Good morning and good evening. Thank you all for joining this conference call. Now we will begin the conference on the fiscal year 2022 third 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. Now 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 Q3 2022 earnings presentation. I will begin with the highlights of the third quarter earnings. Q3 sales was up 21% year-over-year, reporting KRW 604.2 billion, but was down 4% QoQ. Operating profit was up 50% year-over-year and 17% QoQ, reporting KRW 144.4 billion on the back of higher sales and decline in marketing spend. Pre-tax income was up 98% year-over-year and 54% quarter-over-quarter to KRW 250.4 billion. Net income was KRW 182.1 billion, up 83% year-over-year and 53% quarter-over-quarter
Next, I will go over sales for each game. Sales from major Mobile Games was up 32% year-over-year, but down 8% on quarter, reporting KRW 437.3 billion. Lineage W was down 12% QoQ, reporting KRW 197.1 billion in revenue. As Berserk IP collaboration and Giran updates were well-received, Lineage W's stabilization and moderation trend eased, driving the performance above expectations. First-year anniversary large-scale update, released in November 2nd, was also successful, boding well for solid earnings going forward. Lineage M was up 4% QoQ to KRW 146.5 billion. Since the beginning of the year, we started offering content that supported user return and growth. As a result, user purchases were naturally activated, driving sales growth for three consecutive quarters this year.
We plan to continue such an uptrend through the offering of various different services that help extend the game's life cycle. Lineage2 M will release its third year anniversary update in Q4, ahead of which we made adjustments in the level of business activities. For this quarter, the revenue was down 11% quarter-over-quarter, reporting KRW 85.6 billion. We will endeavor to further enhance the business performance through the third year anniversary update in the fourth quarter. Blade & Soul 2, on the back of moderation in sales, was down 43% quarter-over-quarter, reporting KRW 8.1 billion, while we expect to drive a rebound in sales by launching in the Taiwanese market Q1 of next year.
Sales from five PC games were down 4% year-over-year, but up 1% QoQ to KRW 97.1 billion, while Lineage was down 1% QoQ to KRW 25.5 billion, sustaining a steady top line trend. Lineage 2 was up 3% QoQ, reporting KRW 23.4 billion.
Aion 매출은 클래식 서버 업데이트 효과로 전분기 대비 23% 증가한 175억 원을 기록했습니다. Aion Classic은 4분기에도 신규 직업 및 신규 서버를 오픈하는 등 대규모 업데이트를 통해 긍정적인 성과를 이어나갈 것입니다. Blade & Soul은 전분기 대비 4% 감소한 59억 원을 기록했습니다. Guild Wars 2 매출은 전년 동기 대비 29% 증가, 전분기 대비 9% 감소한 248억 원입니다. Guild Wars 2는 출시 10년 차의 게임에도 9개 분기 연속으로 YoY 성장을 달성하고 있으며 서버 시장에서 핵심 MMORPG IP로 그 가치를 인정받고 있습니다.
On the back of the classic server update, Aion sales was up 23% QoQ to KRW 17.5 billion. Aion Classic will continue such a positive trend through large scale updates, including opening of new servers and adoption of new occupations in the fourth quarter. Blade & Soul was down 4% QoQ, reporting KRW 5.9 billion. Guild Wars 2 sales were up 29% year-over-year, but down 9% QoQ, reporting KRW 24.8 billion. Despite it being 10 years into its release, there was year-over-year growth for nine consecutive quarters with its IP value as a core MMORPG title gaining recognition in the Western market.
Royalty 매출은 전년 동기 대비 6%, 전분기 대비 20% 증가한 433억 원입니다. Lineage M royalty는 업데이트 효과로 전분기 대비 큰 폭으로 상승했습니다.
Lastly, royalty revenue was up 6% year-over-year and 20% quarter-over-quarter, reaching KRW 43.3 billion. On the back of updates, Lineage M royalties saw a large increase quarter-over-quarter.
비용에 대해서 말씀드리겠습니다. 3분기 영업비용은 전년 동기 대비 14% 증가, 전분기 대비 9% 감소한 4,598억 원으로 집계되었습니다. 항목별로 살펴보면, 인건비는 복리후생비 감소 및 성과 연동형 장기 인센티브 인식 규모 조정 등으로 전분기 대비 8% 감소한 1,897억 원을 기록했습니다.
Next is on the expense. Q3 operating expense was up 14% year-over-year, but down 9% QoQ to KRW 459.8 billion. To walk through each of the expense items, labor cost was down 8% QoQ to KRW 189.7 billion on lower welfare benefit expenses and adjustments in the size of performance-tied long-term incentive booked.
마케팅비는 여러 게임들의 업데이트와 신작 마케팅 활동이 4분기에 집중될 예정으로, 3분기는 전분기 대비 35% 감소한 389억 원으로 집계되었습니다. 매출 변동비 및 기타 비용은 모바일 게임 매출 감소로 전분기 대비 4% 감소한 2,045억 원입니다.
Marketing was down 35% QoQ to KRW 38.9 billion as updates and marketing for new titles will be focused in the fourth quarter. Variable cost and other expenses were down 4% QoQ, coming in at KRW 204.5 billion due to a decline in mobile game sales.
당사는 이번 분기 그 어느 때보다도 불확실한 대내외 환경 속에서도 Lineage M이 국내 모바일 게임 시장 일위를 꾸준히 유지하고, Lineage W가 예상을 뛰어넘는 실적을 달성하는 등 대표 게임들이 건실한 펀더멘털을 보여주면서 시장의 기대를 뛰어넘는 실적을 달성할 수 있었습니다. 2023년에는 이 같은 견조한 펀더멘털을 기반 위에 보다 풍성한 신작 게임들을 선보이며 성장을 도모하고자 합니다.
In an ever uncertain environment this quarter, Lineage M continued its grip on number one position in the domestic mobile game market, while Lineage W outperformed expectations, attesting to the strong fundamentals of our key lineup overachieving market expectations. Upon such robust fundamentals, we plan to showcase ample number of new titles so as to drive growth going forward.
조만간 2023년 최대 기대작인 TL을 글로벌 게이머들에게 처음 소개하는 이벤트를 개최할 예정입니다. 이를 시작으로 TL의 마케팅 캠페인이 본격적으로 시작될 것이며, 다양한 채널을 통해 TL을 선보일 계획이니 많은 관심과 사랑 부탁드립니다.
In the near future, we plan to hold an unveiling event to bring the most anticipated title of 2023, which is TL, to the global gamers. This will signal the start of the marketing campaign, and we look forward to your interest and support for TL as we will be showcasing the game through a variety of different channels.
여러 모바일 게임 출시 준비도 순조롭게 진행 중입니다. 수집형 RPG Blade & Soul S, 그리고 난투형 대전 액션 장르인 Project R, 퍼즐 장르인 PUZZUP을 2023년 중 글로벌 시장에 출시하고자 합니다. 또한 2023년 글로벌 출시를 목표로 개발 중인 모바일 게임 Project G에 대한 보다 상세한 정보도 내년 초 공개할 계획입니다.
We are on a smooth sail making preparations for release of many mobile game titles. Collectible RPG Blade & Soul S and action PVP Brawl action game, Project R and PUZZUP, a puzzle game, are gearing up for a global release in 2023. We are also working on Project G, which is a triple A mobile game in the pipeline for a global release in 2023, and details will be unveiled early next year.
마지막으로 글로벌 콘솔 PC 플랫폼에 선보일 트리플 A 신규 IP들의 개발도 활발히 진행되고 있으며, 이 중 하나인 신규 Project LLL을 오는 11월 14일 최초 공개할 예정입니다. 이에 대해서도 많은 관심을 부탁드립니다. 당사 임직원들은 그동안 축적해온 NC만의 특화된 강점들을 다양한 장르에 적용시키고, 이를 통해 다양한 플랫폼에서 글로벌 게이머들과 만나고자 합니다. 당사 임직원들의 이 같은 노력에 많은 격려와 응원을 보내주시기를 부탁드립니다. 다음 분기에는 더 풍성한 소식으로 찾아뵐 수 있도록 하겠습니다. 감사합니다.
Lastly, we are actively working on developing new triple-A IPs to showcase them across global console and the PC platform. One such new project is Project LLL, slated for release in November 14th, so please stay tuned. We at NCSOFT will bring our specialized strengths built over the years to many game genres and meet global gamers across multiple platforms. We ask for your continued support and encouragement, and we'll come back next quarter with many more things to share. Thank you.
지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 1번을 눌러주시기 바랍니다. 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다. 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 키움증권의 김진구 님입니다. The first question will be provided by Jingu Kim from Kiwoom Securities. Please go ahead with your question.
네, 질문 기회 감사드립니다. 저는 TL에 포커스된 질문을 좀 드리고 싶은데요. 우리가 이제 PC 콘솔 쪽에 동시 출시 계획에 변함이 없으신지, 그리고 이제 지역 세그먼트별 퍼블리싱 주체를 좀 다르게 가져가실지, 그렇다면 우리가 직접 타겟팅하는 지역은 좀 어디를 보시는지 이런 걸 좀 여쭤보고 싶고요. 그리고 사업 BM에 대한 질문인데요. 기존에 우리 라인업 대비 페이 투 윈 비즈니스를 좀 마일드하게 가져가는 것으로 이해를 하고 있는데, 다만 해당 BM을 국가 또는 권역별로 좀 다르게 가져가실지, 그리고 마지막 질문은 국내에서 리니지 IP 기반 PC와 모바일 라인업하고, 그리고 TL 간의 cannibalization 가능성을 어떻게 바라보시는지 이에 대해서 말씀 부탁드리도록 하겠습니다. 감사합니다.
Thank you. I would like to ask my questions, mostly around TL. Has there been any change in the schedule to have a simultaneous release across the PC and the console? If there's any change in the upcoming plans, please share that with us. Also regarding the companies who will be publishing the titles per different geographies and jurisdictions, do you have, would you be employing different publishing companies? Or which geography or region would you be targeting for this game title? Regarding the business model, compared to your other lineups, it seems like the pay-to-win element is much more milder. Would there be any different approaches for different countries? If you could provide some color there, that would also be quite helpful.
Also, can you share with us what your PC and mobile lineup is that actually using the Lineage IP, and do you foresee any potential cannibalization?
TL 관련 답변 제가 하겠습니다. 키움 히어로즈가 최대한 시리즈에서 멋있는 활약 축하드립니다.
Yes, this is the CFO. I will respond to your questions about here. Before I do that, I would like to congratulate you on such a, you know, successful game that we've seen from your baseball team, Kiwoom Heroes.
TL은 PC 콘솔로 가는 게 맞고요. 그 변화가 없습니다.
Yes. Regarding the release of TL, we do not have any changes to our original plan of going to PC and console simultaneously.
퍼블리싱 주체는 곧 발표가 될 거고요. 저희가 기존에 진행하던 거하고 변화가 크게 없다는 것만 말씀을 드리고요. 글로벌 지역에 대해서 말씀 주셨는데, 네, 글로벌 전체 footprint 전체 커버하는 전략입니다.
Regarding the publishing entity, there will be an official announcement soon by the business unit, so it would not be very appropriate for me to provide that information ahead of that. Please, I ask for your understanding, but I can tell you that there has not been any change to our original plan, regarding the publishing entity. Regarding the global exposure in terms of the geographies, our objective is to, yes, have an overall global footprint.
BM 관련해서는 지금 아까 그 퍼블리싱 주체도 말씀하셨습니다만, 저희가 기존과 다르게 이제 글로벌 시장의 트렌드를, 그다음에 글로벌 유저들의 어떤 특성, 그다음에 원하는 바를 적극적으로 이번에는 반영하는 거기 때문에 글로벌 시장의 보편성, 그러니까 기존까지 한국 시장과 그 아시아 지역의 몇 군데의 그런 어떤 MMORPG의 특수성이 아닌 글로벌 보편성을 감안해서
Now, you've also asked about the business model. We are very proactively trying to incorporate the aspects of the global trend and the needs and the requirements that we are getting from the global base users. Unlike our previous approach where basically there was focus on the very special characteristics of MMORPG that worked in the Korean market and in the Asian geographies. For this game title, we are much more focused on the global universality which we wish to incorporate in our business model. Unlike our past experience where when we release a game title, there is a significant concentration of high level of sales at the initial phase, and then we go through a process of decaying or a downwards trend.
Unlike that, for this game title, we expect that the initial heavy concentration of sales or revenue will be more mitigated, but we will see a much more extended and longer tail, so we can expect a more steady revenue trend from a long-term perspective. Regarding the potential for any cannibalization, first, what I can tell you is that the TL, once again, is for PC and console, and it employs a different business model, so we do not expect there to be any significant cannibalization. Another second point, as mentioned during the presentation, basically we have from our existing lineup of titles a highly loyal customer base or user base. Also the game balance that we offer to our gamers is outstanding in terms of its balance.
We employ such a great characteristic in that regard. Our user base and gamer base have high level of resistance and they perform a role where they will be able to fend off the potential cannibalization. Last point is for TL, unlike the other MMORPG titles, we are targeting a totally new user base as well. That is another element that will help us mitigate the potential risk of cannibalization.
The following question will be presented by Eric Cha from Goldman Sachs. Please go ahead with your question.
Uh, then.
Thank you. I would like to ask two questions, particularly on your recent announcement of Project LLL and Project G. I understand that Project LLL is a shooting genre, but it seems like a lot of game companies, MMO, in the MMORPG realm, they're very much focusing on developing such a shooting genre game title. What differentiates NCSOFT from your peers on this? The question regarding Project G, you've mentioned that it's a triple- A mobile game title. Can you provide a little more color which genre is Project G in? And what is the upcoming schedule like? Second, recently there was a press article saying that NCSOFT is developing an IP for another third party, very large scale global company.
Although you can't disclose the details of this specific IP project, can you at least provide us as to what your stance is regarding developing such IPs for other entities?
Thank you for the question.
This is Jason. Thank you for that question. Regarding LLL, yes, you are right. As you've mentioned, many companies are currently focusing their efforts on developing such shooting genre game. As you know, this console and PC based shooting games, they're an extensively large genre. It's actually MMORPG that is in the niche. The shooting genre basically is mainstream, it's popular, it's universal, it's significantly big in terms of its scope and size. If we are able to develop a model where we could bring live servicing element to the shooting genre and have that generate revenue, that will really make this market and this pie quite significant. The traditional incumbents are the ones that have dominance in the console service, servicing based shooting genre.
What's important is how we can actually convert that and apply the live service aspect so that we can continue to create and generate stream of revenue. Basically that is the strategic base upon which a lot of Korean game companies are currently developing this genre.
NCSOFT happens to be that very company that actually has all of these strengths that could make this possible. Come November the fourteenth, more details will be shared, and we believe that we as a company was able to find a way for us to leverage to maximum the strength that we already have, and we believe that that will be a differentiating factor. Once again, for more details on November 14 th, we will not just be unveiling cinematic trailers, but there will be much more information to come.
Yes, just to add one more point to what Jason has just mentioned.
In the trailer that is upcoming on Monday for LLL, there's of course the front part and the back part, and if you look at the latter part of this trailer, you will see how we are different in terms of providing this shooting game. This is not a short film, it is quite lengthy, so I hope you would have a chance to see all of this. It's actually not a cinematic trailer, but it's an in-game video trailer. Please, I hope that you know, you will be able to see that.
Now regarding this genre that Project G is in, of the mobile pipeline of product, I can tell you that it is a quite big genre that Project G is part of. As I've mentioned before, Project G, I mean, I've read that in a research paper that although we were able to really bring a lot of profit by playing in the MMORPG domain, it still only accounts for a single-digit market share on the global level. Looking at this genre that Project G is part of, I can tell you that it is a quite significant and a genre in terms of its size.
Just as I've explained about Project LLL, what we've done is we have really thought hard as to how we could best leverage all the strengths that we currently have and imply that, and apply that to Project G. We've thought very long and hard about that. I think that if what we have envisioned does really work, we could actually even expect outperformance against our expectations. Lastly, responding to your question about collaboration with other global companies, as you know, because of our track record in achieving and in leveraging our capabilities in the multiplayer MMORPG genre, our capabilities have been proven, and we've been receiving a lot of requests from global players in terms of collaboration.
There will soon be details that will be announced, but I can tell you that this collaboration and cooperation that we will enter into with a global partner, currently that discussion process is well underway, and we are almost reaching the end of that process. Once we close on this deal, we will be able to share with you more details on this, and I can assure you that that information is upcoming quite soon. Once we announce that, I'm sure that our shareholders and investors will be able to see the big picture, and that I hope that you will be satisfied with the big picture that we are laying for you.
Just as we are doing for TL, where we were planning to work together with a globally well-renowned publishing partner, this is a new experiment for us and a new model for us. Just as we're doing for the publishing side, on the developing side as well, the discussions are ongoing with these global players, global companies, and we are almost at the end of gaining a good result out of that.
The following question will be presented by Jaemin Ahn from NH Investment & Securities. Please go ahead with your question.
기존 리니지와 크게 다르지 않다라는 부분들에 대해서도 불만들이 좀 있는 것 같고요. 그래서 비즈니스 모델을 좀 어떻게 가져가실지에 대한 것들을 다시 한번 좀 여쭤보고 싶고, 마찬가지로 한때 테스트 영상을 보면은 콘솔에 대한 테스트는 없으신 것 같더라고요. 제가 못 보았는지 모르겠는데 이 부분 좀 어떻게 이제 PC랑 크로스 플레이에 대한 지원들을 어떻게 하실지 좀 말씀해 주시면 감사하겠고요. 두 번째 질문은 어떻게 보면 TL의 비즈니스 모델과 이에 대한 질문과 연동이 될 수 있는데, 사실 이제 NCSOFT는 과거에 누구보다 그 글로벌 비즈니스에 대해서 좀 공격적으로 해왔던 회사라고 생각을 하고 있습니다. Guild Wars 2도 매출이 여전히 잘 나오고 있고, 예전에 Tabula Rasa 같은 게임들도 뭐 실패는 했지만 어쨌든 투자도 진행하시고 했었는데, 그 당시 혹은 Guild Wars와 NC West가 하고 있는 노하우들이 TL에 대한 글로벌 비즈니스를 하는 쪽에 어떻게 좀 녹아질 수 있는 부분들은 없는지, 이 부분들이 어떻게 좀 연동이 될 수 있을지.
사실 Guild Wars 2도 어떻게 보면 MMORPG에서 가장 성공한 게임 중에 하나인데, 이런 것들이 지금 NC의 글로벌 비즈니스에는 좀 적용이 안 되는 부분들 같아서 이것 좀 전반적인 것들 좀 여쭤보고 싶습니다.
My first question relates to your TL, the business model. I looked at the trailer and I see that the business model is more or less very similar to Lineage . For instance, you are, you know, adopting Einhasad and other doll characters and these aspects seem to be quite similar to Lineage . So some people saying that TL is not that much different from Lineage . So can you provide some more information on the BM that we will be used for TL? And when I saw the trailer and the videos, I didn't see much aspects regarding console. I'd like to understand what type of support you will be providing, especially in terms of the PC cross-play. Second question is, I see that NCSOFT has been quite aggressive and proactive in the global business.
Your revenue stream from Guild Wars 2 is quite good and you're continuously making global investment. Do you plan to employ those knowhow and adopt that to the global business of TL? Because I think like since you know, Guild Wars 2 and MMORPG operation is relatively quite successful, so would like to understand what types of elements and the knowhow and lessons you were able to use for development of TL.
세 가지 질문 같은데, 첫 번째, TL의 기존 리니지나 Lineage W나 원신이나 Aion Einhasad 이런 BM 이용 여부, 그렇지 않고요. 곧 아마 저희 최문영 담당하고 계시는 최문영 PD하고 저도 이렇게 여러 가지 긴밀한 대화를 하고 합니다마는, 그렇지 않다는 거를 곧 아마 사업부에서 직접 개발 쪽하고 사업부에서 발표를 할 거고, 그렇게 할 경우에 저희가 미국 시장에서의 기존에 했던 거를 답습하는 것밖에 안 되기 때문에, 그런 거는 아니라는 거를 저희가 곧 기회를 빌어서 직접 말씀을 드리겠습니다.
The first question, the BMs are not the same between TL and Lineage. We will soon have an opportunity to hear from Mr. Moon-young Choi, in charge of this title from the business unit, and I'm also closely talking to him about these aspects as well. In terms of Einhasad, the dolls, and the metamorphosis element, if we are to just take what's working at Lineage, then we would just be making a repetition and same copy of that in TL. That is not what we want to do. Once again, in the near future, I'm sure there will be an opportunity for him to actually provide that information in another occasion.
그리고 콘솔에 관련해서도 콘솔 이미 테스트 있었고요. 그리고 콘솔이 사내에서 개발돼서 사내에서 플레이하는 게 영상에서도 콘솔 플레이 장면이 나왔고요. 그리고 다시 말씀드리지만 콘솔이 같이 동시에 병행해서 개발이 진행되었기 때문에 현재 최적화 단계, 최적화를 준비하는 단계에 있다는 걸 다시 한 번 말씀드립니다.
Yes. Regarding console, no, the console was also part of the test, and we've done an in-house development and console test as well, and console play was actually featured in the video reel that you must have seen. Basically, once again, there's been a simultaneous development across console and the PC. Right now, we're in the optimization phase.
마지막으로 길드워 저희가 한 경험을 통해서 NC West 노하우 이용 계획. NC West는 저희가 당연히 앞으로도 계속 여러 가지 전략적으로 기존의 노하우를 진행해 나갈 거고요. 제가 여기서 말씀드릴 수는 없습니다만, 길드워에 대한 전략도 있고, 또 본사의 게임을 해외 시장에서 하는 데 있어서의 NC의 전략도 지금 저희가 재정립이라기보다는 파인튜닝을 하고 있습니다. 마지막으로 TL 같은 경우는 저희가 다 아시다시피 아까도 질문 나왔다시피 글로벌 퍼블리싱 파트너라는 개념으로 새로 접근하고 있습니다. 이 TL 관련해서 앞으로 다른 IP가 또 어떻게 NC West와 어떻게 할지, 그건 이제 케이스 바이 케이스이겠습니다마는 TL 관련해서는 글로벌 파트너십에 저희가 더 중점을 두고 있다는 말씀드립니다.
Regarding Guild Wars, and the use of the NC West know-how, yes, we are strategically making use of that know-how. Guild Wars and also the main mother company's game titles and us taking that to the global market. What we are doing right now is fine-tuning the NCSOFT strategies on all of this. Regarding TL, we once again mentioned that we're taking a new approach of using the global publishing partner, and so global partnership is where we are currently putting our emphasis on. Regarding other IPs, of course, it will be case by case, but there will be cases where NC West's capabilities and collaboration with them would also be quite important.
The following question will be presented by Jong-h wa Seong from eBEST Investment & Securities. Please go ahead with your question.
Thank you. I would like to ask two questions. First question relates to TL and Aion 2. TL took a quite significant time for its developing this game title. Its game genre is multiplayer, so it's RPG, so it's basically MMORPG. If you look at the Western market trend, it seems like the bigger hits are coming from single player mode and shooting adventure type of games for PCs and console platform. Would like to understand what you think is the appeal of such a multiplayer game title is against the Western market. For Aion 2, although originally I understand that you announced this as a mobile platform-based MMORPG game, but there's been change in the schedule, and I think I heard that you will not be just dependent on the mobile platform.
Does that mean that for the global markets, you are currently redeveloping this title so that it could also be supported on PC and console platform? Aion 2 then would you also be thinking of changing this into a single mode and of a different game genre other than RPG? Second question is just a simple question regarding the performance-based long-term incentive and the booking of such expenses. Can you provide some more explanation there as to what that really is? These welfare benefits for the employees, basically these expenses, have they been deferred to the following quarter?
Two guys인데요. 예를 들어서 최근에 Steam의 성장이라든지 그다음에 인게임 아이템 판매라는 게 받아들여지는 그 receptiveness라고 하나?
수용성.
수용성. 수용성이라고 지금 이사님께서. 그거를 저희는 캐치를 하고 있고요. 그렇기 때문에 정말로 수준이 높은 RPG가 아까 말씀드린 PVE나 narrative나 액션성이나 이런 게 가미됐을 때 저희는 이게 어떤 장르 자체의 성장이 있을 수도 있다고 봅니다. 그래서 그 두 가지 측면이 저희가 이렇게 좀 하이브리드로 합쳐졌을 때 TL의 기존과 차별화되는 것을 하고 있기 때문에... 답변이 됐는지 모르겠습니다. 이거는 TL 다음 또 제작자 저희 NCing 이벤트에서 아마 충분히 어필이 될 수 있도록 저희가 내부적으로 또 준비를 하도록 하겠습니다.
This is the CFO. I will respond to the question on TL, and I will hand it over to Jason to talk about Aion 2. There are two aspects regarding TL. The first is I understand where you're coming from in terms of your question, because we have such a strength in MMORPG. That's why it is quite difficult for us to actually, before it's released next year, to be able to communicate all of the aspects of TL. Having said that, other than the PVP aspect, the non- PVP aspects have also been strengthened for this game title, especially since it is supported at the console, by the console platform.
Secondly, it really has a very strong narrative aspect to it, narrative content that really help further enhance and elevate the immersiveness of what this game offers. The action element and the action system is also quite different from other MMORPG game titles that currently exist. Compared to the titles that we are familiar with, this game is going to be very different, and we cannot just define it as an RPG game. It is not the same as the existing RPG games. If you look at MMORPG, it is not just about the genre itself. What we are doing is we are fully leveraging the current trend and how the Steam platform is growing and also how the gamers and users are well accepting, there is high level of receptiveness regarding the in-game item sales.
If we are to develop a very high quality, game that has the elements of PVE, the narrative as well as the strong action system, then I believe that we will also be able to further grow this genre, at the same time. Once again, these two elements will come together in hybrid and that will define and dictate the differentiation of TL. We will also make internal preparations to make sure that during the NCing event, when we showcase or when we provide information on TL, that we will be able to fully communicate all of these aspects.
네, 안녕하세요, 박 매니저님. Aion 2에 대해서 일단 제가 간단하게 몇 마디 공유드리면은 사실 아직 출시까지는 좀 시간이 남아 있어요. 그래서 아주 구체적인 사항을 제가 여기서 공유드릴 수는 없지만 일단 알고 계시는 대로 일단 Unreal Engine 5 기반의 차세대 MMORPG라고 저희들은 개발을 하고 있고 당연히 전 세계 동시 출시 목표를 하고 있습니다. 그리고 플랫폼 아까 여쭤보셨는데 PC, mobile, multi-platform으로 게임을 개발 중이에요. 근데 여기서 이제 중요한 건 이거 같아요. 그러니까 많은 NCSOFT의 투자가, 주주분들이 "야, next big thing은 Aion 아니야?"라는 말씀들을 많이 하세요. 당연히 이제 저희가 보유하고 있는 IP 중에서 가장 중요한 IP이기도 하고, 그리고 여러 번 강조드렸지만 이미 10년 전에도 사실 Aion이라는 IP는 북미 유럽 지역에서 천억 이상의 매출을 달성했던 MMORPG 게임이에요.
This is Jason. I will respond to your question about Aion 2. We still have some time until the release of this title, so I won't be able to provide any specifics at this point. Having said that, this game title is being positioned as a next generation MMO powered by Unreal Engine 5, and there will be simultaneous releases across the world. The platform that we will be using is PC mobile, so it will be a multi-platform game title. A lot of people are saying that, "Oh, for NCSOFT, isn't Aion the next big thing?" Yes, that is true to a certain extent because it is one of our very important IPs that the company has.
Even a decade ago, Aion in the North American and European market as an MMO game title grossed in more than KRW 100 billion in revenue.
저희들이 10년 전에 천억 이상의 매출을 북미 유럽에서 달성을 했었을 때도 여전히 아까 말씀드린 것처럼 이게 미시장이기 때문에 traffic이나 이런 것들 발표는 못 드리지만 10년 전에 우리의 PCU가 얼마였는지 이런 거는 공유를 못 드리지만 어쨌든 그 정도 기반으로 천억 원을 달성을 했었어요. 그런데 최근에 북미 유럽 지역의 MMORPG 게임들이 발표하는 이 PCU 스케일들을 보면은 저희 상상을 초월해요. 그리고 그 PCU 수치들은 매해 계속 신작이 나올 때마다 커지고 있어요. 그런 점을 감안을 한다면 지금 저희들이 과거에 천억 원을, Aion이 천억 원을 달성했던 그 시대랑 지금은 좀 진짜 두, 세 배 차이가 난 몇 배 큰
When Aion grossed more than KRW 100 billion from the North American European markets 10 years ago, basically, if you look at the traffic that had been generated on the PC platform, although we are unable to disclose that statistics, if you look at the recent trends compared to then for the MMORPG games in North America and Europe, the PCU scales are actually beyond what one can imagine. Every single time there is a new title that is released, basically that PCU measure is also continuously uptrending. Compared to that KRW 100 billion in size of sales that we saw for Aion 10 years ago, basically we have multiple folds of user base two times, three times even more than that, who could actually be the target for this game.
Regarding the console platform, I would predict that you are referring to one thing, mama, but we are also receiving a lot of contact from overseas experts on these various different areas. For the role-playing and the adventure games, if we are able to somehow incorporate a multiplayer element to it and really enable live services capabilities which we actually hold, we believe that there is a great potential for this game title. Aion 2 development is taking place in step with the trend and that we see from the market. The market backdrop is very different now compared to 10 years ago. One aspect that really stands out is the mass popularity of these types of games.
That really is what differentiates the current market environment, and then basically that is the backdrop under which we are currently endeavoring to develop the most appropriate MMORPG title.
Yes. Lastly, the message that I want to share is not just on the labor cost item itself, but overall marketing and the, you know, cost controls of the company. This year, corporate wide, the top management had a very strong intent to control the cost more efficiently. It's not that, you know, we're going to stay away from spending the necessary funds. It's just that we have really reviewed the overall expenditures so that we can be much more rational. As you know, because our organization is really big in its size, I think starting next year, these efforts will start to really show in the final outcome. Corporate wide, there has been efforts behind such cost efficiencies, and next year, I believe from a mid to long-term perspective, we'll be able to see a much more rationalized expenditure management.
Regarding your specific question about the welfare benefits, this is not tied to any corporate strategy. It's just a quarterly fluctuations that we see because in Q2 there was spending regarding the four major insurances and in Q3 that element dissipated. It's just quarterly differences. Regarding the performance-tied pay. Basically, whenever we have a new title release, there's development-related incentive pays as well. Was just not in the Q3. This was also a reflection of the seasonal cycle. Come Q4, we may not continuously see this figure go down. It can actually, it could actually go up again. Having said that, from the corporate-wide perspective, our approach is to rationalize our spending.
Come next year, we would like to really show to the market that NCSOFT is rationally controlling its cost.
The following question will be presented by Donghwan Oh from Samsung Securities. Please go ahead with your question.
Yes. I'm from Samsung Securities. I see that this quarter there's been a significant dip in your marketing spend. What do you expect the trend to be like for Q4 and Q1 of next year? And also for TL, what is your expected marketing spend?
Yes. Regarding marketing in Q3, there were no big marketing spend items. In Q4, I expect there will be an uptick because of the TL as well as many more IPs to come for next year. What I can tell you is that marketing spend is going to be at a more rationalized level compared to the past marketing trend. Also for TL marketing, in the second half, this will be actually the first case, exemplary case of us rationalizing the marketing spend at the corporate wide level.
Compared to the previous new title releases, you will be able to see a much more disciplined marketing spending. Once again, compared to the previous releases, you will be able to see a clear change.
The following question will be presented by Do Hyoung Kim from CLSA. Please go ahead with your question.
Yes. My question relates to the guidance for your existing lineup of Lineage mobile titles. In Q3 for Lineage W, you defended the downward moderation quite well at about -20%.
Do you expect that downward trend to ease as we enter into Q4? Do you also expect Lineage M's solid trend to continue? Second question regarding TL. You did provide some information here, but I want to focus on the gameplay of this title. If we just look at the trailers that has been released, it's. I think that there is, I guess, not enough content that shows the actionability as well as the the hitting sensations and PVE elements of PVE content. If we look at other titles that were successful in employing the pay-to-win model, they really had a very strong PVE aspect to it. We'd like to understand what is the core content for TL? Is it PVP, player versus player or PVE?
Responding to the question about Lineage M. As you've seen for Lineage M, for third quarter, three consecutive quarters, we've seen an upward growth trend. It's all underpinned by very solid traffic, and also releases of the updates have helped with that growth trend, leading to a good performance. In Q4, because in Q3 we had a large scale update, but in Q4 we don't, so we could see the revenue dip. Considering that this game title was released five years ago and you know, it's been five years since its service, and we are still seeing a very good traffic measure. Hence we have, we believe that we have the basis for a steady performance for Q4 and next year.
For Lineage M, we are seeing that natural erosion. Q3, however, that extent of the decline or the erosion was quite solid compared to Lineage M and Lineage2M, and hence we were able to drive good performance. As we enter into end of the year and early next year, we will see this game title's top line trend to completely stabilize, and we are at this point doing as much as possible to minimize the extent of that erosion as much as possible, so that this game could actually have a stable and moderate trend that is on par with previous titles or better.
This is the CFO. Responding to your question on TL. The videos that you've seen, I think is our in-house test related videos and trailers thereof. This was where we've run a stress test on this game title. That's probably why the PVP aspects were more featured compared to the PVEs. You asked whether, you know, which is more important, they featured in this title, is it PVP or PVE? I can tell you that this title is one that has a very good balance of both of those elements.
The last question will be presented by Hajeong Kim from DAOL Investment & Securities. Please go ahead with your question.
I would like to ask just one question. I understand that the very core identity of NCSOFT is in the MMORPG games, and the console games. But it seems that recently you've been putting a lot of resources backing console game development. Does that mean that you have now changed your identity? Or if that is not the case, what is your strategy or approach for the console games? In the current pipeline, what is the mix between the MMORPG game versus the non-MMORPG games under development?
Yes, that's a very big picture question. We never intentionally defined ourselves as an MMORPG company with the identity of MMORPG only. We were just really good at developing and providing such MMORPG titles. If you look at...
I guess, if you think about the vision, basically it is such that we are really thinking hard as to what our strategy should be for us to better meet the global game market changes and the demand. Our vision is actually bringing the multiplayer game and popularizing this game. I don't think it's appropriate to say that we are only serious about developing MMORPG titles, whereas we're just testing these other genres, like the shooting games and other adventure games, for instance. We are also very seriously developing these other games that are non-MMO because console is a very important part of the global platform, hence we're putting in a lot of efforts.
In terms of the headcount mix, the mix between live and non-live headcount is on par with one another, especially for new title development. Currently, the MMOs versus non-MMO, their mix, the ratio portion is also quite similar. Just to wrap up, internally, there are a lot of, I guess, changes or a lot of efforts that are put in, but also externally in terms of the partners that we collaborate with, we are not just going to be partnering up with one single entity. We are open to many options for us to explore ways for us to better popularize this game genre and for us to expand our global footprint. NC West, in that regard, is a good example, good case in point.
We will be exploring many opportunities to partner up with many companies outside, and we will not just be partnering up with one single entity. Once again, I repeat that. We need these types of success in order for us to, I guess, overcome the current discounts that we see in our value.
Well, thank you very much. This brings us to the end of the Q3 2022 earnings presentation by NCSOFT. Once again, thank you very much for your interest.