Netmarble Games has shown a successful combination of solid content intellectual property and well-proven business models can be a game changer by breaking multiple Lineage 2: Revolution.”
In a recent press conference in Seoul, the Korea’s top mobile game company said it posted USD 174.79 million (206 billion won ) in sales through the “Revolution” in a month since its release on Dec. 14 last year. The sales volume is as large as those by top grossing mobile games in China and the United States, which have much greater markets than Korea, it said.
The amount is compared to Niantic’s globally hit augmented reality game “Pokemon Go,” which posted about 243.7 billion won in sales in a month. Except for “Pokemon Go,” no other game has recorded greater sales than the “Revolution.”
Netmarble Games chalked up 100 billion won in sales with the “Revolution” in 14 days after its debut to renew its own record set by its own game “Evilbane,” which reached the 100 billion won mark in 99 days since the launch.
As an unlisted company, Netmarble Games has no obligation to release its sales performance. But it has continued to disclose its financial reports to show off its explosive growth in recent years. “Despite these figures are corporate secrets, we publicize them not only to meet high interests from the industry and the media but also because we believe the ‘Revolution’ has made history in the game industry,” Netmarble Games CEO Kwon Young-sik said.
Netmarble Games announced the development of the “Revolution” in July 2015. The company has gained access to the “Lineage” series, which have established a solid fandom among Korean gamers during its decade-long history, through a collaboration deal with NCSOFT in late 2014. The “Revolution” had drawn heated expectations as it attracted millions of preorders from users in the domestic market even before its launch.
When it was rolled out on Dec. 14, users overcrowded 100 servers to cause service errors. The CEO said the “Revolution” notched 7.9 billion won in the opening day sales and attracted more than 5 million users in a month. The number of daily active users has reached 2.15 million in the fifth week since the release. The number of maximum simultaneous connections was some 740,000 in the fifth week.
Kwon stressed that the user persistence rates were another factor that demonstrates the success of the “Revolution.” The rate of those who have ever paid for the game was 92 percent in the 14th day since release while that of those who play the game without purchasing any pay items was 76.1 percent.
“This shows that many users are playing the game even without spending money for it,” he said. “This index also dispels criticisms that those who do not pay for the items cannot enjoy the game properly.” In time with the press conference, Netmarble Games also announced its estimated earnings. The company said it posted 465.8 billion won in sales and 116.1 billion won in operating profit in the fourth quarter. Throughout 2016, the company racked up 1.5 trillion won in sales and 292.7 billion won in operating profit, up from 1.07 trillion won in sales and 225.3 billion won in operating profit in 2015.
The proportion of overseas sales almost doubled from 28 percent in 2015 to 51 percent last year.
Citing his ambitious remark in the past that he aims to boost the annual sales to 5 trillion won by 2020, Netmarble Games’ founder and board chairman Bang Jun-hyuk said, “Our average annual growth rate reaches 61 percent. I believe that we have marked a milestone in achieving the 5 trillion won goal and expect to see even greater growth rate in the future.”
Netmarble Games have previously announced that it seeks for the initial public offering (IPO) in the first half of this year. Based on its explosive growth in recent years, market expectations have been that the company’s market cap will reach 10 trillion won.
“Netmarble Games is expected to record 2.6 trillion won in sales and 826 billion won in operating profit this year, up 71 percent and 182 percent from last year, respectively,” KTB Investment & Securities analyst Lee Nam-joon said in a report. “Its market cap is highly likely to be between 10 trillion won and 12 trillion won.”
About concerns that such high expectations are “inflated,” Bang said the company’s value should be estimated on its potential.
“We have come up with hit titles for higher than 60 percent average growth rate,” Bang said. “I believe such high expectations are based on recognitions over our competitiveness, potential for growth, portfolio and global expansion.” On Jan. 13, Netmarble Games said it has become the world’s fifth-largest game publisher.
Citing a data by global mobile application analytics company App Annie, Netmarble Games said it ranked fifth as of December last year, following China’s Tencent and NetEase, as well as Finland’s Supercell, which has recently been acquired by SoftBank.
Bang said the company mission for this year is to produce mobile role-playing games (RPGs) that can hit in larger overseas markets including Japan, China and North America. To this end, the Netmarble chief stressed that it will release mobile RPGs that are thoroughly designed for each market, not ones with partially modified features.
“Even though RPGs are winning jackpots both in Japan and China, many Korean game companies try to sell Korean titles and just give up after early failures. They also disregard the North American market, saying that RPGs cannot be successful there,” Bang said. “We can develop RPGs made specifically for only China or Japan. Otherwise, If RPGs find a niche market in North America and Europe, we can pioneer new marketplaces for RPGs there.”
Bang has underlined the importance of localization since the previous media conference in February 2016. He said developers should go one step further to compete with local games made for local users.
According to data by App Annie, China is estimated to hold one third of the world’s total mobile game market, which reached 60 trillion won as of last year, followed by Japan with 12 trillion won and the United States with 11 trillion won. In total, the “big three” markets have taken some 72 percent of the entire global mobile game market, the data showed. “We cannot succeed globally if we do not knock on the doors of these markets,” Bang said. “We can create opportunities by developing games with local relevance.”
Bang said Netmarble Games will develop mobile games based on content intellectual property popular among Chinese people and distribute them through its partnership with China’s top game publisher Tencent.
On the other hand, he said the outfit will need more time to understand the Western markets. Unlike Asians, users in North America and Europe tend to opt for strategy games. Hence, Netmarble Games will seek for partnerships with local game studios through mergers and acquisitions and push to connect strategy games to the concepts of RPGs, he noted.
Netmarble Games showcased 17 new games on the sidelines of the conference. According to its business strategy division head Paek Young-hoon, the keyword is “massively multiplayer online (MMO).” In the past few years, MMORPGs have been considered to be exclusive to computer online platform not only due to its massive scale but also for high hardware requirements. But more recently, Chinese game developers have started to prove that conventional belief wrong.
Besides Webzen’s MMORPG “Mu: Origin,” the “Revolution” was one of the first MMORPGs in the local market.
Netmarble Games said it is preparing for MMORPGs including “Blade & Soul,” “Icarus M,” “Seven Knights,” “Tera” and “Stone Age.” These five titles are being redesigned as mobile versions based on their namesake original titles, Paek said.
He also introduced games that specifically target overseas users. Among them, “King of Fighters All Star,” “Knights Chronicle,” “Teria Saga,” “Yokai Saga” and “Yokai Watch” are under development for Japanese market. For the U.S. market, the company is producing “G. I. Joe” and “First Born” by blending experiences of strategy games and RPGs. Based on its experience in providing games based on cartoon series, it is also preparing for the “Transformers: Forged to Fight,” Paek said.
First seen and Source: Koreatimes