NCSoft to unveil NFT-based, play-to-earn games in 2022

NCSoft Corp., South Korea's leading game developer, will dip its toes into the realm of the blockchain and non-fungible tokens (NFT) by releasing play-to-earn games based on NFTs next year.

NCSoft's Chief Financial Officer Hong Won-jun said at an earnings call on Nov. 11 that the company has already completed technology reviews on the creation of its own cryptocurrency available for its NFT-based, massively multiplayer online role-playing games (MMORPG).

"We are also considering applying the play-to-earn game model to all games developed and distributed by NCSoft," Hong added. 

The games, to be released in the first half of 2022 at its earliest, will allow users to make money by trading their game items for a cryptocurrency, or a type of NFTs.

NFTs are blockchain-based tokens that each represent a unique asset such as a piece of art, digital content or media. They cannot be reproduced, altered or counterfeilted, thereby giving the holder full ownership of the digital asset.

The global game industry is experiencing a paradigm shift to the play-to-earn (P2E) model from the pay-to-win model, on which NCSoft's games are based.

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NCSoft expects NFT-based games will provide a new catalyst for its business growth by attracting new gamers and taking commissions from operating an NFT exchange.

Investors welcomed Hong's comments. Shares in NCSoft rallied to close by the daily limit of 30% at 786,000 won on Thursday, despite a double-digit decline in its operating profit and sales in the third quarter. It was the first time for the stock to hit a daily limit-up in six years since Jan. 28, 2015. 

Its latest mobile game Lineage W, launched last week, has swiftly reclaimed the top spot in the country's mobile gaming market. It also set a new record in terms of daily sales on its debut among Korean gaming apps on Google Play Store. Its nine-day cumulative sales have reached 100 billion won since its Nov. 4 debut.

But the new game's successful launch failed to move its shares higher, given the prevailing view that its existing pay-to-win game model appeared to have run its course.

NCSoft's third-quarter operating profit decreased by 56% to 96.4 billion won, with sales down 14.5% to 500.6 billion won.

The global hit of South Korea's first P2E game, Mir4, prompted NCSoft and other smaller game developers to consider shifting into the P2E model.

Wemade Co, the producer of Mir4, an MMORPG mobile game, has become a “ten bagger” stock, with its price rising more than ten times in about one and a half years. Its global version, unveiled last August, adopted the blockchain technology. 

The game allows gamers to mine black iron in the game that can be traded for a game coin called Draco. The coin is exchangeable into a WEMIX token that can be traded on cryptocurrency exchanges.

Com2uS Corp., another South Korean mobile game developer, will apply the P2E model to its new MMORPG "Summoners War: Chronicle" to be unveiled next year.

"The blockchain-based games are becoming a new core business for the gaming industry which has been suffering slow growth," said a gaming industry source.

"But the play-to-earn game model has its limits because they can be marketed only abroad. They are banned in the domestic market on the reason of fuelling speculation."

Meanwhile, Kakao Games Corp. and Gamevil Inc. plan to open NFT exchanges next year.

Write to Joo-wan Kim at kjwan@hankyung.com
Yeonhee Kime edited this article.