The game industry is still suffering great losses. In the fourth quarter of 2006, the operating profits of the five listed game companies showed poor performance compared with the same period last year.
The operating profit rate of the four leading companies in the game industry -- NC Soft, Neowiz, CJ Internet and Webzen -- has fallen below 10%. IN particular, Webzen's loss of US$19 million in 2005 has increased to US$32 million in 2006. A couple of years ago, the operating profit rates of leading companies were 20-30%.
Even Actoz Soft, a company that has gone back into the black in the fourth quarter, is still in the red on the basis of annual performance.
Considering that the leading game companies still have poor profitability, small to mid-sized game companies are also most likely suffering great losses.
The only hope is that in case of large companies, their sales are slowly increasing along with recent market expansion. But for a long period of time, small and medium sized game companies have had to suffer difficulties. One high-ranking company official said: "As competition gets fiercer at home and abroad, and also the user's gaze reaches higher, so the development period for a new work lengthens, and as a result, investment requirements are growing like a rolling snowball."
But there is still hope that this year will bring a good opportunity for takeoff, because many new large-scale products will come out. New games such as NC Soft's Aion and Tabula Rasa, Neowiz's A.V.A. and Warlord, and CJ Internet's YS Online are waiting to be launched within 2007. The fact that many large scale foreign-made games will enter the domestic market is expected to revitalize the market by increasing expansion.