Good morning and good evening. Thank you all for joining this conference call. Now we'll begin the conference call of the fiscal year 2023 fourth quarter earnings results by NCSOFT. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press star one, that is star and one on your phone during the Q&A. We shall commence the presentation by NCSOFT. Good morning and hello. I'm Jason Lee, Head of IR at NCSOFT. Thank you for joining the company's first quarter 2022, three earnings presentation. I will begin with the earnings highlight. On the back of downward stabilization of Lineage W sales, Q1 sales was down 13% QoQ and 39% year-over-year, reporting KRW 478.8 billion.
Operating profit was up 72% QoQ to KRW 81.6 billion on across the board decline in operating expense. While on a year-over-year basis, operating profit dropped 67%. Pre-tax income was KRW 141.3 billion, with net income at KRW 114.2 billion, both turning around to profit versus last quarter. On a year-over-year basis, there was a decline of 39% and 32% respectively. Next is breakdown of sales by each game. Following the 1st year anniversary update previous quarter, there weren't any large scale updates for Lineage W this quarter, which drove QoQ sales down by 31% to KRW 122.6 billion.
We will have another round of large scale updates scheduled during the second quarter. As top line will enter a cycle of stabilization in 2023, we can look forward to a more steady earnings trend going forward. Lineage M posted QoQ growth of 15%, reaching KRW 130.1 billion. We see all of the traffic related measures, including MAU, DAU, and PCU trending strongly as the game still is in its heyday despite it being a seventh year since the launch. We will continue to extend the life cycle of the game underpinned by user-centric servicing policy. While Lineage 2M domestic sales is on a solid trajectory due to a decline in overseas sales from North America and Europe, sales were down 11% QoQ, reporting KRW 73.1 billion.
We are planning on an update that will revitalize in-game combat in Q2 so that we may achieve steady revenue stream throughout year 2023. Sales from five PC game titles were down 12% QoQ to KRW 91.4 billion. This decline is attributable to the fact that we dialed down the level of business activities, which in turn pressured down sales from Lineage 2, and AION, whose sales shot up last quarter owing to a large scale update. Blade & Soul sales were up 1% QoQ to KRW 7.3 billion, while Guild Wars 2 sales fell 10% QoQ, reporting KRW 20.4 billion on lapse of impact from the release of expansion pack last year.
Finally, royalty sales were up 9% QoQ to KRW 42.3 billion, with China's Guild Wars 2 royalty seeing a much higher QoQ rise. Changes in competitive landscape in China since early this year triggered a steep growth in traffic and sales for Guild Wars 2 in China, which led to highest quarterly revenue since its rollout in 2014. Next is the cost breakdown. Q1 operating expense was down 21% QoQ to KRW 397.1 billion. Labor cost was down 9% QoQ to KRW 211.9 billion on the back of lapse of impact from last quarter's Lineage W incentives. Marketing expense was down 90% QoQ to KRW 4.9 billion, with the absence of large scale update across the game portfolio.
Depreciation increased 8% QoQ, reporting KRW 27.9 billion, while variable costs and other expenses were down 21% QoQ to KRW 152.5 billion on lower distribution fees following a decline in mobile game revenue. This year, we plan to bring to market new global titles, including TL, in the second half of the year. As per the recent announcement, we plan on running CBT, closed beta test of TL against 10,000 users, which is not much different to a full-fledged service level. We therefore look forward to your interest and participation as our intent is to do a final check on the game and fully open and share in advance diverse array of content from TL. With the start of CBT, TL will begin its race for a rollout, and while that's ongoing, we will come back with more news to share.
Also, preparations behind four different mobile games, which are non-MMOs, are on a smooth sail. We will present a unique game ability by merging our MMORPG development knowhow into these games. By launching new titles from varying genre and platforms, we will be writing up a new story of growth for NC. Lastly, we have been endeavoring to develop AI technology under the recognition that we can offer new value to customers and the company alike when we combine our AI technology with games. Project M last March showcased AI-powered digital human receiving positive feedback from both Korea and overseas. We plan to open up our proprietary AI platform to our employees so that they can utilize such AI tech in actual game development.
We are planning on developing AI technology tailored for the game business, through which we will not only make the game development process more efficient, but also make more immersive content with a view towards leveling up the quality to a new level. These efforts will help us explore future growth opportunities, and as such, I ask for your continued interest. This brings us to the end of the first quarter 23 earnings presentation. I hope to be back with more promising news next quarter. Thank you.
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.처음으로 질문해 주실 분은 골드만삭스의 에릭 차 님입니다. [Foreign Language]The first question will be provided by Eric Cha from Goldman Sachs. Please go ahead with your question.
네, 질문 기회 감사합니다. 두 가지 질문드리겠습니다. 국내에서 최근에 그 대형 모바일 MMO 신작들이 좀 나왔었는데 그 NCSOFT 게임에 대해서 이에 대한 뭐 트래픽이나 매출에 대해서 영향이 있었는지, 또 그와 연결해 가지고 그 2분기에 모바일 게임 매출 전망이 어떤지 그 컬러 부탁드리고요. 두 번째 질문은 그 국내 언론에서 이제 NCSOFT가 오랜만에 그 지스타에 참여한다고 이제 제가 봤는데요. 실제로 참석을 하시는지, 그리고 혹시 그럼 그때까지 그 TL은 안 나오는 걸로 생각을 해야 되는 건지, 아니면 그와 상관없이 그 독립적인 이슈인지 설명 부탁드리겠습니다. 감사합니다.[Foreign Language]
Thank you for taking my question. I would like to ask two questions. First is, we'd like to know whether there has been any impact on NCSOFT's traffic or top line revenue on the back of the launch of these large-scale mobile MMORPG new titles that we've seen in the domestic market. Also, can you provide some color as to what your outlook is for your second quarter mobile game revenue? Second question is that I've seen through a news article that NCSOFT will most likely be participating in the G-STAR event. Even despite the fact that the TL will not yet be rolled out at that point in time, or are these two issues separate and independent?
네, Eric Cha 질문 감사드리고요. 현재 그 말씀 주신 그 여러 가지 MMORPG 시장의 경쟁이 여러 작이 출시되고 또 경쟁이 심화되는 거에 대해서는 저희 회사는 오히려 긍정적으로 보고 있습니다.[Foreign Language]
Well, thank you for that question. Regarding your question about deepening competition in the MMORPG market and the release of new titles into this game segment, actually, from our company's perspective, we view this from a positive light.
지금 현재 상황에서도 저희 그 모바일 게임 세 가지 IP의 트래픽에는 별다른 큰 변화가 관찰이 되지 않고 있습니다.[Foreign Language]
We have not yet been able to observe any changes to the traffic that is being driven by our three mobile IP games.
저희는 이 추세가 이 분기에도 안정적인 매출을 저희가 지속적으로 유지할 것으로 생각을 하고 있습니다.[Foreign Language]
We also believe that such a steady trend will continue into the second quarter, I mean, in terms of the top line revenue.
결론적으로 저희 회사에 대한 어떤 매출 및 트래픽의 잠식 효과는 어, 제한적이라고 말씀을 드릴 수 있을 것 같고요. 저희는 오히려 국내 시장에서 그 저희가 강점을 가지고 있는 MMORPG 장르가 어, 계속 어, 절대적인 지배력을 가지고 있다는 거를 확인하는 기, 어, 기회로 생각을 하고 있습니다. [Foreign Language]
All in all, we believe that there and there is, and there will be limited impact in terms of the erosion into our revenue and traffic. Regarding the impact from these other competing titles. We actually believe that this is an opportunity for us to, once again, affirm a very strong dominance that we are enjoying in this MMORPG genre in the domestic market.
그리고 어, G-STAR 관련해서는 저희가 어, 잘 아시지만 음, 그동안에 NCing이라는 어, 그 온라인상으로 저희 개발 중인 신작들을 공개하는 활동을 활발히 해왔는데요. 올해는 어, G-STAR를 참가해서 이걸 좀 더 오프라인에서도 저희 고객분과 또 여러 관련된 어, 분들을 직접 만나는 기회를 가지고자 하고 있습니다. [Foreign Language]
Regarding your question on G-STAR, as you know, we've been very actively showcasing and highlighting our new title releases through the NC Thing, our online approach. This year, we are also by participating in the G-STAR event, will be able to really meet face to face offline with our customers as well as related stakeholders.
여러 가지 그 어떤 작품을 출품할지는 지금 현재 논의 중이고요. TL은 G-STAR 참가하는 거하고는 무관하게 저희는 TL 일정은 G-STAR와 무관하게 진행 중이라는 걸 말씀드리겠습니다. [Foreign Language]
With regards to which title we will be taking to G-STAR is something that, where we will be making a decision on in the near future. Regarding the relationship between TL release and G-STAR, irrespective of the G-STAR event, our TL related timeline is at this point ongoing smoothly.
다음으로 질문해 주실 분은 HSBC의 김준현 님입니다. [Foreign Language] The following question will be presented by Joon Hyun Kim from HSBC. Please go ahead with your question.
네, 질문 기회 감사드립니다. 저 두 가지 질문이 있는데요. 첫 번째는 이제 TL 이외에 말씀주셨던 그런 모바일 게임들 일정 다시 한번 업데이트 부탁드리고, 그다음에 TL 일정 관련해서도 이제 Amazon Games와의 어떤 일정의 차이나 뭐 이런 갭이 있을 수 있는지 그런 가능성 공유해 주시면 감사하겠습니다. 두 번째는 [Foreign Language]
이제 모든 모바일 게임들이 이 분기 업데이트를 좀 많이 예정을 하시고 계신 걸로 보이는데 이제 그렇게 되면은 이제 1 분기 마케팅비를 어 굉장히 많이 세이브를 했는데, 요게 좀 과거 수준처럼 올라갈지, 아니면 계속해서 좀 효율적인 집행을 기존에 유지한 채로 좀 이런 업데이트가 있을 건지, 그런 좀 컬러 공유 부탁드리겠습니다. [Foreign Language]
Thank you. I have two questions to ask. First is, aside from TL, can you provide us with an update as to what your mobile game timeline and pipeline looks like? Can there be any timeline differences or gaps vis-a-vis Amazon Games? Second question is, I understand that there's quite a bit of update that is scheduled to happen for your mobile game in the second quarter. In Q1, you've significantly saved on marketing spending. As we enter into Q2, will there be a rebound or increase in marketing spend? Or would you be able to maintain the current level of marketing spend efficiency under which you will carry on forward with the update?
네, 준현님 질문 감사드립니다. 저희가 기존부터 계속 말씀드려온 것처럼, 올해는 저희가 전체적으로 TL을 포함해서 5종을 출시를 예정을 하고 있습니다. TL은 뭐 잘 아시는 거고, Non-MMO Mobile 4종을 현재까지는 출시 목표로 하고 있습니다. [Foreign Language]
Thank you for that question. Our original plan from the beginning was to release five new titles this year. That includes TL. You know of TL quite well. There are other four, which is, non-MMO mobile titles.
이 Non-MMO Mobile에 대해서는 저희가 구체적인 출시 일정을 별도로 순차적으로 공개를 드리겠습니다. [Foreign Language]
Now, regarding the specific timeline for release of these Non-MMO Mobile games, we will consecutively or subsequently share with you the timelines when the time comes.
TL 말씀 주셨는데요. TL은 그 저희가 아시다시피 글로벌 퍼블리셔인 Amazon Games하고 지금 출시 일정을 조율 중이고요. 여러 가지 시중에 알려진 대로 하반기 중에 출시가 [Foreign Language]
TL, you mentioned TL as well. As you know, we are at this point coordinating the specific schedules with our global publisher, which is Amazon Games. As you know, and as was announced or as was mentioned, basically, our target is to release it in the second half of the year.
예, 이 출시 일정은 전략적으로 저희가 글로벌 시장에서의 파급력을 최대화 하기 위해서 지금 조정을 하고 있는 상황이고요. 앞으로 그 관련해서 마케팅 활동이 아주, 이 세부적으로 촘촘하게 진행이 준비가 되고 있고요. 저희가 그 시장에서 이것에 대해서 이해를 하실 수 있도록 별도 이벤트를 통해서 구체적인 일정 공개를 할 예정입니다. [Foreign Language]
Mm-hmm. Now regarding the launch schedule, currently what we are doing is we're working on to come up with a way that we could maximize the impact of this new release across the global markets. Currently the marketing activity plan is being very thoroughly being prepared for us to achieve that objective. We will be able to, in the very near future, hold a separate event where we will disclose and open up the actual schedule for this game title so that we could better help the market to understand how things would go.
어 마케팅 비용에 대한 부분은 저희가 어 작년부터 계속 어 말씀을 드려온 사항인데요. 어 이 분기부터는 아마 일 분기보다는 어 마케팅 비용이 어 더 정상화되지 않을까 생각을 하고 있습니다. 그 이유는 이 분기부터 더 많은 업데이트와 여러 가지 사업 계획이 잡혀 있기 때문에, 어 당연히 어 일 분기보다는 더 활발한 마케팅 비용 집행이 이루어질 거로 생각을 하고 있고요. 하지만 어 저희 기조가 어 기존과는 어 물론 기존에도 그랬습니다마는, 아 마케팅 비용이 집행되는 게 어 얼마나 효율적으로 어 저희 매출로 이어지고 있고, 또 단순하게 단기적인 매출이 아니라 여러 가지 측면에서 어 효과성을 저희가 면밀히 검토를 하고 어 진행을 하고 있기 때문에, 어 이 분기에서는 조금 더 일 분기보다는 저희가 계획한 목표에 따라서 어 마케팅비의 증가가 있을 것으로 예상을 하고 있고요. 하지만 마지막으로 전체적인 마케팅 비용은 저희가 작년에도 굉장히 효율적인 마케팅 집행을 집행한 것처럼 그 정도 수준으로 전체 일 년 단위로 봤을 때는 어 그 정도 수준을 유지하지 않을까 생각을 하고 있습니다. [Foreign Language]
Regarding the efficient use of marketing spending, we've been highlighting the importance of this factor since previous year. Most likely in the second quarter, we think this marketing spend level would normalize to the previous levels compared to what we've seen in Q1. I say that because during the second quarter we have many more updates that's lined up and also items under the business plan that will be implemented. Obviously that will increase the marketing spend more compared to what we've seen in Q1 based off of these more active marketing activities that is planned. Having said that, our position has always been the case that marketing spending and how efficient we actually go about spending the marketing budget has to really link with the generation of top line revenue.
Not just from a short-term perspective, we actually check the effectiveness of such spending when we carry out the plans. Once again, under as per or aligned with what we have planned, our second quarter marketing spending will creep up compared to what we've seen in Q1. Having said that, in terms of the total marketing spend, like was the case with the previous year where we were able to efficiently really spend our marketing budget, we think that for this year, on a per year basis, you will see the marketing spend to be flattish versus previous year.
The following question will be presented by Jinggu Kim from Kiwoom Securities. Please go ahead with your question.
Thank you. I have two questions I would like to ask. Just some of the specifics on your marketing spend. Can you provide us with a number as to what the % of your marketing expense is against your top line sales or revenue and the absolute size of this marketing spend? Second is, can you elaborate as to what the company stance is or approach is towards blockchain?
Thank you Mr. Jinggu Kim for your question. The % of marketing spend against our gross revenue last year was around 7%. This year we are looking to have or spend around that level as well. Just to remind you that this is not a number that's dictated top-down. It's not like we are having any financial control and that this is a number that has been handed down from the top to bottom.
This is based off of the business judgments that were made at the business unit level. For a marketing budget and marketing spend, short-term revenue is important, but there are other business indicators that come into play. For this year, it's projected that we will more or less spend about 7% of gross revenue as we've done in the previous year. Another thing to point out is that we just have a corporate-wide consensus whereby we will not just recklessly spend marketing expense. We will be thoroughly mindful of the effectiveness of that money spent. Regarding blockchain, the company is continuously interested in, and also researching and studying into different technologies relating to not only AI, but blockchain as well.
As you know, for the Layer-1 blockchain, as we've recently made investments into a US-based company that was recently listed, Mysten Labs, known for its SUI token. As such, we are very closely monitoring the overall market environment and technological changes.
그전에도 저희가 실적 발표 때 말씀이 되었습니다마는, 블록체인 기술이 게이머들에게 어떤 가치를 창출할 수 있다는 생각에는 변함이 없지만, 그게, 저희는 P2E 어떤 차원에서 [Foreign Language]
The previous call. In terms of the blockchain technology, the company does believe that it brings value to the gamers. We are not approaching this blockchain from the with the P2E, Pay to Earn approach. More, it's actually aside from P2E, we are thinking of many different ways where we could bring blockchain technology and merge that, infuse that with games. In so doing, there are many aspects that we need to be thoroughly mindful of. For instance, the impacts that it will have on the in-game economics as well as the in-game balance. In light of the current volatile market backdrop, we really need to be very prudent when we approach this blockchain technology.
Up until the time we have firm belief and confidence in the way forward with blockchain, we will not be thinking of applying that or making announcements externally with regards to its application to games.
다음으로 질문해 주실 분은 CLSA의 김동준 님입니다. [Foreign Language] The following question will be presented by Dongjun Kim from CLSA. Please go ahead with your question.
네. 질문 기회 주셔서 너무 감사드립니다. 저 앞서 나왔던 질문에 조금 연장해서 여쭤보자면, 이제 다수의 경쟁작들이 출시가 되었고 영향이 그렇게 크게 미치진 않았다고 말씀을 주셨지만, Lineage W 같이 사실 출시된 지 이제 뭐 상대적으로 얼마 되지 않은 게임 같은 경우는 이제 회사의 가이던스보다도 지금 계속해서 QoQ 하락세가 좀 가파르게 이어지고 있는 것 같고요. 또 여쭤보는 이유가 4월달에도 좀 유의미한 경쟁작 출시가 있었고, Sensor Tower 뭐 정확한 데이터는 아닐 수 있겠지만 QoQ 하락세가 계속 가파르게 이제 일어나고 있는 모습들이 최소한 이제 Lineage W에서는 보여지고 있어서 저희가 앞으로 Lineage W 좀 매출 안정화 과정을 좀 어떻게 바라봐야 되는지 좀 새롭게 가이던스를 제시해 주시면 좋을 것 같고요? [Foreign Language]
두 번째로는 TL 관련해서 질문을 드리고 싶은데, 이게 글로벌로 출시하는 게임치고는 노출이 좀 너무 안 되었다는 생각이 저는 좀 개인적으로 많이 들고 있어서 앞으로 많은 이벤트들 준비하고 계시다고 말씀을 주셨는데, 이 중에서 좀 글로벌 유저들 대상으로 또 저희가 좀 대규모 베타 테스트라든지, 이렇게 좀 글로벌 노출도를 높일 수 있을 이벤트가 어떤 것들이 있을지 좀 말씀을 부탁드리겠고요. 마지막으로는 저희가 이전에는 NC에서 게임을 출시한다라고 하면 시장에서 확실히 기대감이 좀 빠르게 형성이 되었던 반면, 지금은 시장 상황도 저희 전략적인 기조나 타겟하는 시장도 좀 많이 달라진 상황에서 그런 기대감이 쉽게 형성되지는 않는 것 같습니다. TL에 대한 기대감을 왜 시장에서 그래도 가져야 되는지 너무 뻔한 질문일 수는 있겠지만, 추가적으로 말씀 주시면 너무 좋을 것 같습니다. 감사합니다. [Foreign Language]
Thank you for taking my question. I have a follow-up question to the previous question.
There were multiple number of competing titles that were released, and you've mentioned that there had not been any big impact on your business. If you look at Lineage W relatively recently launched title, their QoQ decline was steep, steeper than your guidance. There was also a quite strong competing title that was launched in April as well. According to Sensor Tower numbers, QoQ decline is actually quite pronounced. Can you provide a little more color on the stabilization process of LW, Lineage W and any new guidance on this business? Second question is, I personally think that TL being a global launch, its exposure was very much limited. Would like to understand what your plans are to increase the exposure to this TL release, which is upcoming.
For instance, running a large scale beta test against global users. Do you have those plans in place? Another aspect to this question is that in the past, when people, when NC was about to release a new title, market expectation really built up. It's maybe because of a change in the markets that you're targeting and the changes in strategies that followed. It doesn't seem like that market expectation is building up that easily. Why do you think that rationale is? Why, from the market's perspective, should we be looking forward to TL launch?
네, 안녕하세요. Dongjun Kim 위원님, 이장우입니다. 그 Lineage W 관련해서 제가 한번 잠깐 간단하게 설명을 드리면 아마 이제 위원님께서 말씀하신 가이던스라는 것 자체가 어떻게 보면 기존 저희 모바일 게임들의 그 decline rates랑 비교해가지고 이제 그 수치를 말씀하실 텐데요. 저희들 생각에는 저희들이 예상한 것보다 one quarter 정도 그게 더 decline 됐다 정도로 해석을 해요. 이전에 말씀드린 것처럼 실제 traffic이나 이런 것들은 전혀 변화가 없고. 지금 이제 May이잖아요. 저희들이 계속 trending을 monitoring하고 있는데 아마 이 분기 실적에서 확인하실 수 있을 것 같아요. 저희들이 지금 안정화. [Foreign Language]
딱 단계 진입했다는 거는 지금 단계에서는 자신 있게 말씀드릴 수 있을 것 같아요. 일단 초반 매출 하향 안정화 추세는 이전 게임과 비교했을 때 1분기 정도 딜레이되면서 안정화됐다고 보시면 될 것 같습니다. [Foreign Language]
Thank you. This is Jason Lee. I will respond to your question on Lineage W. I think when you asked this question, you were probably looking for a specific figure compared to the decline rate from the other legacy mobile game titles. Compared to our expectations, the decline was one quarter more delayed. As I mentioned, there had not been any change to the traffic, and we are very closely following how the trends play out, and we have seen, we are looking at the main numbers as well. I can tell you that once we enter into the second phase, and I will be able to say that with confidence when that time comes. This downward stabilization of Lineage W once again is going into a stabilization phase, just that there's been a one quarter delay.
Related information will soon be announced.
저희 NCSOFT하고 Amazon Games가 같이 global test 또 global showcase, 이런 포함해서 적극적인 마케팅 활동 계획을 하고 있고요. 그 일정은 아까 말씀 올린 것처럼 순차적으로 계획, 그 안내를 드릴 예정입니다. [Foreign Language]
NCSOFT, together with Amazon Games, are going to engage in very active marketing activities, including global test as well as global showcase, and the relevant schedules will be opened sequentially.
저희가 지금 여러 가지 경제 상황 같은 거를 감안해서 저희가 그런 타이밍과 이거를 조정, 조율하고 있다는 거를 좀 말씀을 드리면 질문에 답변이 되지 않을까 생각을 합니다. [Foreign Language]
We are at this point coordinating the timing and the schedule in consideration for the competitive backdrop. I think that by saying that I will be able to answer the question that you've raised.
다음으로 질문해 주실 분은 Morgan Stanley의 Se Yeon Park 님입니다. The following question will be presented by Se Yeon Park from Morgan Stanley. Please go ahead with your question.
네, 질문 기회 주셔서 고맙습니다. 저도 뭐, 질문 몇 개 사실 준비했었는데 사실 다른 분들이 이제 다 물어봐서 지금 딱 하나 있는데요. TL의 운용에 관련해서는 이제 한국에서는 아무래도 이제 pay-to-win 게임들을 조금 게이머들이 좋아하는 경향이 있고, 이제 해외 분들은 pay-to-win을 상대적으로 안 좋아하는 경향이 있고, 또 이게 이제 운영 주체도 이제 국내랑 해외가 좀 다를 것으로 보이는데, 그러면은 뭐, 게임 출시부터 시작해서 또 뭐 콘텐츠 업데이트나 이 monetization business model 등이 권역에 따라 다르게 운영될 계획인지, 아니면은 같이 가는 건지, 아니면 정말 나중에는 이 서버들이 국내랑 해외도 같이 통합될 수 있는 여지가 있는지에 대해서 조금 그런 설명 좀 부탁드리겠습니다. 고맙습니다. [Foreign Language]
I intended to ask many questions, but it was previously asked by other analysts. I would just like to ask one question relating to servicing of TL. In Korea, gamers tend to prefer pay-to-win mode, whereas overseas, Western players tend to not like pay-to-win.
5월 24일부터 5월 30일까지 진행하는 CBT에 저희가 테스터 규모를 한 10,000명 정도로, 좀 확대해서 생각을 하고 있고요. 이 기간 일주일 정도 기간 동안에 플레이가 가능한 그 분량의 콘텐츠를 모두 제공하는 그런 정식 서비스에 거의 필적하는, 거의 정식 서비스하고 같은, 테스트를 진행하려고 하고 있습니다. 왜, 이 질문에 왜 이 답을 드리냐 하면, 뭐 통역을 하시고. [Foreign Language]
Yes. Thank you, Mr. Sean Park, for the question. We are at this point planning on a closed beta test to last from May 24th to the 30th, and we will be conducting the CBT against expanded 10,000 users. During this one week period, we will be providing all of the available contents that the gamers can actually play, which will be on par with a full-fledged service level. The reason why I tell you that I will explain.
기존에 출시된, 글로벌 출시된 그 경우를 봐도, 어, BM이 한국과 서구권이 같음에도 불구하고 매출이, 어, 양쪽에서 비슷하게 일어나는 경우를 저희가 경험을 했고요. 어, 이번 테스트에서도 그 유저들께 저희가, 어, 유료 화폐를 지급하고 그다음에 상품 구매의 직접 경험까지도 제공을 드릴 예정입니다. 그래서 이번 CBT의 의미가 이런 식으로 게임의 BM을 좀 전반적으로 점검을 하고, 어, 거기에 대한 피드백을 바탕으로 완성도를 극대화해서 끌어올리려고 하고 있고요. 그 과정에서, 어, 여러 가지 그 TL 관련된 fandom을 확보하고 고객 커뮤니티를 활성화하는 역할이 될 거로 기대를 하고 있습니다. [Foreign Language]
If you look at our previous global launches, the BMs, even if they are the same for Korea and the Western world, we were able to drive same level of revenue. This time, the reason why we're conducting this test at this scale is that we will be providing the users with the in-game currencies, and they will actually be able to experience direct purchases of the in-game merchandises. By doing that, we will be able to check on the feasibility of the game business model. Based on the feedback that we receive from the users, we will be able to maximize and scale up the level of completeness of this game title. In so doing, we will also be able to secure an avid fandom of TL and also really activate the user community.
Just to provide a direct answer to the question that you raised, Mr. Park, basically our servicing approach and stance will be the same and identical across all of our global areas. Due to the characteristics of the global market, we have adopted a more universal monetization to the revenue curve that we will see, unlike the other mobile games where the revenue curve is very much focused, the curve is very much initial focused on the front part in terms of the amount of growth. We expect after we open this through the CBT we will be receiving feedback and we'll consider and reflect that in the game to follow.
Presented by Dongjun Kim from CLSA. Please go ahead with your question.
Well, thank you for taking my question. Just one very quick question. I understand that your schedules, release schedules for Blade & Soul 2 and the Lineage W, you had actually gone through some changes in regards to releasing into the timeline for these releases. Also for AION 2, under the backdrop where there's been a lot of pay-to-win game titles in mobile MMORPG, and there's been a buildup of fatigue by the gamers. In that situation, I think AION 2 can really bring a good opportunity. We would like to understand what the company's take or strategy is and how you see opportunities arise from AION 2. Mm-hmm.
Regarding the question in AION 2, I will, you know, throw that to Jason because he personally is an avid fan of this game. Responding to the question about Blade & Soul 2, this year in the third quarter, we have planned to expand to embark on global expansion. Since the release of Blade & Soul 2, there's been many changes. We've really further scaled up the fun and entertainment of the combat by making improvements on the control and enhanced the user accessibility, you know, through really reinforcing and strengthening the content that is being offered. Over the past two years, there's been many changes on the content front, and we think that this is an opportunity for us to really double check and affirm the value of the IP of Blade & Soul in a new region.
In that sense, we have high expectations. You also asked about Lineage W. We are in the process of preparing for a release in Area two and also developing the console version. We will be able to open the specific timelines at a latter point in time. Regarding AION two. Types of game genres saturated, we felt that there would be a new value that would be created under the MMORPG market as of today. If you compare the markets of 2008 and right now, the market size is much bigger, and also there would be a segment where a different types of MMORPG games could really be successful and be accepted based off of this more broadened gamer base that has been created both domestically and globally.
If we can come up with and develop a product that can target that very specific segment and which we are doing, we are currently developing those certain game titles, and we'll be able to open up the schedule at latter point in time. Once we do that, I believe that in the MMORPG mobile segment, we will be able to really, you know, come up with a game that could meet that quantum jump.
The following question will be presented by Eric Cha from Goldman Sachs. Please go ahead with your question.
사실 매출 1분기가 저점인지 아닌지 그렇게 뭐 확실하게 확언은 드릴 수 없지만, 굉장히 안정적으로 2분기, 3분기 진입할 수 있을 거라고 생각을 해요. 물론 이제 영업이익은 다른 이슈죠. 보수적으로 접근해야 되는 분기가 있고 하겠지만은 일단 다시 한 번 저희 레거시 매출 기조가 앞으로도 계속 decline 하냐? 사실 그거는 아닌 것 같아요. 사실 이번 분기도 사실 가장 큰 swing factor는 사실 Lineage W였었잖아요. 아까 말씀드린 것처럼 이제 안정화 단계 진입하고 아까 말씀드린 한 1분기 정도 defer가 되기는 했지만은 그거를 감안하면은 지금 2분기 매출이 거기서 한참 더 뭐 벌러덩하게 떨어질 것이다, 그런 건 아닌 것 같습니다. [Foreign Language]
As mentioned before, Lineage W, top line revenue is entering into a stabilization phase and also other gains as well. The traffic is quite steady. Now with regards to whether I believe that as we go into Q2 and Q3 things would look more stable. Of course, operating profit is a different story. There will be certain quarters where we would need to be a little more conservative. Regarding the second quarter, I do not believe there will be that revenue volatility. Quite clear coming from the hardcore users, there's no doubt on that. Do you also have plans to really attract the younger or lighter users, light users of these games with your upcoming titles? You mentioned AION targeting different user groups, but gain user segment.
In terms of the business model or the content or gameplay, would there be any difference?
네, 저희가 AION 2에 관해서는 지금 말씀드릴 수 있는 상황이 아니니까 TL 위주로 말씀을 드리겠습니다. 그 말씀 주신 질문에 정확하게 답변을 드리면 저희가 지금 현재까지 저희의 강점인 PVP 콘텐츠는 유지하면서도 서구권 그 유저들에게 어필할 수 있는 좀 다양한 PVE 콘텐츠를 저희가 많이 제공을 할 거고요. 또 이 글로벌 게이머들이 좀 몰입할 수 있는 그 narrative 콘텐츠를 갖추고 있습니다. 그래서 그 점이 차별화되는 포인트일 것 같고요. 그다음에 그 대규모 플레이어들이 이렇게 어우러지는 콘텐츠에서도 여러 가지 action성을 극대화한 그런 거를 저희가 이번에 많이 신경을 썼습니다. 그리고 좀 번역 드리고 추가로. [Foreign Language]
Yes. I will focus on TL, rather than Aion 2. Our strengths, which is PVP content, we will continue to stick to that. On top of which, for our Western users, we will be providing and servicing various different PVE content as well. To really help the global users to be much more appealed, we actually have in place narrative-based content, which can really appeal to our global user base. For the games where, and instances where there will be a massive number of users, playing together, we have really focused on improving on the action element and have come up with many different ways to further bolster that.
그리고 기존의 어떤 그 공성전 외에도 개인형 던전, 그리고 guild raid, 그리고 world 탐험 콘텐츠, 이런 좀 다양한 그 플레이할 거리를 제공할 거고요. 공성전만 하더라도 저희가 이렇게 trailer에서 보여드렸던 막 그런 화려함에 비해서 조작하는 방식이 굉장히 좀 용이한, 쉬운 그럴 거라고 저희는 생각하고 있습니다. 결론적으로는 저희가 개인 플레이어 간 경쟁보다는 어떤 community에 기반한 콘텐츠들이 많기 때문에 그게 좀 그 life cycle을 좀 길게 가져갈 수 있는 그런 측면에서 저희가 새로운 거를 기존 게임과 비교했을 때, 경쟁 게임과 비교했을 때 새로운 우위가 있을 거라고 생각을 하고 있습니다. [Foreign Language]
Aside from siege warfare, we are offering various different play-playing elements such as the individual players, dungeon, guild raid and world adventures or world explorations. In the trailer, the siege warfares were very colorful and flamboyant, but the gameplay itself is going to be much more easier to maneuver. Because we are going to have more content that is community-based compared to just a player competition, I think that this is going to work as a new edge for us, competitive edge for us compared to our legacy game titles and our competing game titles in extending the life cycle of the game.
네, 오늘 실적 발표 참여해 주신 여러분들 감사드리고 저희가 또 노력해서 다음 실적 발표에 또 더 좋은 말씀 나눌 수 있도록 많이 노력하겠습니다. 감사합니다. [Foreign Language]
Well, with that, we would like to close today's earnings conference call. Thank you once again for joining, and we look forward to bringing you, but, you know, more promising news next call. Thank you.