South Korean game development and publishing giant Krafton Inc. boasted the highest operating margin in the local gaming industry, over 40% in the third quarter, mainly thanks to a rapid recovery in its Indian business , underscoring the importance of foreign markets in the growth of Korean game companies.
The company announced in a regulatory filing on Tuesday last week that it earned 189.3 billion won ($143.4 million) in operating profit on a consolidated basis in the July-September quarter.
This was up 30.9% from the same period last year, reversing course from the previous quarter when it reported a 20.7% year-on-year drop in profits and an 8.6% contraction in revenue.
It reported 450.3 billion won in revenue in the third quarter of this year, up 3.8% from a year ago.
Thanks to the strong results, Krafton’s operating margin reached 43.8%, the highest among Korean gaming companies, it said.
The company’s stellar performance in the last quarter was largely driven by the return of its global mega hit “PlayerUnknown’s Battlegrounds” (PUBG) to the Indian market after a 10-month ban by the Indian government on the gaming market. Fastest growing mobile phones in Asia.
INDIA’S EXCITEMENT FOR PUBG REVIVAL
Krafton’s mobile gaming business saw revenue rise 9% year-on-year to 309.1 billion won thanks to the resumption of “Battlegrounds Mobile India” (BGMI), the Indian version of PUBG Mobile, in May, in addition to the successful debut of “Battle Royale: Dragon Ball Super,” a new PUBG mode launched through the collaboration between PUBG Mobile and Dragon Ball, the company said last week.
BGMI, which landed in India in July 2021, attracted over 100 million cumulative players and became the number one game on the market’s App Store in just one year of release.
But in July last year, the Indian government abruptly banned gambling in the country without providing reasons for the suspension.
The online multiplayer battle royale game was allowed in India this summer, and its revenue and traffic soon recovered to pre-suspension levels, the company said, adding that it has also continued to attract new users.
It hosted a major esports friendship league in the world’s most populous country last month after BGMI resumed its service and has been actively exploring and providing localized content to keep the market booming.
Its Indian subsidiary also announced in August a plan to invest an additional $150 million in the South Asian country over the next two to three years, following a combined investment of $140 million in 11 Indian companies to date since 2021.
PUBG is Krafton’s flagship intellectual property (IP) and has been generating consistent revenue across all platforms since its debut in 2017.
GOING GLOBALIZED IS KEY TO GROWTH
Other Korean game companies with aggressive overseas business with several new titles also did well in the latest quarter.
Nexon Co. reported that its third-quarter revenue from North America and Europe rose 77.6% year-on-year to 8.9 billion yen ($58.9 million) and that from other regions including China, Japan and Southeast Asia , increased between 10% and 20%.
As a result, its operating profit in the third quarter increased 47% year-on-year to 31.5 million yen on sales of 97.5 million yen, up 23% from a year ago, according to the company statement.
NCSOFT Corp. and Netmarble Corp., however, reported poor earnings in the same quarter.
NCSOFT is considering mergers and acquisitions to diversify its game lineup and appeal to broader users, according to the company.
It currently relies heavily on the medieval fantasy massively multiplayer online role-playing game Lineage, which first hit the market in 1998.
It also plans to present seven new titles at G-Star 2023.
Netmarble, which reported an operating loss last quarter, also lacks new, hit games that can attract gamers around the world.
Write to Seung-Woo Lee at leeswoo@hankyung.com
Sookyung Seo edited this article.