Game industry leaders NCsoft and Nexon, which recorded satisfactory performances in the third quarter, are scheduled to embark on aggressive corporate merger and acquisition (M&A) to expand their business areas to include mobile game service.
Having reported performances for the third quarter on the 13th, the two companies unanimously pointed out mobile game as a next-generation growth item and announced extensive investment strengthening plans.
In particular, NCsoft decided a M&A for mobile game service on the basis of its increased cash retention rate.
“We increased our cash retention rate over the last several years in order to achieve growth through active M&A,’ said NCsoft Executive Manager Hyeon Mu-jin at a conference call for the performance report on the 13th. “(M&A) reviews are being actively carried out internally.” NCsoft’s cash retention amounts to approximately KRW 750 billion. With the treasury stock of KRW 300 billion added, NCsoft’s available fund exceeds KRW 1 trillion.
In the third quarter, NCsoft recorded KRW 211.6 billion in sales, KRW 81.3 billion in operating incomes and KRW 75.7 billion in net profit for the term. As ‘Lineage’ and ‘Aion’ displayed continuous growth, the company achieved the largest quarterly operating incomes since 2013.
Although sales decreased by 1% from the previous quarter, the company’s operating incomes and net profit for the term increased by 25% and 43% respectively. From the same period last year, sales, operating incomes and net profit for the term increased by 25%, 165% and 188% respectively. As for quarterly sales by region, it recorded KRW 138.5 billion of sales in Korea, KRW 38.6 billion in North America and Europe, KRW 10.1 billion in Japan, KRW 2.1 billion in Taiwan and KRW 22.3 billion as royalty.
By product, NCsoft earned KRW 68.5 billion, KRW 14.8 billion, KRW 32.9 billion, KRW 19.8 billion, KRW 19.7 billion, KRW 16 billion and KRW 17.6 billion with Lineage, Lineage 2, Aion, Blade & Soul, Guild War 2, Wild Star and other casual games respectively.
Nexon’s ‘FIFA Online 3’ sales in Korea increased by 64% from the same period last year as a result of the special World Cup demand season. Nexon’s sales in the third quarter were JPY 45.6 billion, which increased by 14% from the same period last year. As for operating incomes and net profit, this company recorded JPY 15.1 billion, which decreased by 7% from the same period last year, and JPY 13.6 billion, which increased by 69% from the same period last year, respectively.
NCsoft and Nexon expressed an intention to focus on mobile game business next year. “The head office and subsidiaries have been preparing for mobile game business for a long time,” said NCsoft Executive Manager Hyeon. He emphasized, “Mobile game will be our new growth item.” NCsoft has set out a plan to release a mobile game ‘Blade & Soul TCG’ using its Blade & Soul intellectual property (IP) right in China next year.
Nexon’s mobile game sales in the third quarter increased by 41% from the same period last year to JPY 9.7 billion. “We forecast that the percentage of mobile sales will increase more as we have plans to release a number of mobile games in addition to our own IP,” said a Nexon insider. “We are prospectively reviewing M&A with related companies in order to actively target the fast-growing mobile game market.”
Kim Si-so | firstname.lastname@example.org