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[News Focus] Netmarble enters red in Q4, seeks change in 2020 through overseas biz

Co-CEOs to share burden of game development, overseas launches

Netmarble's 39-story new headquarters is being built in Guro-gu, Seoul, for a projected completion in the third qurater of 2020. (Lim Jeong-yeo/The Korea Herald)
Netmarble's 39-story new headquarters is being built in Guro-gu, Seoul, for a projected completion in the third qurater of 2020. (Lim Jeong-yeo/The Korea Herald)
The year 2020 poses fresh challenges for Netmarble as the company strives to overcome a net loss from the acquisition of a home electronics company, while also adapting to the presence of two CEOs and tackling the global market with more game launches.

Netmarble went into the red in the fourth quarter of 2019, having recorded a quarterly net loss of 6.3 billion won ($5.3 million) and a quarterly 10.3 billion won net loss attributable to its controlling shareholder. The loss resulted in part from the Coway acquisition, as well as from a decline in the value of its overseas assets on lower foreign exchange rates.

Coway is a household electronics subscription platform that rents out water and air purifiers, mattresses and smart closets (which help with clothes maintenance). Netmarble envisions a foray into the internet of things smart home market, hoping to combine its software technologies with Coway’s existing services.

The fourth quarter loss is a one-off event, stressed the Netmarble officials in the conference call that followed the quarterly report Thursday.

Netmarble CEO Kwon Young-sig was joined by the company’s newly appointed second CEO, Lee Seung-won, and its Chief Financial Officer Do Ki-wook.

Netmarble’s revenue in Q4 increased 13.3 percent year-on-year but fell 13.3 percent quarter-on-quarter to 551.8 billion won. Its operating profit went up 32.1 percent compared with the year before but slid 40.5 percent from the quarter immediately before, to 50.2 billion won.

The lower quarterly figures were due to the limited results of fourth quarter launches, the officials said.

The strategy for 2020 is to look overseas, Netmarble said, pointing out that 72 percent of its Q4 revenue came from overseas: 30 percent from North America, 15 percent from Japan, 11 percent from Europe, 9 percent from Southeast Asia and 7 percent from other regions.


(Netmarble)
(Netmarble)


Marvel Contest of Champions accounted for 17 percent, Lineage2 Revolution 13 percent, Seven Deadly Sins 9 percent, Blade 7 Soul Revolution 7 percent, and other games for amounts ranging from 2-5 percent.

To focus on its performance overseas, the company has appointed Lee Seung-won, formerly the vice president for Western business at Netmarble, as co-CEO.


(Netmarble)
(Netmarble)


Kwon, prior to becoming the CEO of Netmarble, had been the head of strategy at CJ E&M’s game business division while Lee had been Yahoo Korea’s head of marketing and CJ E&M’s chief of global strategy before joining Netmarble.

Netmarble has announced plans to launch five new games in the first half of 2020, most of them globally.

The global launch of Magic: ManaStrike was the first to take place, on Jan. 29. Next up is the global launch of Seven Deadly Sins on March 3, then the Korea launch of A3: Still Alive in March. After that, the global launch of Blade & Soul Revolution is set for April, and its US subsidiary Kabam is planning the much-anticipated global launch of Marvel Realm of Champions in the first half of the year.

The Coway acquisition will be partially reflected in Netmarble’s consolidated quarterly reports in the first quarter of this year, and fully reflected starting from the second quarter.

CFO Do said the company still has 2.5 trillion won in liquid assets in the form of cash from subsidiaries and investment assets.

Netmarble will conservatively plan any workforce increase and marketing cost increases for 2020.

Netmarble is currently building a new 39-story headquarters, “G Square,” at the digital complex in Guro, western Seoul, and the company hopes it will become a landmark in the area. Coway will also be moving into the building once construction is complete, within the third quarter of this year.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)
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