Good morning. I'm Lily from the IR department of Kakao Games. We would like to begin our fourth quarter and full year earnings presentation. Today, I am joined by our CSO, Michael Han, and CFO, Terry. We will begin with the CFO's presentation on 2023 fourth quarter and full year earnings. As a disclaimer, today's earnings release includes estimates of KIFRS-based consolidated statement, which are subject to change upon the auditor's review.
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Good morning. This is CFO Terry. I will begin with Q4 and FY 2023 financial results. Fourth quarter's consolidated revenue for Kakao Games was KRW 239.2 billion, up 1% year-over-year and down 10% Q-on-Q. FY 2023 consolidated revenue dipped by 11% on year, reaching KRW 1 trillion 24.1 billion. Consolidated operating profit in Q4 increased 57% on year and down 38% on quarter, reporting KRW 14.1 billion. FY 2023 operating profit was down 58% on year, coming in at KRW 74.5 billion. Looking at business breakdown, PC game saw an increase of 22% year-over-year and 15% Q-on-Q, reaching KRW 13.2 billion.
PUBG regained traffic following offline events, which helped to build stronger bonding with the user base, and Path of Exile revenue continued its uptrend on the continuing impact from new league opening. Path of Exile as a main title with a solid market presence in the hack and slash genre is building up an anticipation for Path of Exile 2 to be released in Korea in the second half of the year. We're also ramping up for a rollout of PC games from different genre, including twin-stick shooter and SRPG, which we will bring to market starting the second half of this year. We look forward to generating solid global results.
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For mobile games, we continued with content updates for three key MMORPG games, which include Odin, ArcheAge War, and Ares, fully being mindful of characteristics of each of these games while our priority has been placed on managing user traffic, which is the key basis for long-term servicing of the game. In Q4, timeline for global release of new titles was changed to 2024, and with the impact from launch of Ares last quarter removed, Q4 revenue was up 4% year-over-year, but down 15% Q-over-Q to KRW 157.1 billion. Despite natural erosion of Odin's revenue, even though it's been two years since its launch, it is maintaining a user base that is top tier in Korea, and revenue momentum has become more robust.
Through the year-end update, Odin reclaimed its number one ranking in both app markets as a top grossing game, proving its competitiveness in the market. We will roll out highly immersive content of growth and co-op systems, and supported by overwhelming size of the user base, we will be creating another opportunity for building the momentum. For Odin in Taiwan and Japan, we are focused on user retention and profitability by adjusting the game balance and the difficulty level through providing content that better fit the market and regional users' preference. For the Western markets, as we have proven through market tests, the users are intrigued by Odin's universe and its visual attributes, and we're making preparations for Western gamers to enjoy the game with great ease.
For ArcheAge War, in line with a more robust large-scale Warfield content, we released a new occupation which helped to solidify the core user base. With launch of servers for growth system and massive return promotions, there was a rebound in December business metrics. In time for its first-year anniversary in 2024, and following the large update, our objective is to drive another rebound in business metrics. For the Southeast Asian market, even from the very beginning of the launch, we want to build up a big stage for gamers to compete and enjoy the fun of Warfield content. Ares has set itself up as an MMORPG game with colorful action and unique gameplay, defining its distinctive personality as a game.
As such, we will continue to serve content and gameplay environment so that a wider range of users can all enjoy the game together. Also, based on unique game ability of Ares, we are developing a new version to this game that can work well with the wider global market, and we expect to be able to do a soft launch before the end of the year. On the back of continuing slow seasonality, other revenue saw a decline of 6% year-over-year and 1% Q-over-Q, coming in at KRW 68.9 billion as Kakao VX and Sena Technology were all placed under contingency business mode in order to go through restructuring the organization for unleashing efficiencies.
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Consolidated operating expense reported KRW 225.1 billion, down 1% year-over-year and 7% Q-over-Q. On a full year basis, there was a 2% YoY decline to KRW 949.6 billion. Looking at each of the line items, against the backdrop of discipline for hiring, there was an increase in number of developers for new projects at PC and console game studios. While labor cost was down 1% year-on-year, it was up 2% Q-on-Q, reaching KRW 52.3 billion. Future hiring plans will still be under the overarching operational efficiency discipline. In terms of future investment, we are closely monitoring to make sure that investment is funneled to new projects and projects to embark on global challenges. Marketing expense was down 33% year-over-year and 22% Q-over-Q to KRW 10.2 billion on the back of cost efficiency efforts around major titles including Odin.
As share of overseas marketing will increase this year, we're preparing to respond nimbly depending on the competitive landscape and regional and strategic environment, while our plan to keep marketing spend against the revenue to be around similar levels of 2023. Commissions paid is made up of fees paid to the marketplaces and studios, and fees for the use of the infrastructure, and is linked to the movement in the game revenue. As such, commission was up 7% year-over-year and down 13% Q-on-Q to KRW 91.3 billion. We expect the share of commissions against game revenue to slightly inch up on the back of new titles being published, which drive higher fees paid to game studios.
As license fees were amortized following the launch of new titles under the publishing arrangement, amortization was up 8% YoY and 4% QoQ, reaching KRW 22.4 billion. Other expense comprising of cost of sales of non-game businesses like from Kakao VX and Sena Technology declined 8% YoY on the back of fall in revenue. Following the base effect from efficiency efforts behind some of the underperforming businesses, other expenses were down 6% Q-on-Q, coming in at KRW 48.9 billion.
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To make the leap as a global company, Kakao Games continues its attempt at new challenges to find ways to expand the platform through leveraging its development and servicing capabilities in tandem from changes that are seen in the market and how users consume content and the game genre. 2023 was mired with difficult macro environment, during which we emphasized on gaining stronger efficiency and prudent spending was considered important.
We don't expect business environment to turn to our favor, but we will go beyond from cost efficiency to actively bringing changes for productivity enhancements. We will make core investment to diversify into different genre and platform and further solidify global services so that we may be chosen by our global users. Thank you everyone, shareholders and investors for the support that you have shown Kakao Games over the years. This brings us to the end of Q4 and FY 2023 presentation on earnings. We would be happy to now take your questions.
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Now, Q&A session will begin. Please press star one that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two that is star and two on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant.
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The first question will be provided by SoHye Kim from Hanwha Investment & Securities. Please go ahead with your question.
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Thank you for taking my question. I'm from Hanwha Investment & Securities. I just have one question. I would like to understand what the company strategy is regards to its global expansion and also for specific regions in terms of your plans on new platform or new game genre.
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This is the CSO, Michael Han. Responding to your question about our global strategy. At Kakao Games, we have adopted two main strategies so that we could drive further performance from the global market. The first is to diversify the mobile game genre so that we can make inroads into the overseas market. Since we do not have a sufficient amount of overseas experience as of yet, it will be quite hard to predict the future success and the probability of success going forward. We've been putting in continuous efforts so that we can break free from the limitations and the constraints that we had had in working with only a handful of game genres.
To cite a couple of examples, we have a successful experience of taking Guardian Tales onto the global stage with its mobile action controls and a very strong storyline impact. We took Eversoul and entered into not just Korea and the global markets, but also made inroads into the Japanese market. This year we have plans to showcase Goddess Order and Project V. There are also some casual game titles that are categorized as an incremental idle game where you let the game actually run and play for itself.
We are at this point making preparations to make investments and making preparations for servicing those such games, although it has not yet been disclosed. In terms of ROM and ArcheAge War, we are trying different rivalry models from region versus region through a global concurrent launch where we see that there's a high level of similarity on certain regional markets that we see from Korean MMORPG users. We've also made extensive adjustments and modifications on Ares for the Western mobile users in terms of the contents offered and the level of the balance. As you can see, we are making quite aggressive and different attempts so that we may be able to diversify the servicing model when it comes to these MMORPG games.
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The second strategy that we've been employing is a PC and console based expansion when it comes to global services. To name a few, XL Games' ArcheAge 2 and Ocean Drive Studio's Sword Master's Son, Neptune's Eternal Return, and most recently, a new game title and the looter shooter game, which is being developed by Lionheart, are some of the key examples that we've been continuously making investment into so that we can make inroads into the Western market and the global market as well. Especially, from the very beginning, the Ocean Drive Studio was set up under the goal of building up a fandom base for its own IP and studios, taking the PC and console game to the global market.
We believe that this will also provide us with a new approach, a new methodology for Kakao Games to build and accumulate its capability in the global market when it comes to PC and console game servicing. Also internally inside Kakao Games, we have set up a new team that is solely dedicated to global servicing from the very onset of development to live servicing of those titles. We also have built our own testing environment for the global market so that we could very closely communicate with our users when we go through the development process.
We will continue to expand on the participatory type of a test user pool. We will engage and involve more influencers and opinion leaders gradually as we go forward so that we can actually build out and expand on the community and really help to explore the development methodology that could really ensure the success of the game titles.
As such, we are continuously making efforts in developing development and servicing related methodologies that will best fit the user's requirement and their needs. Also, we will actively engage Western experts when it comes to making stories, composing music, and coming up with videos, so that we can come up with content that could really enhance the immersiveness. The investments have been made with this in mind. In line with our global business strategy in terms of investment as well as sourcing, we are going to be more aggressive in expanding into different types of game genre, including looter shooter, roguelike, strategic simulation puzzles, as well as incremental games and two-dimensional games and sports genre.
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Next question please
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The next question will be presented by Jingu Kim from Kiwoom Securities. Please go ahead with your question.
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Thank you for taking my question. I understand that the first titles that will be introduced in 2024 are ROM, where you are receiving preorders, and Goddess Order. I'd like to know what the company's expectations are with regards to the performance that you are expecting from these two titles and the rationale behind that.
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First, responding to the question, I'll talk about ROM first and share with you the outcome of the global beta test that we conducted at the end of January. Through this test, we were able to see and verify that there is a sizable demand out there for gamers who want the MMORPG genre, especially with a quarter view perspective and hardcore MMORPG. Because this is a global concurrent service, we saw that there was a story that was added to the rivalry that existed amongst different countries and different regions, which very naturally took place. We were able to see that people really enjoyed the very fierce combat and the wargame that actually took place within the game.
ROM also has this mechanism that allows the content to progress and circulate, for instance, through the mechanics of field boss and dungeon, and the growth systems that ROM offers in the form of the enchants and the synthesis content really received good ratings from the users. Because this is a concurrent global service and because it was the first test, we were able to see that the testers really liked the nice server environment that this game offered, and also that this game provided the most optimal or highly optimized client devices. We believe that this will appeal to the low-end users as well. The characteristics of this game is that there is a high level of PK freedom and compensation that would follow that. We think that this would really work well with the adult user base who are intrigued by the core MMORPG games.
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Redlab Games is the developer of this game, and this is a development or game studio where there are highly experienced veterans of the game industry who have more than 20 years of track record in their personal careers. They are also very good at communicating and servicing this very specialized hardcore MMORPG game against their user base. In their previous game, they came up with the booty system that offered an interesting gameplay, and also they have a very simplified business model structure. The producer himself had a direct communication with his user base, providing a briefing to the users of the game.
This is a development game studio that is well known to the hardcore MMORPG users. Both the game studio and Kakao Games are looking at this game title with a view towards generating long-term revenue rather than focusing on short-term gains. Rather than thinking of billing over the short term, we're thinking of a more reasonable product structure and a pricing model that will be viable over a longer term horizon. There are specific mechanisms such as the sealed system for the trades that happen within the games in order to protect the asset value of the gamers. Those mechanisms and mechanics are also implemented within the game. We've completed the last leg of the test and, as per our plan, global servicing will begin as of February the 27th.
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Second is on Goddess Order. Now, this is one of the projects that we have really put all of our preparations to bring about a good global success. The studio of this game has built up their global experience through Crusader Quest, which achieved 25 million cumulative downloads. Also through Legend of Slime, they know what it takes to be a global success. All of those elements are well reflected in this project for Goddess Order. Hence, we're looking forward to a good performance from this game title. This game adopts a 2D dot graphic, which wields a significant amount of global hardcore fans.
From a visual perspective, it is quite compelling, and it offers a stylized picture, characters, and game background, providing a refined and beautiful dotted design, and we believe that the game is going to offer a universe that could really work with the hardcore user base. There is a story mode that allows the players to directly control the actual situations that happen within the game for the characters. Also there is an origin story mode that talks about the story of each of the knights that appear in-game. This is an adventurous game, providing an exciting experience to the gamers inside this dot-based universe. In our previous closed test, the users had a very positive reception when it comes to the graphic and the storyline of the game.
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In terms of the game control, it adopts a two-dimensional horizontal scroll, and it has the most optimized action element that best fits the mobile platform. It will be providing a high-quality manual action that everyone and anyone can actually enjoy. Through the previous test, we were able to see that it offers a control convenience, and also it was well-ranked in terms of the action ability as the game provided pairing, defending, and avoiding, all of these techniques across all of the mobile platforms. Other than that, there are also features that allow for a three-person tag-based deck mechanism, and the hit sensation that was offered in-game was also positively reviewed by the testers.
At Kakao Games, we have a good track record of taking Guardian Tales to success on the global market, and we believe that the target users for Goddess Order is quite similar to that of Guardian Tales. Over the three years, we've successfully serviced Guardian Tales in Korea as well as in other global markets, and in so doing, we were able to build up a know-how. We've prepared quite a long time for this game to be introduced, and we will be well prepared with an extensive amount of content to offer to our users. In the first half, we will conduct a number of other closed tests, and we'll validate this game on a couple more occasions. Through global soft launching, we will be able to look forward to good results. Our plan is to showcase it in the second half.
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Thank you. This brings us to the end of earnings presentation of Kakao Games for Q4 and full year 2023. Thank you very much to everyone for joining us this morning.