Nexon-Krafton Battle for No. 1 Intensifies... All-Out Push to Protect Profitability with AI, New Games

Nexon Reclaims No. 1 Spot in Q3 on Hits from MapleStory and FC
"Weeding Out Projects; Reallocating Staff and Budget"

Krafton Operating Profit Falls 35% as Costs Rise
"Monetizing New AI Businesses and Rolling Out New Titles"

Competition between Nexon and Krafton for the top spot in South Korea's gaming industry is intensifying. Krafton surpassed Nexon in revenue for the first time ever in the first half of 2026, but Nexon reclaimed the top spot in the third quarter. Facing the shared challenge of protecting profitability, both companies are banking on more efficient development through artificial intelligence (AI) and hits from new titles based on key intellectual properties (IPs) to turn things around.

Nexon's Pangyo headquarters. Photo courtesy of Nexon.

According to the gaming industry on November 11, Nexon posted revenue of 1.2312 trillion won (138.4 billion yen) and operating profit of 371.8 billion won (41.8 billion yen) in the third quarter. The figures were up 10.5% and 5.5%, respectively, from the same period a year earlier. Nexon's cumulative revenue for the first three quarters reached 3.792 trillion won, surpassing Krafton's 3.633 trillion won and restoring its position as the industry's top company.

The MapleStory franchise, enjoying a second heyday, was a key driver. Nexon CEO Lee Jungheon said on the previous day during an earnings conference call, "MapleStory's performance in Taiwan and China was a very important factor in our strong third-quarter results," adding, "In China in particular, we saw user inflows of up to nine times those of the local live service." He continued, "The MapleStory franchise will maintain solid performance next year, 2027, driven by growth in 'Classic' and 'World.'"

However, the continued weakness of its existing flagship IP, the PC game Dungeon & Fighter, remains a challenge to address. Lee said, "The PC version of Dungeon & Fighter has remained weak because the major seasonal update launched in April 2026 did not receive a good response from users," adding, "We are putting all our efforts into the seasonal update early next year, 2027."

Nexon has adopted a "focus and select" strategy to improve profitability, reallocating resources after carefully evaluating its development projects. Nexon Chairman Patrick Söderlund said, "While companies across the industry are cutting staff, we chose to retain our workforce." He added, "We set financial targets for every new project and put them through a rigorous approval process, canceling six projects this year, in 2026. Most of our personnel and budget have been reallocated to core titles with strong potential for long-term success."

The company said it is actively using AI technology to boost development productivity. Söderlund said, "AI takes repetitive work off developers' hands and lets them test new ideas more cheaply and quickly," adding, "In the time it used to take to create one game mechanic, we can now make five versions, allowing us to take more creative risks before full-scale development."

Krafton CI. Courtesy of Krafton.

Krafton recorded its highest-ever cumulative revenue for the first three quarters, but its quarterly operating profit weakened. On a consolidated basis, operating profit in the third quarter was 225 billion won, down 35.5% from the same period a year earlier. Revenue rose 11.6% over the same period to 971.4 billion won. Higher marketing costs, including those related to attending Gamescom, and weak advertising performance at its Japanese subsidiary, ADK Group, both contributed to the decline in its profit margin.

Krafton is seeking a rebound in profitability by monetizing new AI businesses and rolling out a lineup of major new titles. Krafton Chief Financial Officer Bae Donggeun said on an earnings conference call, "We are building a foundation for sustainable growth on the back of steady traffic and profitability from the PUBG franchise." He added, "We will boost our corporate value over the medium to long term by expanding our new-title pipeline and turning AI technology into viable businesses."

Krafton has gone beyond integrating its proprietary language model, Raon-1, and its AI companion technology, PUBG Ally, into games. It has also introduced Kopa, an AI-powered recruitment assessment tool, and Kipeu, a K-pop AI chat service, generating cash flow outside gaming. In addition, the company plans to reduce its reliance on the single PUBG IP by releasing a major year-end 2026 update for Subnautica 2, which has sold more than 5 million copies worldwide, and by rolling out new console and PC titles, including PUBG: Dead Dot Net.

Krafton CEO Kim Changhan addressed market concerns that it could take a long time to recoup the costs of AI investment, saying, "We are considering businesses that can generate tangible revenue quickly." He added, "We plan to present Krafton's overall AI business strategy on another occasion."

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