the Breakers and new genre titles based on the company's existing IP.