Game Companies' Market Cap Halved in a Year [NC]

Impact of User Attrition and Uncertain Growth Prospects
Krafton, Netmarble, Kakao Games, Wemade, and Others

Over the past year, while the KOSPI surged nearly 200%, listed Korean gaming companies have faced halved stock prices due to user attrition and uncertainty over future growth. This poor performance, despite record-breaking earnings, illustrates the current weakened state of the K-game industry.

According to the Korea Exchange on June 26, Krafton, the top Korean gaming company by market capitalization, recorded a market cap of 9.5967 trillion won based on the previous day's closing price of 208,000 won. For the first time since January 2024, the 10 trillion won threshold has been broken. The stock price continued to fall by nearly 3% during the morning session. Compared to a year ago, when its market cap was in the 17 trillion won range, Krafton's value has been cut in half.

Other gaming companies are facing similar circumstances. Over the same period, Netmarble's market cap dropped from the 5 trillion won range to 2.9496 trillion won, while Kakao Games plummeted from 1.5844 trillion won to 686.9 billion won—a decline of more than 60%. Wemade's market cap has also more than halved over the past year to 515 billion won.

This year, only Pearl Abyss—with the success of "Crimson Desert"—and NC, which has implemented intensive organizational restructuring, have maintained or increased their market cap compared to June last year. Pearl Abyss continues to stay in the 2 trillion won range, while NC has grown from the 4 trillion won range to the 5 trillion won range.

The sharp decline in the gaming industry's market cap reflects the market's assessment that current strong earnings do not guarantee future growth. The profit model (business model) centered on probability-based items, which was previously a growth formula, has reached its limits, and users are leaving in search of other forms of entertainment, leading to structural stagnation. The rapid growth of China's gaming industry is also impacting the K-game sector.

Faced with crisis, gaming companies have turned to aggressive marketing tactics, which have backfired. A notable example is the recent "promotion BJ" practice found in Netmarble's new title "Soul: Enchant." In this scheme, marketing funds paid by the game company to YouTubers and internet broadcasters (BJs) are used for in-game purchases, artificially boosting app market sales rankings and distorting market success indicators. Previously, NC and Kakao Games were also embroiled in similar controversies.

The Korea Game Users Association stated in a declaration, "Rankings achieved by deceiving consumers are packaged as if they are 'must-play' mainstream games, misleading public perception," and added, "Such practices undermine the fundamental fairness of games and must be stopped."

This content was produced with the assistance of AI translation services.