| Panoramic view of NCSoft Pangyo R&D Center building. (Photo provided by NCSoft) |
NCSoft is complaining of extreme pain due to a series of bad news. The profitability of the previously solid representative IP ‘Lineage’ series collapsed, and conflict with users, an investigation by the Fair Trade Commission (FTC), sluggish new releases, a plunge in stock prices, and a credit rating downgrade occurred.
According to the gaming industry on the 24th, Korea Credit Rating recently lowered NC’s credit rating outlook from ‘stable’ to ‘negative’. The rating was maintained at ‘AA’ as before, but the possibility of it dropping within six months has increased. The Korea Investment & Securities Reviews cited the following reasons: △increased sales volatility due to changes in mobile game demand trends and intensifying competition, △deterioration in external appearance and operating profitability, and △possibility of increased investment to expand the profit base.
At the same time, “(NC’s) competitive edge in the market has weakened due to the decline in MMORPG market share due to the slowdown in the growth of the mobile game market starting in 2022, especially due to the launch of competing games like Lineage Like,” he said. “This year, profitability has significantly decreased due to the obsolescence of existing flagship games and the absence of new games.” “It will not be easy for sales to rebound in the short term due to the burden of labor costs, which have risen sharply in recent years, and uncertainty over the box office success of new MMORPG games.”
The Fair Trade Commission’s on-site investigation is also a huge burden for NC. Last month, about 1,000 users of ‘Lineage M’ and ‘Lineage 2M’ filed a complaint with the Fair Trade Commission asking the Fair Trade Commission to investigate suspicions of super accounts. The Fair Trade Commission has begun an on-site investigation after accepting users’ claims that it is an unfair practice for a super account created by an administrator to secretly compete with regular users in an MMORPG where competition between users is one of the core contents.
The poor performance of all new works released in recent years also hindered NC. ‘Trickster M’ and ‘Blade & Soul 2’ failed one after another, and the most anticipated new game ‘Throne & Liberty (TL)’ also failed to lead NC to a rebound. In addition, the Lineage series faltered, putting the brakes on growth. As a result, NC’s stock price, which rose to 1,048,000 won in 2021, plummeted to 163,600 won on the 19th, and last year’s sales and operating profit recorded 1.7798 trillion won and 137.3 billion won, a sharp decline of 31% and 75% compared to the previous year.
In this situation, the card NC pulled out was ‘improving constitution’. Last year, NC sold its fandom platform ‘Universe’ and withdrew its AI finance business, which it had been fostering as a new business. Last February, it liquidated its subsidiary Entrivsoft Corporation.
Recently, the company began offering recommended resignations to a number of employees. NC has the largest workforce among major domestic game companies, with over 5,000 employees as of last year. This recommendation for resignation is interpreted as a move to resolve cost issues, including labor costs.
Currently, proposals have been made not only to non-development workers but also to development workers, and if an employee decides to resign, they will be compensated in the usual form of 3 to 6 months’ salary added to the existing severance pay. The employees who have decided are expected to begin retirement procedures as early as next month.
However, it appears that voluntary retirement for the entire organization is not being considered. This is because there is a possibility that a large number of essential personnel will leave if artificial restructuring is carried out.
In response to this, an NCSoft official declined to comment, saying, “We are reviewing various ways to improve the company’s structure, and no details have been confirmed regarding the workforce (restructuring).”
Reporter Park Joon-young [email protected]
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