[Concall] NC TL released in the first half
Date: February 9, 2023 (Thu) 08:00 True Seek: Lee Jungkook Contents of presentation: NC soft 2022 performance and game launch schedule/strategy
■ NC soft 2022 4Q and annual earnings summary, new schedule ▣ Summary of sales -Annual sales of KRW 2.57 trillion (+11%) The largest sales record of the B Station -4Q sales of KRW 5479 billion (electricity-9%,-28%), operating profit of KRW 47.4 billion (electricity-67%,-57%), net loss of KRW 16.5 billion (deficit change) B mobile game 381 billion won (electricity-13%,-37%last year), PC online game W104.4bn (electricity +7%, +17%last year), royalty 35.9 billion won (-10%,-10%last year )
▣ Cost configuration -4Q operating expenses W500.5bn (electricity +9%,-23%last year) -Labor cost of KRW 232.6 billion (electricity +23%,-9%last year) ㄴ Incentive and Special Encouragement Payment of Incentives and Warriors in accordance with the success of 'Lineage W' -Marketing cost of KRW 48.1 billion (electricity +24%,-59%last year) B decreased according to the cost efficiency -Depreciation cost of KRW 26 billion (electricity-3%, +1%last year) -Sale changes and other KRW 193.8 billion (electricity-5%,-22%last year) Reduction of distribution fees due to decrease in mobile game sales
▣ Profit configuration -Annual operating profit of KRW 559 billion (+49%), net profit of KRW 452.6 billion (+14%) -4Q operating profit of KRW 47.4 billion, net loss of KRW 16.5 billion The net profit of the party is recorded due to losses other than foreign exchange-related operations due to falling exchange rates.
▣ Business status -Lineage W cumulative sales of KRW 1.32 trillion -'Lineage M' plan to continue good results while maintaining solid traffic -Mobile game sales, 75% of total sales -In sales and traffic in recent years due to changes in the economic environment of the Chinese market, the sales and traffic have increased significantly due to the recent changes in the economic environment of the Chinese market due to the release effect of 'Guild War 2' new expansion pack.
-40% and 44% growth in Asia, North America and Europe, respectively -Honesty sales increased by 29% year-on-year, accounting for 37% of total sales.
▣ New release schedule
-'TL' February 21 Final test, scheduled to be released in the first half of this year -NON MMO Genre 4 Mobile Games will be released
■ Q & A Please ask for the first quarter sales direction of major mobile games. In particular, 'Lineage W' entered the sixth quarter, but can you judge that you entered the stabilization stage? = 'Lineage W' can be seen by adding numbers, but you can see that it matches 'Lineage M' or 'Lineage 2M'. Considering such numbers, you can determine that it will almost reach the stabilization stage by the first quarter. Of course, you can see if you go to the same race or a slight drop, but basically you have entered the stabilization stage. The goal is to continue this trend until the end of 2023.
Please explain more about the new pipeline. Is project G still released in the first quarter? = The new announcement or this is the key to the announcement after communication with the internal development organization or Using. So, there are a lot of additional things that can be revealed here, but in short, four mobile games of the Non MMO genre are scheduled to be released this year in addition to 'TL' as we introduced earnings.
It is scheduled to be released in the order of project R, G, and BSS, and the project R of the difficult-type action genre and the collective RPG genre of project BSS aiming for the first area, and 'Pub Up', which was released a few days ago, is aiming for global goal. . It is a misunderstanding that project G will be released in the first quarter.
How is the possibility of IP collaboration with other companies mentioned last time? = It is still open and in progress. Sooner or later, I think there will be a chance to say separately.
'Guild War 2' We mentioned the sales of China's business, traffic structure, and changes in competitive environment. In addition, how much is China's total sales and traffic? = I hope that the sales and traffic of individual games cannot be disclosed. However, 'World of Warcraft' hasn't stopped the service in China? Therefore, it is true that MAU and sales of 'Guild War 2' have increased significantly.
In the fourth quarter, incentives were more than I thought, and how much wages, including new manpower plans and incentives, will increase in 2023. In the first quarter, incentives are reduced, and it is expected to decrease from the fourth quarter of last year. It is expected that the increase in manpower will not be significant, but in fact, the number of employees increased to 13%by 2020 to 9%in 2021 and 2%in 2022. It is expected that it will not be much different this year thanks to its cost efficiency. We will update the specific numbers as we proceed.
On the other hand, if the new global works are successful, the performance and incentives should be given. This is a good scenario.
There are a lot of new works that are scheduled to be released this year, but marketing costs are expected to be more than total sales. In 2022, marketing costs decreased to 7% of total sales. This year's outlook is expected to increase marketing costs, as global games are released this year, but they are trying to avoid 10%carefully out of total sales, depending on the company-wide strategy.
'TL' is known to be released through the Global Publisher. If so, the burden of marketing costs will be a lot of publishers, but I wonder why marketing costs will increase this year. Asked if you work with global publishers, marketing costs will naturally decrease. However, there is also a launch of 'TL', but four mobiles are not scheduled to be released this year. In that sense, if four types of mobile are scheduled, marketing costs are inevitable.
Meanwhile, from this year, the marketing cost will be carried out by effectively monitoring according to the marketing channel, so that the marketing fee can be carried out as necessary.
Recently, China's issue issuance has increased. Can you meet NC games soon? And I wonder if there is a change in the strategy of China. = We are preparing internally about entering the Chinese game market. The last first wave was announced, but I think there will be a second wave to hope. So if you announce it at an appropriate time, I hope to announce it accordingly.
'TL' is a final test soon. In addition, how is the strategy to secure overseas users in addition to global publishers? = This final test is only for domestic users. It will be carried out after the selection of a Gun partner for global testing and marketing related to the strategy of securing overseas users.
Recently, AI has been highlighted a lot, but NC has not studied much. Is there a plan to apply AI to the game or have a commercialization plan? = Last year, I finished the experiment with a medium-sized model and plans to continue to grow this year. Our model is fundamentally used in terms of producing games and developing content. If this expands further, language models such as 'Chat GPT' can be used for stories and characters and used in interactive games.
Furthermore, the goal is to connect the 3D character manufacturing technology and large-scale access game management technology that we already have to connect the digital human business, which focuses internally to provide differentiated immersion for users. .
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