Good day, everyone, and welcome to NEXON's 2020 second quarter earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Maiko Ara, Head of Investor Relations and Corporate PR. Please go ahead, Ma'am.
Hello, everyone, welcome. Thank you for joining us today with me are Owen Mahoney, President and CEO of NEXON, and Shiro Uemura, CFO. Today's call will contain forward-looking statements, including statements about our results of operation and financial conditions such as revenues attributable to our key titles, growth prospects, including with respect to online game industry, our ability to compete effectively, adapt to new technologies and address new technical challenges, our use of intellectual property and other statements that are not historical facts.
These statements represent our predictions, projections and expectations about future events, which we believe are reasonable or based on reasonable assumptions. However, numerous risks and uncertainties could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Information on some of these risks and uncertainties can be found in our earnings-related IR documents. We assume no obligation to update or alter any forward-looking statements.
Please note net income refers to net income attributable to owners of the parent, as stated in NEXON's consolidated financial results. This conference call is intended to provide investors and analysts with financial and operational information about NEXON, not to solicit or recommend any sale or purchase of stock or other securities of NEXON. A recording of this conference call will be available on our investor relations website, www.ir.nexon.co.jp/en/followingthiscall.
Unauthorized recording of this conference call is not permitted. I'd now like to turn the call over to Owen.
Thank you, Ara, thanks all of you for joining NEXON's second quarter 2020 conference call. Before we share our financial results, I'd like to offer some context on our performance at the midpoint of a highly disruptive year, a view on how we expect NEXON to emerge in 2021, and how we're positioned as we look beyond this year. From the start of the pandemic, the games industry has experienced a surge in both players and engagement, a spike that some analysts expect to taper off as the crisis ends.
At NEXON, we see COVID in the context of a much broader trend in entertainment. We believe the crisis has brought sharp focus to a secular shift in the entertainment industry which began years ago, from physical-based entertainment such as sporting events, concerts, and theme parks, to online virtual worlds, and from linear lean-back experiences to lean-forward interactivity. Today, millions of consumers have discovered online games and virtual worlds are more fun, more social, and widely available across billions of smartphones, PCs and consoles.
This secular shift towards online interactive entertainment began years ago. It's here to stay, and it's accelerating. The entertainment companies positioned to prosper in this shift have a proven ability to sustain and grow powerful intellectual property, to manage their IPs across multiple markets on multiple platforms. They understand that success comes from managing the live services of their games. This understanding gives rise to franchises that thrive for years and even decades. In this context, we believe NEXON stands out as one of the world's top creators and stewards of intellectual property.
We recognize that a great game is not a movie. It operates much like a massive virtual amusement park, where millions of people return to have fun with their friends and enjoy new experiences year after year. Despite the disruption caused by a global public health crisis, NEXON is performing exceptionally well. Our tentpole franchises are setting records for longevity, consumer engagement and revenue. These franchises are fueling our cash flow, which in turn is strengthening our fortress-like balance sheet, providing liquidity to invest in growth.
Our creative teams continue to deliver the gold standard in live operations, as well as a pipeline of exciting new titles. Importantly, we are also expanding our popular IP portfolio onto platforms like mobile, which offer explosive growth potential as we reach a wider audience with a product that is even more accessible. Next week, NEXON will launch mobile Dungeon & Fighter in China, a game that has already generated an incredible 60 million pre-registrations. More on that shortly.
As an executive team, we couldn't be happier with the progress of the creative strategy we announced a few quarters ago. An initiative to create fewer but bigger games, and to maximize both player satisfaction and profitability by adapting our big franchises for enormous new platform opportunities like mobile. Our success on mobile started with MapleStory M. We followed that up with several additional mobile successes, most recently, KartRider Rush+ and The Kingdom of the Winds, Yeon. What is shaping up to be our biggest launch in decades, Mobile Dungeon & Fighter on August 12th.
By the end of this year, NEXON will have five of our biggest and most immersive online game franchises available to tens of millions of players on mobile. We are deeply gratified to develop and communicate an ambitious plan, and then for our teams to implement that plan so successfully. On today's call, we're going to discuss our strong second quarter results. As impressive as these results are, we hope that you will view our performance in the larger context.
We hope that you'll see NEXON as a company that offers investors long-term stability and exciting growth catalysts, and that we stand to benefit from a massive secular shift that is bringing consumers right into our sweet spot, deeply immersive online games on PCs, consoles, and mobile devices. I'll now turn to our second quarter performance, where Uemura will provide details on our Q2 financial results and Q3 outlook later in his section. Q2 group revenues were JPY 64.5 billion, up 20% year-over-year, which came in ahead of our expectations.
Operating income was JPY 26.7 billion, up 106% year-over-year, also exceeding our outlook. The solid performance was primarily driven by the record-breaking Q2 in Korea, where we had strength across our portfolio, including MapleStory, Dungeon & Fighter, and Sudden Attack. Each of which recorded double-digit or even triple-digit year-over-year growth. Our new games also performed well. MapleStory in Korea, now in its 17th year of operation, delivered yet another quarter of triple-digit year-over-year growth.
In Q2, it grew 151% on a constant currency basis, on top of the 24% growth in Q2 2019. MapleStory also recorded excellent results in other parts of the world. In North America and E.U., it grew 173%, in the rest of the world, it grew 217% year-over-year on a constant currency basis. We are particularly pleased with the early success we're seeing in moving popular NEXON PC franchises onto the massive mobile platform. In May, we launched the mobile version of NEXON's popular racing game, KartRider Rush+, globally excluding Japan and Vietnam. The game is off to a terrific start, particularly in Korea and Taiwan.
Our data shows that in Korea, there is little overlap between the PC and mobile players. The franchise is building new fans on top of the already massive registered player base on PC of 380 million users. KartRider Rush+, which accommodates a variety of play styles, is enjoyed by a wide audience of players, including male and female, parents and children, young and old. We think KartRider Rush+ is a large and positive data point in our thesis that platform expansion, especially mobile, represents a massive opportunity for NEXON.
Let me pause here to make an important point. While we are extremely pleased with the launch metrics on KartRider Rush+, at NEXON, we measure success in years and decades, not months and quarters. We believe this franchise has a long and exciting future on mobile. In June, we launched FIFA Mobile, FIFA's mobile standalone game, which also had a good start while having minimal overlap with FIFA Online 4. Our success on the mobile platform is particularly pleasing, and it comes just ahead of the mobile launch of one of our biggest franchises, Dungeon & Fighter.
As a result of these excellent numbers, NEXON has achieved its highest-ever Q2 revenue and operating income. This success is clear affirmation of our recent strategy change. We are now deeply focused on leveraging NEXON IP, on supporting fewer but bigger, deeply immersive online games, and on expanding our franchises into multiple new platforms. This highly focused strategy, coupled with the secular shift in the entertainment industry towards interactive entertainment and online virtual worlds, provides a clear path towards growth and profitability.
NEXON's Q2 success was tempered by revenue from our China business, which was below our expectations due to softer than expected performance of Dungeon & Fighter on PC. The key update in March, as well as the two major content updates introduced in the second quarter, were well received by our existing players, but have yet to recapture players who haven't logged in in the recent months. To summarize, the updates were partially successful. They effectively engaged existing players but missed our expectations on recapturing those who haven't logged in for a while.
Importantly, the existing player base is stable, and we do not expect that to change this year. Going forward, we will continue to work on engaging those who haven't engaged recently. Excuse me, to reengage those who haven't engaged recently. We remain focused on the long-term success of the game and strongly believe that the best days of this franchise in China are ahead of us. While it's taking us longer than we had originally expected to get Dungeon & Fighter back to its growth trajectory, we are pleased with the strength of NEXON's business as a whole as we once again delivered stronger than expected group performance in Q2.
Shifting now to new games, we're about to launch Dungeon & Fighter Mobile in China. Globally, Dungeon & Fighter is one of the most successful franchises in the entire entertainment industry. Launched in 2005, it is a flagship NEXON franchise generating lifetime gross revenue of well over $15 billion on the PC platform alone. To put this in perspective, that's several billion dollars more than the lifetime box office of the entire Star Wars catalog.
At the core of this incredible success are two features that make Dungeon & Fighter accessible and sustainable, simplicity and incredible live game operations from our team in Korea. The simple control of Dungeon & Fighter makes the game easy to learn for all players, regardless of their level. In addition, the wide variety of characters, skills, modes, and communities have constantly evolved over the last 15 years, making the game so deep and immersive that players repeatedly come back to this virtual world.
Its most attractive feature, including action-packed gameplay as well as the 2D iconic pixelated art, which is reminiscent of arcade games, makes it a special game for our players. Dungeon & Fighter Mobile encompasses the distinctive action gameplay, decade-long legacy, and evolution of the original Dungeon & Fighter. Our development team in Neople has invested an enormous amount of time and effort to ensure that the deeply immersive world of Dungeon & Fighter can be optimized on powerful mobile devices.
During a closed beta in China, we received valuable feedback from our fans, which helped us polish and repolish the overall game quality, tech, and fun. Now we're ready. Next week, on August 12th, NEXON will launch Dungeon & Fighter Mobile in China, where it has already generated 60 million pre-registrations. Our partners at Tencent have committed a deep marketing and operational support to the game as we both believe this could be one of China's biggest game launches.
We are thrilled to bring Dungeon & Fighter's deeply immersive virtual world to tens or hundreds of millions of players on mobile platforms in China, and we're thrilled about what this could mean for other NEXON franchises. We'll share with you its early performance during our Q3 call. We're pleased to say that there are more big launches coming soon. Looking forward in the second half of 2020 and 2021, we have two more big beats that we're particularly excited about. First, KartRider: Drift, the cross-platform next iteration of our popular kart-racing game.
KartRider Drift had its second closed beta test in June. Like KartRider Rush+, we think the game will build millions of more fans on top of the already solid user base of 380 million players. There is more to come, including the first title from Embark Studios, our team in Sweden. In the near future, we'll share with you some exciting news about their work. We think what Embark is doing represents a new generation of online games for the West, as well as massive advance in game-making technology.
In June, we announced a partnership with Wonder Holdings on two joint ventures focused on sharpening development of KartRider Drift and Mabinogi Mobile. At the center of the agreement is Wonder Holdings founder and CEO Min Heo , an accomplished developer with a great eye for what makes games successful. In 2001, Min founded Neople, which developed the first Dungeon & Fighter. After selling Neople to NEXON, Min established Wonder Holdings, which included two game studios in Seoul, Korea.
Following our strategic investment in Wonder Holdings last September, we invited Min to take an advisory role at NEXON, and he made valuable contributions to our development teams. That collaboration yielded an idea for a new structure that brings Min's leadership and creative insight together with teams working to extend NEXON's IP onto new growth platforms like mobile. The two projects under this collaboration are KartRider Drift and Mabinogi Mobile.
Min has been appointed executive producer of both projects and will be responsible for making creative decisions in partnership with two NEXON producers. The teams will transfer into the new joint ventures later this year. Uemura will discuss the financial and accounting impact associated with the joint venture formation shortly. I'll close by saying that bringing talented teams under the leadership of a proven hit-maker is a familiar strategy in the entertainment industry. Particularly in movies, music, and games.
We are incredibly excited to work more closely with Min and apply his insights and leadership in ways we expect will enhance the success of these two games. I'll summarize here by saying that NEXON just recorded the best Q2 in our 26-year history. Several tentpole franchises are delivering exactly what is hoped for by both players and investors. Fresh, exciting content, and predictable revenue from games you can depend on for years and even decades. We have an exciting pipeline of games in development.
We generate strong and predictable cash flow, and our balance sheet provides us with enormous strategic flexibility that we can use to accelerate growth. Best of all, we are keeping our promises to both players and investors. We built a strategy for making fewer online games, but to make them bigger and to evolve franchises with millions of passionate followers onto enormous new platform opportunities like mobile. With that, I'll turn the call over to Uemura, our CFO. Thank you.
Now, let's move on to the Q2 results. For additional details, please see the Q2 2020 investor presentation available on our IR website. Q2 revenues, which were JPY 64.5 billion, up 20% year-over-year on an as-reported basis and up 27% year-over-year on a constant currency basis, exceeded our outlook. While revenues from China were below our outlook, revenues from all the other regions exceeded our expectations. We had particularly strong performance in Korea. Looking at the total company results on a platform basis, PC revenues were in the range of our outlook, while mobile revenues exceeded our outlook.
Operating income was JPY 26.7 billion and exceeded our outlook, driven by revenue outperformance. Looking at the cost items, our marketing costs in Q2 were lower than our plan, while we recorded higher than planned PG fees and royalties in relation to the strong performances of the new mobile games, including the global service of KartRider Rush+ and TRAHA Japan Service, which is a publishing game. Net income was JPY 19.8 billion, which was below our outlook, primarily due to a JPY 6.7 billion FX loss related to the appreciation of the Korean won against the U.S. dollar during the quarter and its corresponding impact on U.S. dollar-denominated cash deposits.
Revenues from our China business were below our outlook and decreased year-over-year as Dungeon & Fighter's performance was below our expectations. For Dungeon & Fighter, we introduced the Labor Day update on April 23rd, which continued until June 5th. This update included the avatar package sales. We also introduced the 12th anniversary update on June 18th, which included new dungeons, in-game events, as well as avatar package sales and continued until July 16th.
The March and key update, which focused on increasing user engagement as well as regaining the churned users, had positive impact on improving the engagement of the existing players but did not recapture the lapsed players at the rate that we had expected. Accordingly, both active users and paying users trended lower than anticipated, and Dungeon & Fighter revenue was lower than expected. In addition to the factors I discussed, active users were negatively affected by the reduced number of bots following the implementation of stricter player identity verification measures.
Consequently, MAUs and paying users decreased quarter-over-quarter. Revenues and ARPU also decreased sequentially due to typical seasonality. Year-over-year MAUs decreased primarily due to the churned abusers in the second half of 2019, as well as the reduced number of bots following the implementation of a stricter measure to verify player identity. We did not experience a major improvement in the number of paying users since the second half of 2019. Paying users decreased year-over-year and remained at low levels.
Meanwhile, ARPU increased compared to Q2 2019 as the portion of light users decreased compared to a year ago. While ARPU increased year-over-year, this was more than offset by the decrease in paying users, resulting in a year-over-year decrease in Dungeon & Fighter's revenue. As planned in Q2, we recorded an adjustment of JPY 2.3 billion for a one-time royalty income related to Dungeon & Fighter sales from QQ, Tencent's communication platform.
Revenues from our Korea business in Q2 exceeded our outlook, primarily driven by stronger than expected performances of the new mobile game, KartRider Rush+, which we launched on May 12th, as well as our key PC online games, including MapleStory and Dungeon & Fighter. MapleStory's Q2 revenue exceeded our expectation, driven by the strong performance throughout the quarter following the successful 17th anniversary event and sales promotions in April.
User metrics including MAUs, paying users, and ARPU increased year-over-year, generating a 151% revenue growth on a constant currency basis as it achieved its highest Q2 revenue in Korea. Dungeon & Fighter's revenue in Q2 also exceeded our expectations, driven by the well-received item packaging offering. The strong momentum continued since the key update, including level cap release and the third awakening, which was introduced last quarter.
User metrics including MAUs, paying users, and ARPU, all increased year-over-year, and it recorded constant currency revenue growth of 49%. Revenue from Sudden Attack also exceeded our expectations and grew 103% year-over-year on a constant currency basis. This was driven by the successful in-game events and the introduction of the new characters and season pass. The strong momentum continued from Q1 and the user metrics, including MAUs, paying users, and ARPU, all grew versus a year ago.
FIFA Online 4's revenue was below our expectations. The active users, which had stayed high since the second half of 2019, decreased as the balance of the game's player rating and content update did not resonate with our users. However, on a year-over-year comparison, active users as well as paying users were roughly flat, and its revenue was up on a constant currency basis. We have already addressed the user feedback regarding the balancing of player rating and the reviews from our players since have been good.
We will continue to focus on increasing the user engagement through exciting content updates. As for the mobile business, we launched the new mobile game, KartRider Rush+ on May 12th, and it is off to a terrific start. We had a strong performance throughout the quarter, and the revenue significantly exceeded our expectations. The KartRider franchise successfully expanded the player base by building upon the PC KartRider player base. KartRider Rush+ has been enjoyed and played by various demographics and played together across generations.
On June 10th, we also launched FIFA Mobile, FIFA's mobile standalone game. It is also off to a good start, and the revenue exceeded our expectations. FIFA Mobile also expanded its player base by successfully gaining FIFA Online 3 and FIFA Online 4's dormant users as well as brand new players. Driven by the strong performances of these titles as well as the contribution from V4 launched in Q4 2019, PC and mobile business grew 62% and 88% year-over-year respectively.
Overall revenue from our Korea business grew 69% on an as-reported basis or 81% on a constant currency basis year-over-year, and we achieved the highest Q2 revenue in Korea. Revenues from our Japan business exceeded our outlook, driven by stronger than expected performance of the new mobile MMORPG, TRAHA, which we launched on April 23rd. On a year-over-year basis, while we benefited from TRAHA, this was more than offset by decreases in MapleStory M due to tough comparison with Q2 2019, which was the quarter in which the game launched, as well as the disposition of gloops.
Consequently, revenues decreased year-over-year. Revenues for North America and Europe in Q2 exceeded our outlook, primarily driven by stronger than expected performances of MapleStory and Choices. Revenue from MapleStory and Choices grew year-over-year. MapleStory's active users, paying users, and ARPU all grew versus a year ago and recorded year-over-year growth of 173% on a constant currency basis, driven by well-received content updates and item sales. This growth was more than offset by decreases in MapleStory 2, Overhit, AxE and Darkness Rises.
Consequently, revenues decreased year-over-year. Revenues from the rest of world exceeded our outlook, driven by stronger than expected performances of KartRider Rush+, launched on May 12th, primarily in Taiwan, as well as MapleStory. Revenues grew year-over-year driven by the contributions from KartRider Rush+, V4, which launched in Taiwan, Hong Kong, and Macau in Q1, as well as MapleStory, which recorded 217% growth on a constant currency basis, while revenues from Overhit, Moonlight Blade, and AxE decreased year-over-year. Turning to our Q3 2020 outlook.
For Q3 2020, we expect revenues in the range of JPY 77.3 billion-JPY 85.4 billion, representing a 48%-63% increase year-over-year on an as-reported basis, and a 49%-65% increase year-over-year on a constant currency basis. In particular, we expect revenues from Korea and China to increase year-over-year. We also expect North America and Europe, as well as the rest of the world, to grow year-over-year, while Japan will decrease versus a year ago. Overall, we expect strong growth in our group revenues compared to Q3 2019.
We expect our Q3 operating income to be in the range of JPY 30.5 billion-JPY 37.4 billion, representing a 25%-53% increase year-over-year on an as-reported basis, and a 26%-55% increase year-over-year on a constant currency basis. I'll discuss the details of this shortly. We expect net income to be in the range of JPY 25.5 billion-JPY 31 billion, representing 36%-22% decrease year-on-year on as-reported basis and 35%-20% decrease year-on-year on constant currency basis.
In Q3 last year, we recorded JPY 15.4 billion FX gain, which will not be repeated in Q3 2020. Therefore, the net income in Q3 is expected to decrease year-on-year. Excluding JPY 15.4 billion for FX gain, we expect our net income to increase 4%-27% year-on-year. Turning to China, we expect to benefit from the launch of the mobile game, Mobile Dungeon & Fighter. We anticipate the PC version of Dungeon & Fighter to be roughly flat year-on-year, while our mobile game, KartRider Rush+, which received a major update last year in July, will decrease year-on-year.
We expect revenues from China business to be in the range of JPY 23.3 billion-JPY 28.1 billion, or 31%-58% increase year-on-year on as-reported basis, and 33%-60% increase year-on-year on constant currency basis. As for PC Dungeon & Fighter, we introduced the summer update on July 16th, including avatar package offering, events, and new dungeon. In addition, we will release the National Day update in September, which will include additional avatar package offerings, new content release, and events.
We have not experienced a notable change in our KPIs. MAUs and paying users have trending low. Meanwhile, ARPPU has been staying at a higher level than at the same period last year. We expect Dungeon & Fighter revenue in Q3 2020 to be roughly flat year-on-year. We launched a new mobile game, Mobile Dungeon & Fighter in China August 12th through our local partner, Tencent. Together with Tencent, we announced its release date in June on the official website, as well as at the Tencent Games Annual Conference.
Major marketing activities have begun, including LED light show and online events celebrating the launch date announcement. In addition, we showcased the game at the ChinaJoy, China's major game show from July 31st to August 3rd. 60 million players have already pre-registered. The contribution for Mobile Dungeon & Fighter reflected in Q3 outlook is based on the information such as number of the pre-registrations and results from the closed beta test.
Turning to our Korea business. For MapleStory, we expect the game's strong momentum to continue into Q3, driven by the summer update started from late June, and its revenue to trend record the double-digit year-on-year growth, even compared to the tough comparison with Q3 2019. In Q3 2019, MapleStory's constant currency basis revenue grew 8% on top of the 126% year-on-year growth in Q3 2018, which was driven by the large-scale update for its 15th anniversary. We also expect other major PC games, including Dungeon & Fighter and Sudden Attack, strong momentum to continue and grow double-digit year-on-year in Q3.
We expect FIFA Online 4's revenue to be roughly flat year-on-year compared to Q3 last year, when its revenue grew significantly versus Q3 2018, when we successfully completed the service transition from FIFA Online 3 to FIFA Online 4. We expect our mobile business in Korea to grow year-on-year, benefiting from V4, launched in Q4 2019, KartRider Rush+, and FIFA Mobile, both launched in Q2 2020, and The Kingdom of the Winds, Yeon, launched on July 15th and is off to a terrific start.
We anticipate both PC and mobile revenue to grow year-on-year. Overall, we anticipate revenues from our Korean business to be in the range of JPY 42.2 billion-JPY 44.5 billion, or 78%-88% increase year-on-year on as-reported basis, and 80%-90% increase year-on-year on a constant currency basis. In Japan, we expect to benefit from TRAHA, launched in Q2 this year. Meanwhile, we expect this to be more than offset by the disposition of gloops and a decrease in revenue from MapleStory M due to the difficult comparison with Q3 2019, which was right after the game launch.
As a result, we expect revenues in the range of JPY 2.5 billion-JPY 2.8 billion, or 20%-11% decrease year-on-year on as-reported basis, and 19%-10% decrease year-on-year on constant currency basis. In North America and Europe, we expect MapleStory's strong momentum to continue into Q3 and grow triple digit year-on-year. We also expect to benefit from KartRider Rush+, launched in Q2 2020, as well as V4, which launched on July 24th.
Overall, we expect revenues from North America and Europe in the range of JPY 4.9 billion-JPY 5.3 billion, or 8%-16% increase year-on-year on as-reported basis, and 9%-17% increase year-on-year on constant currency basis. In the rest of the world, we also expect MapleStory's strong momentum to continue into Q3 and grow double digits year-on-year and to benefit from V4, which launched in Taiwan, Hong Kong, and Macau in Q1 2020 and globally in Q3 2020, as well as KartRider Rush+, launched in Q2 2020.
As a result, we expect revenues in the rest of the world in the range of JPY 4.4 billion-JPY 4.7 billion, or 37%-47% increase year-on-year on as-reported basis, and 38%-48% increase year-on-year on a constant currency basis. In Q3 2020, we expect operating income to be in the range of JPY 30.5 billion-JPY 37.4 billion, representing a year-on-year increase of 25%-53%. The main driver for this higher operating income is the revenue increase. Other favorable factors include the decreased impairment loss of JPY 2.2 billion recorded in Q3 2019, which will not be repeated in Q3 2020.
Unfavorable factors regarding the operating income include, first, increased variable costs associated with revenue growth. Second, increased HR costs associated with increased salaries, performance-based bonuses, as well as stock option costs. Third, increased marketing costs associated with promotions for new mobile games, including the global service of V4, the global service of KartRider Rush+, FIFA Mobile, as well as The Kingdom of the Winds, Yeon. Lastly, lower other income.
In Q3 last year, we recorded JPY 7.5 billion gain on the step acquisition under the other income. In reference to the consolidation of Embark Studios, we do not expect such a gain in Q3 2020. The high end of the range reflects the fact that we expect the impact of positive drivers to be larger than the negative drivers, resulting in higher operating income. Next, I will discuss the accounting treatment as well as the impact on our profit and loss and balance sheet related to the establishment of two joint ventures with Wonder Holdings.
First, from an accounting perspective, both joint ventures will become our equity method affiliates. We plan to complete the establishment of the joint ventures within 2020. After forming the joint ventures, the development teams of the KartRider: Drift and Mabinogi Mobile will be transferred to the new companies. Since KartRider and KartRider Rush+ teams belong to the same division as the KartRider: Drift team, they will be transferring to the new joint venture together.
As for KartRider and KartRider Rush+, which are currently developed and published by NEXON, the impact on our group P&L related to the team transfer is expected to be immaterial. The development projects for KartRider: Drift and Mabinogi Mobile, both currently under development at NEXON, will be handed over to the joint ventures. NEXON will publish these games and provide ongoing live operation support. Next is the capital allocation plan. First, let me explain our plan to invest up to $1.5 billion in global entertainment companies, which we announced in Q2.
NEXON has a solid foundation that consists of multiple franchises, which provide us with strong cash generations and fortress-like balance sheet that is flush with cash. Our operating cash flow in the first half of 2020 was JPY 65.6 billion, and our cash balance as of Q2 2020 was JPY 474 billion. In addition to M&A strategy, in order to make good use of our cash in the market that is defined by the low interest rates, NEXON's BOD authorized $1.5 billion for investments in publicly traded companies that have strong global entertainment IP and run by great management teams.
In addition to generating good returns, we hope to develop long-term relationships that lead to opportunities to work together with those companies. Lastly, let me update you on the shareholder return. As planned, the BOD today approved a dividend payment of JPY 2.5 per share for interim period to the shareholders registered as of June 30th, 2020. We are scheduled to pay the same dividend per share for the year-end fiscal year 2020. We will remain disciplined in delivering shareholder value by growing our business globally and maintaining consistent dividends. This ends my comments. Back to Owen.
Thank you, Uemura. Before we take your questions, I want to quickly summarize our quarter and the growth catalyst that you can expect in the coming year. We delivered solid results in the first half of 2020. Our flagship franchises continue to deliver high growth, and our balance sheet is a strategic asset. Many of our new games, like KartRider Rush+, have launched well, and we are extremely excited about the projects in our pipeline, including Dungeon & fighter mobile, KartRider: Drift, and products in development at Embark Studios in Stockholm.
For our investors, we are keeping our promises. We have refined our creative strategy to focus investment on fewer but bigger virtual worlds and properties that can be adapted to capture huge platform opportunities like mobile. It's early in the development of this strategy, and in NEXON, we measure success in decades, not months. We couldn't be happier with the early results of this, and the path to success this company is headed on. With that, we'll open the call to your questions.
Thank you, Owen. Next, we would like to start the Q&A. For Q&A session, we have a consecutive interpretation between Japanese and English. The interpretation will come between your questions and our answers. Please wait for the interpretation before you hear our answers. Our answers will also be followed by interpretation. Please wait until the end of the interpretation before moving on to the next question. You might have more than one question, but we will take your questions one at a time. Now we are happy to take your questions.
Today, we will accept questions from conference call participants. If you have a question, press zero one on your touchtone telephone. Once again, if you have a question, press zero one on your touchtone telephone. When we receive your input, you will hear the voice guidance. If you do not hear the guidance, please press zero one once again. If you need operator assistance, please call the operator by pressing star zero. We'll begin taking your questions shortly. Please hold on for a moment. The first question is from Mr. Han Joon Kim from Macquarie Capital Limited.
Great. Thank you for the chance to ask question. I do have two questions, and I'll go through them one by one. I think the first one is on The Kingdom of the Winds, in terms of the cooperation with SUPERCAT. I think in the past when we've had good partnerships like this, I think for NAT Games, we've progressively over time have managed to kind of consolidate them into our fold. Is this something that's possible for here as well in the interest of continuing to scale and manage
The Kingdom of the Winds IP on mobile, or is this going to be a little bit different in terms of being able to work with them more closely down the road?
I'll take that question, Han Joon. Hold on. We need to translate.
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Hi, Han Joon. It's Owen. Thanks for your question. We're not in a position to speculate on what might happen down the future. It's not the right time to do that. We have no announcements to make of any sort.
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Got it. Thank you. My second question is on kind of projects after for the second half or going on to next year. Perhaps mistakenly, I thought maybe KartRider: Drift or Mabinogi Mobile could be somewhere closer to the second half of the year. With the structure change, I think presumably it'd be fair to think more 2021 than 2020. Alongside that, just in terms of Embark Studios titles, I think you alluded to it earlier, about having a little bit more update later down the road, but is this something that we can still expect towards the end of the year, going into early next year.
Just in general, if you have thoughts on pipeline for the second half and thereafter, any updates would be great. Thank you.
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Hi, it's Owen again. We don't have anything to announce at this time in terms of timing. What we've told you is that those two games, particularly KartRider: Drift and the first title from Embark, are our next big beats. We haven't announced dates for those yet, and that's going to be driven entirely by product development and marketing. We'll make the appropriate announcement for the time that's best for those launches.
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Thank you very much.
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Thank you.
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Next question is from Mr. Yamamura from Nomura Securities.
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Can you hear me?
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Yes, we can hear you.
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I have two questions, first of all, about the plan of the China Dungeon & Fighter Mobile. You expect a national holiday update, but if you look at last year, before it went down, Q-o-Q growth was observed. Looking at the status, the PC version of the Dungeon & Fighter, it seems that you're focused more on the existing users. Does that mean that the seasonality might change from now on or it won't change anything? That's my first question.
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Yes. Thank you for your question. Let me summarize once again on China Dungeon & Fighter. As you said, last year in Q1 and Q2, we saw a very steady growth and we grew very much. Unfortunately, from the anniversary and the summer update time period, we started to see some decline. This year in March, we had a major update in order to recapture the churned users. As a result of this update, unfortunately, we could not recapture the churned users as much as what we expected. We could not go back to the very high growth period in the past.
The content of the update was very highly evaluated by the existing users, and those existing users are enjoying the game very much. As far as the China Dungeon & Fighter is concerned, the existing users are the main players and they are very stably trending. As for the seasonality, we see the seasonality in Q1 and Q3. As we always say, the PC online games has a long longevity. We think that we can grow this in the long run. We would like to maintain the current level or status so that we can put this into the regrowth trajectory.
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Thank you. My second question is the plan in Q3 about the mobile Dungeon & Fighter. What kind of scenario or what kind of story do you expect for the startup of this mobile Dungeon & Fighter? How this game will be played or enjoyed by the users? Would it be the monetization from the beginning or would it start up and gradually increase? It seems that you have a very big pre-registered users. Do you have a sufficient content from the beginning? I'm a bit concerned about that.
As for the startup of this mobile Dungeon & Fighter game, what kind of a scenario do you expect? As much as you can talk about this, I would appreciate your comments.
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Yes. Thank you. Yes, we have very high expectations from the Dungeon & Fighter mobile version, but it has not yet launched, so it's very difficult to talk about what would happen clearly at this moment. The game experience is very similar to that of the PC version. If you look at the Dungeon & Fighter PC version, the users are enjoying this in the long term, and we have been growing this game very much. Our ideal is to do the same with the mobile version. Of course, we like to start big and then continue to grow further.
Now, as for the year-on-year outlook, we expect growth in China, but the Dungeon & Fighter PC is expected to be flat. Even at the high end, there is a slight increase expected. With the KartRider Rush+, there will be an offset, but the net increase will come from the mobile version of the Dungeon & Fighter. That gives you a little bit of a hint what would happen year-on-year .
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Thank you very much.
This is Owen. Just one other comment. As you know, we've had the game under development for some time, and one of the things we wanted to be very careful of was to develop a lot of content. You asked the question, but certainly the development included making sure that we had worked very hard to make sure that we, as I said in my prepared remarks, polish and polish and polish the game. A big part of that is making sure that we have enough content. It's been a big focus for our team.
Just want to let you know that that was an important component of getting the product ready.
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I understand. Thank you very much.
Thank you.
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Our next question comes from Mr. Seyon Park from Morgan Stanley. Please go ahead.
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Hi. Thank you for the opportunity. I also have two questions which I'll go over one by one. First question is related to The Kingdom of the Winds. To me, it seems like this game has come really as a big surprise. Coming in at one point, the number two grossing game in Korea. It seems revenues are actually quite stable. This is actually a game which even comes before when I was going to college. It is a very old game that I recall. I was just kind of curious as to whether the players are those who have played this game on the PC version, or whether we are seeing a younger generation of players play this game.
In terms of your outlook of how long the longevity of this game could be, could you share some details as to whether this is a small group of very highly engaged players, or whether it is relatively a broader base of players, but with maybe moderate to lower monetization overall.
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Thank you for your question. As you have mentioned, The Kingdom of the Winds is trending very well. As you have mentioned, this is quite an old title. As a matter of fact, this is the very first online PC game that NEXON launched. For us, this is a great track record of being able to convert the great IP title to mobile version. All in all, to date, I am quite happy and grateful for the results we are getting through this game. Now, talking about the attributes, meaning who are the players, needless to say, people who used to play The Kingdom of the Winds through the PC feel very nostalgic, and they came back to play the mobile version.
Not only that, but we see a broader generation playing The Kingdom of the Winds, different gender as well as different age groups, whether you be old or young, they all come to play this game. So once again, this is, for the Koreans, a very nostalgic title that they can bring back good memories. The people who used to play this game on PC are now enjoying the mobile version as well. So regarding the user profile, we can say that the past users of PC came back, and also we have the new players.
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I would like to comment on the outlook. As I have already mentioned in Q3 outlook, we believe that this title can be a major contributor to our business. So far, KPIs look very favorable. Regarding what will evolve after Q4 and onward, of course, I cannot make any concrete comment on it, but for now it is indeed growing and we want to utilize our know-how on how to realize longevity of PC online games to the mobile world as well. Therefore, we will put our full effort to grow this mobile game and enjoy longevity.
Thank you very much. My second question is related to the $1.5 billion budget that you have to invest in the global entertainment companies. Can I get a little bit more background as to the rationale behind it? Is it to replenish some of your IT, given that a lot of the games that NEXON had developed in the past have now come out on a mobile or a cross-platform version? Or does it involve other kinds of reasons as well? Does this $1.5 billion include game companies as well, or are we talking specifically only about maybe non-game-related IT?
If you do end up investing, would it mean that NEXON is a passive investor or more of a mutual partnership? Thank you.
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Hi, this is Owen. I'll answer the question. Let me give you a quick background. By way of introduction or background, as you can probably gather by talking to us, we have a very particular view on what's going on in the media industry around the globe right now and where it's heading in the coming years. As we've said before, we just have a very strong opinion that we're in the middle of a secular shift in our industry, and that it's profound, and that we're going to look back on the first half of 2020 as a major turning point.
We think the world has really changed, at least in the entertainment industry. The market for interactive entertainment is already bigger and it's changing a lot. The transition is happening. When you read about what's going on, when I read the newspapers in the U.S. and Japan, this type of discussion is barely mentioned. I mean, we can see it around the entertainment business, but you don't read about it a lot. The topics typically are about linear entertainment, about movies or music or live sports, when you see entertainment coverage.
The question for us, though, is who wins in this new world? We think that we win if we execute well, but we also think that there's a lot of really good IP out there that could win if the IP owners make that transition to the new world. We think this is going to represent real opportunity in the coming 10 years. We think it's a good use to put our cash into this opportunity. It is not part of our M&A strategy. It sits apart from that M&A strategy. Really, the primary purpose is to get a better return on our cash in a zero interest rate environment.
The board has approved us to invest in up to $1.5 billion, as you've heard us say. We have invested about half of that so far. If the opportunity arises, potentially we can work with the companies that we invest in to help them make that transition if they're interested in doing that. To your question of is it about replenishing our IP, we don't think about that way at all. We've got some of the very biggest IP in the entire entertainment industry, anywhere in the globe.
We've got fantastic IP, but we also have a view that there's going to be some other great winners in the world that we're all going into. That's what it's about.
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Can I just confirm that you've cited that you already spent 50% of this budget, does that mean that in the near future, the company will be disclosing on what investment you've invested in?
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The answer to your first question is yes, we are confirming that we've spent roughly 50% of it. The answer to your second question is we may or may not announce who those companies are that we've invested in.
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Okay, thank you.
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Thank you.
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Our next question comes from Mr. Atul Goyal from Jefferies. Please go ahead.
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Thank you very much for this opportunity. Very excited with the launch for Dungeon Mobile. Owen, the question is, you've got 60 million registrations. You also mentioned that combined with Tencent, you have high expectations. You believe that the game could be one of the best, probably you meant in revenue terms. How are you managing the potential risk of cannibalization that the users on mobile don't necessarily just come from the PC? Are there some metrics you're monitoring?
Maybe, I don't know what you can share, but out of the 60 million, how many are actually current active users on PC versus the ones that are not? That's my first question. I've got one more question on DNF monetization data.
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Thanks Atul for your question. The short answer is, it's extraordinarily hard to tell. Over time, what we've seen is that the franchise tends to grow on both. The big impact, the much bigger impact that we have seen is synergies between the platforms. Combined with or in addition to growth of the power of the overall franchise. That gets reflected across the KPIs. Of course, it ends up in revenue, but it also ends up in the KPIs that get reflected in revenue. Just as an illustrative example of this, we've shown before the history with MapleStory PC and the history of MapleStory Mobile.
As a matter of fact, we've put a slide that illustrates that on page 40 of this quarter's deck. You can see what happened. We launched MapleStory Mobile in 2016 and through 2019, as you can see, the numbers got substantially stronger in MapleStory PC. Those numbers have gotten even a lot stronger in the first half of 2020. Over the long term, it's been very good for the franchise overall, the strength of the franchise overall and on each of those platforms. That overwhelms whatever cannibalization, which, as I said, is very, very hard to tell, that may be there.
Net, it's really hard in the near term to call precise numbers, but over the long term, our experience has been very positive. We'll just have to see how it works out for Dungeon Fighter.
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That's a very good point you make, Owen. In fact, before I ask my second question, a quick comment. I observed the same thing when we saw Pokémon launch. It didn't cannibalize Pokémon Mobile. It didn't cannibalize. In fact, increased the number of people who wanted to buy Pokémon console games. Same thing we observed with Animal Crossing as well. I take the point there. Again, we need to be careful and watch how things go. Secondly, Owen, is it possible?
I know it's very difficult to I mean, there's something, a lot confidential agreement between you and other parties, especially including Tencent, but is there some kind of an image you could share in terms of the take rate or monetization for DNF on PC versus mobile? Without going into a lot of details, but is there something you can share? Will it be slightly higher or slightly lower? Ballpark, same kind of a take rate is what we should look at.
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Sure. I'm not sure how if this will answer your question as directly, the way to think about mobile DNF is it's basically designed to be PC DNF, but on a mobile device. That's the way to think about it in terms of everything about it, the gameplay, the monetization, how long we expect or hope that people will play it, interact with each other and so on. There will be two important differences, a small one and a bigger one. The small difference is that there's going to be a platform fee. Anytime you're on mobile, you're going to have platform fees.
You have to keep that in mind when you do your model. The bigger one is we're addressing a much, much bigger market. By our estimates, I'm not sharing that this is not the China numbers alone, globally, by what we gather is there's roughly about 300 million game playable PCs in the world. There are roughly 3 billion game playable mobile devices now. That's iPhone X and higher equivalents on Apple and Android. On a global basis, we're dealing with a total addressable market that's much, much bigger.
That dwarfs platform fees in terms of size of impact for us. We're very excited about the mobile platform. In terms of how we're designing it, though, it's designed to be the PC experience, from a user's perspective, there's a huge impact and then it's with you all the time, anywhere you're at.
Fabulous. Thank you so much. All the very best for the launch.
Sorry, let me translate that. Sorry.
Sorry.
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Thank you very much. All the very best.
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Thank you very much.
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Mr. Jay Defibaugh from CLSA. Please go ahead.
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Thanks for taking my question. I'll just ask one since I think we're running short on time. On mobile DNF, could you please elaborate on what Tencent is doing to get those pre-registrations, and more importantly, how the game is being integrated into the Tencent platforms to engender engagement and monetization? Thank you.
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Thank you very much for the question. Regarding full-fledged marketing activities for Mobile Dungeon Fighter, it started quite recently. Even before this full-fledged marketing activities, pre-registration has been conducted. We can say that there were many pre-registration even before the marketing activities. Nonetheless, after the announcement was made that this game will be launched on August 12th, Tencent conducted major marketing activities.
Not only that, but we have Mobile Dungeon Fighter official website, also at Tencent's Games Annual Conference, Tencent conducted marketing, also we have a video that can be enjoyed by people who are interested in it. Also we have showcased this game at China Joy.
Thank you for that. Is there anything that you can comment on regarding how Tencent is leveraging its platforms to make the most out of Dungeon Fighter Mobile?
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Tencent has communication channels such as QQ and WeChat, and my understanding is that they are maximizing on these channels to conduct activities related to marketing.
Okay. Thank you very much.
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This concludes the question- and- answer session. Ms. Ara, at this time, I'd like to turn the conference back over to you for any additional or closing remarks.
Thank you. If there are no further questions, I would like to take this opportunity to thank you for your participation in this call. Please feel free to contact the NEXON IR team at investors@nexon.co.jp should you have any further questions. We appreciate your interest in NEXON and look forward to meeting you, whether it is here in Tokyo or in your corner of the world.
Thank you. That concludes today's conference. Thank you for your participation. You may now disconnect.