NC soft held a conference call for the third quarter of 2022 for domestic and foreign investors on the 11th.
The conference call was attended by major executives, including Hong Won-jun, CFO, and mentioned 3Q sales and major games and new launches in the second half.


November 11, 2022 (Fri) 09: 00 ~ 10: 00

True Seek: Hong Won-jun CFO, Lee Jungkook, IR

Announcement: NC soft 3Q performance and game launch schedule/strategy

■ NC soft TL, launch target in the first half of 2023

NC soft recorded sales of KRW 604.4 billion, operating profit of KRW 144.4 billion, and net profit of KRW 182.1 billion. Sales decreased by 4% Qom, and operating profit and net profit increased 17% and 53%, respectively. Compared to the same period last year, sales grew 21%, operating profit 50%, and net profit of 83%.

Mobile game sales are 437.3 billion won. It decreased by 8% Qom to a 32% increase from the previous year. By product, Lineage W W197.1bn, Lineage M 1465 billion won, Lineage 2M 85.6 billion won, and Blade & Soul 2 are 8.1 billion won.

PC game sales are Lineage 25.5 billion won, Lineage 2 23.4 billion won, Ion 17.5 billion won, Blade & Soul 5.9 billion won, and Guild Wars 2 is 24.8 billion won.

Lineage W continued to sales with updates and global IP affiliates. Lineage W accounts for 33%of its total sales in the third quarter. Lee Jungkook said, Berserk collaboration and Iran update received a good response.

Lineage M has increased by 4% Qom, recording three consecutive quarterly sales growth. Lee Jungkook said, Since the beginning of the year, the purchase activity has increased naturally.

The 10th anniversary of its launch, Guild Wars 2 grew 29% year-on-year. Lee Jungkook said, Guild War 2 is recognized as a core MMORPG in the Western market.

Ion increased 23% Qom due to the classic server update effect. Lee Jungkook said, In the fourth quarter, we will continue to achieve positive results with new occupations and large-scale updates.

Regional revenue recorded KRW 375.4 billion in Korea, KRW 140.8 billion in Asia, and KRW 44.8 billion in North America. Royalty sales are 43.3 billion won. It has grown 62% in North America and 48% in Asia. Overseas and royalty sales account for 38%of total sales.

Operating costs fell 9% Qom. Marketing costs recorded 35% Qom and 28% year-on-year to 38.9 billion won through efficiency. Labor costs also fell 8% Qom.

NC soft is developing a new PC-console ‘Throne and Liberty (TL)’ with the goal of launching in the first half of 2023. In 2023, the company plans to showcase various genres such as puzzles, collectible RPGs, and blank field action.

Lee Jungkook said, In this quarter, NC soft has achieved more than the market expectation. We are trying to meet global gamers through various platforms by applying NC’s unique features to various genres.

■ Q&A
Q. Please explain about ‘TL’ PC-console simultaneous launch plan, global direct target area and business model. In addition, how do you see the possibility of a carnival rating with NC’s game?

Hong Won-jun CFO = ‘TL”s PC-console simultaneous launch plan has no change. The ‘TL’ global publishing agent will soon be announced. There is little change in the existing plan. Global plans to cover the whole.

The business model will be friendly to the global market unlike before. It actively reflects the characteristics of the global market user. It is promoted in consideration of global universality, not MMORPG specificity in the Korean market and Asia.

As a result, ‘TL’ is expected to generate sales longer than the existing performance, rather than the initial sales concentration, as we expected, as we expected.

For the carnivalation, TL is a PC-console and business model. In addition, the loyalty of the existing game, the stable game system that NC soft is proud of, and the balance maintenance are excellent, and the carnival rating resistance is high. In addition, TL thinks that there is little concern for the Carnival Affairs because it targets new users who have not encountered MMORPGs in the global market.

Q. The LLL was seen as a shooting genre. Many game companies have recently focused on shooting genres. What is the part that NC can differentiate?

Lee Jungkook = Many companies are developing a shooting genre game. The important thing is that the shooting genre is a large market in consoles and PCs. Shooting is a genre that is more popular than MMORPG. When a model that generates sales by living it will be a very big market.

As you know, the shooting is authentic. The reason why the shooting can be transformed from the console to make a live service to generate continuous profits, which seems to be the reason why Korean game companies with strength in live services are strategically developing shooting games.

So, I think NC soft is one of the most common companies mentioned. Much information will be released on November 14, but we think we have found the greatest strengths that can be differentiated.

Hong Won-jun CFO = 14 days on the 14th video, and there is a back part. Looking at the back part, you will fully find out how the LLL is trying to differentiate it from the existing shooting game. The video is very long and in-game video, not cinematic.

‘Project D’ is called Triple A-class mobile game, but please share specific genres and expected launch schedules.

Lee Jungkook = ‘Project D’ is a game with great importance in the pipeline prepared by NC soft. As mentioned earlier, I think that the genre of ‘Project D’ in the mobile game is also a big genre.

Looking at the research paper, I was concerned that NC made a big profit in MMORPG. When the strengths of ‘Project D’ are in operation, I think it will bring more than expected.

Q. What is your position on collaboration with external large game companies?

Hong Won-jun CFO = Global collaboration proposals come a lot of thanks to NC’s development of game development. Soon there will be a great cooperative announcement with a very good global partner. I can’t disclose the company’s name now, but investors will be satisfied with ‘NC is drawing this big picture’.

In the end, TL’s cooperation with global partners in terms of publishing is to target the global market properly.

Q. In the TL video, the existing lineage system, dolls and transformation, and Ain Aside elements are melted. For this reason, some markets seem to be dissatisfied. Please explain TL’s business model again.

Hong Won-jun CFO = TL’s business model is not the same as the previous game. It will soon be announced in the division. If it is the same as before, NC is the only to repeat the existing method in the US market. We will soon borrow a chance that it is not concerned.

Q. Guild War 2 appears to be a successful game, but does NC’s global business reflect Guild 2 business know-how?

Hong Won-jun CFO = TL is approaching a new concept of global publishing partner. It is a case by case that other games will do with NC West. First, TL is focusing on global partnerships.

Q. In the recent Western market, single play-based shooting and adventure are strong. TL or Ion 2, on the other hand, is MMORPG. Please tell us a plan to appeal differently from the current trend in the Western region.

Hong Won-jun CFO = TL has been enhanced with PVP and EVE. In particular, I know that it is important as a console. The immersive narrative has also been enhanced.

The action side is very different. It is very different from what you have done.

If the MMORPG is going to work in the West, NC said that the growth of the steam platform and the in-game item sales data increased. Therefore, when PVP or EVE is strengthened to a high-quality MMORPG, and the narrative and action levels are higher, there may be growth for the genre itself. It is expected to be hybridized and differentiated from the existing.

Lee Jungkook = Ion 2 cannot share specific details, but it is the next-generation RPG based on Unreal Engine 5. It aims to launch the world simultaneously. The platform is a PC-mobile multi-platform game.

The important thing is MMORPG, which has already achieved sales of 100 billion won in North America, 10 years ago. Recently, the growth of the MMORPG market in North America is beyond imagination. It’s not just 2 to 3 times larger. Customers in the market, which are larger than in the past, are waiting.

In terms of overseas industry experts, it is expected to grow bigger in the ‘Won sin’ market. In the Western region, RPG’s multiplayer elements are growing, and it is becoming more important to generate sales with live services. ‘Ion 2’ is being developed to meet such market environment changes.

‘Ion 2’ is developing hard to become an important MMORPG in the Western market, which is different from 10 years ago.

Q. Get the next quarter labor cost and marketing cost guide.

Hong Won-jun CFO = This year, we are working on a systematic and reasonable review of costs. Some are appearing little by little. Since NC is a big company, I think it will work from next year. In that sense, we are making company-wide efforts, and the results will be reflected in the medium to long term.

Since the overall scale is rationalized and systematic, it is’ NC’s Cost Concons