Sat. Nov 26th, 2022

Amid the increase in labor costs of most game companies, game companies that failed to produce new box office hits recorded operating losses. Game companies are planning to rebound their performance through a new offensive, but it is not expected to be easy to rebound in a short period of time.

According to an electronic announcement on the 13th, a total of four places recorded operating losses in the second quarter, including Netmarble, Pearl Abyss, Dev Sisters, and Com2us Holdings. Netmarble posted a deficit of 34.7 billion won this quarter. It has increased its deficit since it turned into a deficit for the first time in 10 years in the first quarter.

Pearl Abyss, which postponed the release of its new console “Red Desert” last year, recorded an operating loss of 4.2 billion won due to the prolonged gap in its new work. Deb Sisters, which recorded all-time sales due to the success of Cookie Run: Kingdom last year, lost 2.2 billion won in operating losses. Com2us Holdings has been losing 1.6 billion won in operating losses in the first quarter.

The rise in operating costs due to increased labor costs led to worsening performance. According to the current status of labor costs in the second quarter, Netmarble was in the order of 189.7 billion won (22.7% ↑ compared to the same period last year), 50.6 billion won (10.4% ↑), 17.2 billion won (7.3% ↑) for Dev Sisters, and 12.9 billion won (20.7% ↑).

The company expanded its workforce by entering new projects and new businesses, but its performance was hampered by rising labor costs. Dev Sisters is developing six new lineups, and has turned into a deficit with the addition of localizing costs for Cookie Run’s overseas attack. Com2us Holdings announced that it has hired more manpower by focusing on developing mainnet including blockchain business.

In the case of Pearl Abyss, the surge in bonuses, including its own stock program (stock grant), affected it. Cho Seok-woo, chief financial officer (CFO) of Pearl Abyss, explained in a conference call, “Labor costs have increased by paying 8 billion won in incentives, including treasury stocks.”

Game companies are planning to streamline labor costs from the second half of this year. Netmarble announced that it will manage the manpower employed by each developer at the group level. This is expected to lead to a reduction in manpower recruitment. “Each developer has been actively recruiting as an investment concept for developing new products, but we will limit the increase in manpower at the group level considering the recent situation,” said Do Ki-wook, CEO of Netmarble at a conference call in the second quarter.

Leave a Reply