South Korea’s leading online game developer NC Soft is enjoying an upswing in its share price on robust sales of mobile games in China that propelling the company`s overall growth according to a report at pulsenews. Blade & Soul Mobile, a mobile game the company launched in China earlier this month based on its popular online game with the same name, has captivated the minds and hearts of Chinese gamers.
According to the Korea Exchange (KRX) last week, shares of NC Soft surged 18.8 percent from Dec. 30 last year to Mar. 14 this year, outpacing a 0.6 percent rise in Kospi over the same period. Late last year, shares of NC Soft hovered around 230,000 won ($192.7), but in about three months, its stock price soared to 277,000 won on Mar. 11, reaching its highest in 52 weeks. NC Soft’s stock fell 1.2 percent to 250,000 won as of 02:25 p.m. in Seoul trading on last Wednesday.
The upswing comes after NC Soft expanded its business portfolio to mobile games last year in a bid to respond to the growing demand for diverse mobile content. The company that remained shy about developing mobile games has turned more aggressive in investing in mobile content after giving away the top spot in the game industry to Netmarble Games last year.
Blade & Soul Mobile, in which NC Soft launched early this year in the Chinese market, has been well received by mobile-savvy consumers. After its launch on Mar. 7 in partnership with Tencent Inc., China’s largest game developer and retailer, the game has made its name on the top of the best mobile game list in China.
Blade & Soul Mobile is a role-playing game (RPG) based on the existing intellectual property of the online game version of Blade & Soul. When the global game industry started to shift from online- to mobile-based, NC Soft remained passive in launching mobile games, stirring concerns among investors that the company would fall behind others and eventually lose its ground to competitors that dived into the mobile game industry. While the online game industry earns between 100 million won and 300 million won in revenue daily, the mobile game industry reaps 300 million won to 500 million won.
However, Ahn Jae-min, an analyst at NH Investment & Securities Co., said that with the release of its new mobile game, NC Soft has brushed off uncertainty over its growth potential. Ahn even forecast the company should see an overall growth in its earnings and be re-evaluated.
Other brokerage firms are also adjusting and upgrading NC Soft’s estimated earnings as they project the growing popularity of Blade & Soul Mobile will bring positive outcomes. In particular, they note that the company will gain massive profit from high royalty revenue in China. NC Soft’s revenue in China are based on the royalty it receives from Tencent as the game is distributed only by the local game company. In other regions like Japan, Taiwan, North America, and Europe, NC Soft directly provides the game service via its overseas subsidiaries.
Kong Young-kyu, an analyst at Shinhan Investment Corp., said that NC Soft is expected to earn 28.6 billion won in revenue from Blade & Soul Mobile royalty in China this year if the game remains above 16th place in sales. Kong projected that NC Soft will see a 56.5 percent rise in its first-quarter operating profit this year to 70.2 billion won when reflecting the estimated royalty income. The figure is higher than the initial brokerage firms’ estimates of 67.3 billion won operating profit in the first three months of this year.
Last year, NC Soft received 98.7 billion won in royalty income, down 28 percent from 136.8 billion won in 2014.
NC Soft is also expected to post further growth in revenue in the months to come considering that it plans to introduce about 10 more mobile games this year. Currently, NC Soft is working to develop many of the popular online games to mobile games based on the intellectual property it owns. Online games that are well known in China, Southeast Asia and North America, including Lineage and Aion, will be introduced as mobile games later.
Unlike the robust growth in the mobile game sector, however, NC Soft’s most overseas businesses remain sluggish. Recently, NC West Holdings, the North American unit of NC Soft, has cancelled the release of its latest online game WildStar following a workforce reduction. NC West Holdings, headed by Yoon Song-yee, wife of NC Soft CEO Kim Taek-jin, oversees business in the North American and European markets. Last year, sales of NC West Holdings dropped 24.1 billion won from a year ago to 124.3 billion won due to poor sales of WildStar.
First seen and source: Pulse News