In the dynamic realm of online gaming, NCSOFT stands as a titan, constantly evolving and adapting to the ever-changing landscape of virtual worlds. As an analyst for NH Investment & Securities, I've delved into the intricate details of NCSOFT's recent performance and future strategies, revealing a fascinating journey that involves both challenges and promising opportunities.
Unveiling the Scene: A Sluggish Start for TL
The narrative begins with the tale of NCSOFT's TL, a game that has encountered a slow start in terms of sales. However, my analysis suggests a silver lining—anticipate a significant boost upon its global release. The initial payment for the title is expected to make waves in the gaming market, setting the stage for a potential turnaround.
A Shift in Strategy: Battle Crush and Project BSS
Looking ahead, the crystal ball reveals a change in NCSOFT's strategy. New games, such as the intriguingly named Battle Crush and Project BSS, are poised to shake things up. As the company welcomes a new CEO and undergoes executive restructuring, the winds of change are blowing. Cost reduction efforts are on the horizon, promising a leaner and more efficient NCSOFT.
Adjusting Sails: Lowering Target Price but Holding Steady
While maintaining a Buy rating, adjustments are made to the target price, reflecting cuts to earnings estimates for NCSOFT's new game lineup from 2024. Despite the disappointment in Throne and Liberty (TL) sales, my analysis limits additional trimming of earnings projections, as conservative estimates were already factored in for the title. It's a strategic move, acknowledging challenges while keeping an optimistic outlook for the future.
The TL Tale Continues: From Domestic Disappointment to Global Anticipation
TL might have faced disappointment in the domestic market, but the plot thickens. The game is set for release through Amazon Games in 2Q24 after a Closed Beta Test (CBT) in 1Q24. Earnings are expected to see a positive reflection following the launch, providing a beacon of hope. With muted sales expectations, the downside seems limited.
Beyond MMORPG: Battle Crush and Project BSS on the Horizon
In the grand scheme, attention should be directed not only towards MMORPGs but also NCSOFT's non-MMORPG strategy. Battle Crush, an action-packed battle game, and Project BSS, a collecting RPG, are slated for launch in 2Q24. These ventures showcase the company's diversification and readiness to explore new gaming frontiers.
A Glimpse into Q4 2023: Anticipating the Numbers
The curtain partially lifts to provide a sneak peek into the fourth quarter of 2023. Sales estimates indicate a decline, and operating profit expectations are not meeting consensus figures. However, with TL's sales in the picture and a slowdown in the decline of Lineage W and Lineage 2M sales, the story is far from over. Marketing costs have risen, signaling active participation in industry events and TL rollout efforts.
In conclusion, the saga of NCSOFT unfolds with twists and turns, setbacks, and strategic maneuvers. As the gaming giant navigates through challenges, the horizon seems to hold promise, marked by new game releases, executive changes, and a global gaming stage awaiting TL's arrival. Keep an eye on NCSOFT—this gaming odyssey is far from its final level.
