Netmarble leverages existing IPs, M&As to keep growth

Expectations are growing high that Netmarble Corp., South Korea’s second-largest game developer and publisher, will extend its growth streak through this year, driven by new games reinvented from existing intellectual properties.

According to IGAWorks, a Seoul-based mobile app market analytics firm, on Friday, Netmarble’s “Solo Leveling: Arise” topped the Korean mobile game ranking in revenue in the week between May 13 and 19, elbowing out Chinese hit game “Last War: Survival Game” and NCSOFT Corp.'s “Lineage M.”

The Netmarble game, remade from a web novel originally published on Kakao Page from 2016 to 2018, reaped 35 billion won ($2.6 million) in revenue only a week after its release on May 8.

Korean game industry observers attributed Netmarble’s latest achievement to the game developer’s strategy to leverage popular IPs actively.

The Korean game giant has reinvented not only hit web novels but also well-known web cartoons, animation films and TV series into games.

“The Seven Deadly Sins: Idle Adventure,” Netmarble’s new role-playing game (RPG) that began taking pre-orders on Thursday, is based on the Japanese manga “The Seven Deadly Sins” by Nakaba Suzuki.

“Arthdal Chronicles: Three Factions”, the massively multiplayer role-playing game (MMORPG) that hit the market last month, is a joint project between Netmarble and Korean production company Studio Dragon Corp. inspired by a local TV series with the same title.

The game publisher is also readying to release “RF Online Next,” a revamp of the old title “RF Online” released in 2004, later this year.

GAMERS WELCOME NOSTALGIC CONTENT

Netmarble’s new games inspired by old hit IPs were met with enthusiasm, helping the company post operating profit for two straight quarters in the first quarter of this year ended March after snapping its seven-quarter losing streak in the final quarter of last year.

Netmarble reported an operating profit of 3.7 billion won in the first three months of this year, swinging from a loss of 28.7 billion won in the same period last year. Its revenue stood at 585.4 billion won, down 2.9% on-year.

As it is set to roll out at least five more new titles by the end of this year, including MMORPG “Raven 2,” the outlook for the company’s earnings looks rosy.

FAST ADOPTION OF NEW GAME TRENDS

Netmarble has been also fast in adopting a new game trend, resulting in an improvement in earnings.

The idle RPG game based on its original title “Seven Knights” immediately grabbed attention after its launch in September last year, leading the country’s idle game fad. Idle games were mainly developed by small, independent game companies before the Netmarble game’s release.  

Reflecting the growing popularity of the idle games, Netmarble released another idle RPG based on “The Seven Deadly Sins.”

“Netmarble is quick at commercializing games that remain unnoticed during the development stages if they are well received during internal tests,” said an official from the game industry. “The company is also quick at making a business transition thanks to its massive distribution capability.”

The game giant will discontinue “Seven Knights” games as of August this year to focus on new titles.

M&A DEALS FINALLY PAY OFF

Netmarble's M&A drive has also borne fruit lately.

Hong Kong-based global mobile casino game company SpinX Games, acquired by Netmarble for 2.6 trillion won in 2022, delivered a net profit of 153.9 billion won in 2023, up 27% from the previous year.

Thanks to SpinX, the Korean game giant has become the world’s No. 3 mobile casino game company.

Netmarble’s surprising takeover of Korean appliance rental company Coway Co. for 1.7 trillion won in 2020 has proved to be a good deal after the latter reported its best-ever sales and operating profit of 1 trillion won and 193.7 billion won, respectively, in the first quarter of this year.

The game giant has also been prudent in spending. It spent 670.8 billion won in research and development last year, down 22% from the previous year.

Netmarble’s Chief Financial Officer Do Gi-wook said during an earnings conference call earlier this month that the company would maintain its current staff size, with no increases.

“With higher revenue, the company will manage to improve its profitability,” added Do.

It also sold off its stakes in HYBE Co., the Korean entertainment behemoth behind global sensation boy group BTS, to raise 743.4 billion won.

Cheering the company’s solid earnings and continued improvement in financial soundness, investors rushed to pick up its shares.

Netmarble stock hit a 52-week high of 72,400 won on May 9, nearly doubling from the 52-week low of 36,750 won recorded in October last year.

Its shares ended down 0.2% at 64,400 won on Friday.

Write to Ju-Hyun Lee at deep@hankyung.com

Sookyung Seo edited this article.