Netmarble is in a tough spot.

Since its IPO in 2017, the company’s stock has been on a consistent downward trajectory. After a brief spike up to roughly 167,000 ($115 USD) during the COVID highs of 2020, the share price is hovering around 45,500 KRW ($31) and is already down about 16% year-to-date, at the time of writing.

After a rare bright spot last quarter, in which the company posted its largest earnings since its IPO and its first profitable quarter in years, Netmarble came back to earth in Q3 with a more modest showing. Revenue and EBITDA both plunged from Q2 to Q3, down 17% and 32%, respectively. The company posted a net profit of just 21B KRW (about $14.5M), well short of the 51.7B KRW (around $35.6M) estimated by analysts.

Co-CEO Young Sig-Kwon recognized as much on the Q3 earnings call, stating that the company “has slowed down in its growth … due to the absence of major new releases.” The stock is now testing record lows last set in early 2024. With Q4 and FY 2024 earnings expected in the coming weeks, it could be poised for an even steeper decline.

How did the once-vaunted Korean publisher find itself here? And how might it pull itself out of this tailspin? Let’s look to recent history for clues.

Established in 2000 as a PC game developer, Netmarble eventually found its success as an early leader in mobile RPGs. Lineage II: Revolution, an MMORPG developed under license from NCSoft, became one of the company’s biggest hits on release in 2015 and continues to receive updates today.

In 2017, Netmarble acquired Kabam, bringing mobile fighting game Marvel: Contest of Champions into its portfolio. Both Marvel: Contest of Champions and Lineage II: Revolution (as well as its successor, Lineage M) would go on to earn more than $1B in lifetime revenue, buoying nearly a decade of mobile RPG development.

Today, the company consists of 12 studios (seven domestic Korean studios, five overseas) and two subsidiaries (Kabam, SpinX Games). Netmarble is also the largest shareholder of casual game publisher Jam City, which flirted with the public markets in 2021 before canceling a planned SPAC due to “market conditions.”

As an aside, Jam City's performance does affect Netmarble's financials, since it's majority owned, but it's best to view its game portfolio independently since Jam City is a separately run company (and is categorized as such by Sensor Tower). For a quick bit of context, the LA-based publisher faces similar long-term declines. Sensor Tower puts Jam City’s total monthly mobile revenues at roughly $13.7M in January ‘25, as compared to about $17.5M in January ‘23 and $29.5M in January ‘21.

As for Netmarble, the current portfolio bears similarities to that of other mature mobile publishers: a handful of aging titles supporting a plethora of underwhelming performers or outright misses, plus a smattering of pop-and-drop releases.

Netmarble also operates a number of social casino games (via SpinX) that constitute a meaningful portion of its revenue. Of the top 10 highest-earning games for Netmarble over the past four years, three were slots games. Unfortunately, both social casino and RPG tend to be extremely whale-dominant genres, implying that Netmarble likely faced setbacks after Apple’s deprecation of IDFA. Coincidentally, it wasn’t long after IDFA deprecation began in late April 2021 that Netmarble’s stock began to seriously decline.

Returning to those pop-and-drops, one such launch turned out to be the key driver of Netmarble’s raucous Q2. The release of Solo Leveling: Arise, an action game based on a popular Korean IP, resulted in $41.8M in revenue for May. However, initial optimism around the title has begun to fade as the early revenue spike has turned into a classic shark fin.

A similar story played out in 2021 with Ni no Kuni: Cross Worlds. At the time, the game industry was in the midst of an NFT craze, which the free-to-play RPG sought to capitalize on by integrating web3 elements of its own. In fact, Ni no Kuni was one of several games that would launch on Netmarble’s MarbleX platform, which is still operating today and recently underwent a rebrand.

It’s fair to say that placing such a large bet on an unproven format (including plans for “about a dozen new games”) may have been overly aggressive. It’s also worth mentioning Netmarble is a partner of the OASYS ecosystem too and is spreading its blockchain bets around.

All this has resulted in a broadly even distribution of revenues across Netmarble’s lineup. One could argue that a diverse set of revenue streams is a good problem to have; perhaps Netmarble is able to leverage some economies of scale in developing and operating so many games. More likely, though, is that few of the games are material enough to stand on their own and merit a meaningful scaling of user acquisition.

Despite leveraging a number of licenses popular in both Asia and the West, Netmarble lacks a clear "anchor IP" in its portfolio. That position was perhaps once occupied by Lineage, Seven Knights, Seven Deadly Sins, or one of Netmarble’s other RPG mainstays, but today, there is no obvious standard bearer. 

The diversification of revenues appears to be an intentional strategy. Indeed, the company seems to use the same template slide in every quarterly earnings presentation, always stating that its biggest revenue generators “were evenly distributed,” even if they are occasionally a bit top heavy (as was the case in Q2 ‘24).

It’s difficult to connect the dots between Netmarble’s portfolio performance and the overall business financials. Labor costs and commission expenses have steadily declined. Marketing costs jump with new releases, but appear to be under control. The company has also made significant headway on reducing its debt burden. It reduced the more than 2T KRW (approximately $1.37B) in short-term debt from Q3 ‘22 to 405B KRW (roughly $277M) in Q3 ‘24, though the company may have traded current for noncurrent liabilities, as that line item has grown while the former has dwindled.

The biggest red flag is the lack of top-line revenue growth. The income from Netmarble’s new game releases and existing cash cows does not appear to be enough to offset the decay from elsewhere.

In an attempt to dig itself out of this hole, Netmarble has queued up nine new games for release in 2025. Among these are The King of Fighters AFK (a sidescroller akin to Capybara Go! or Legend of Mushroom), Mongil: Star Dive (a Genshin Impact-esque sequel to an older Netmarble game Monster Tamer), and Game of Thrones: Kingsroad (a cross-platform ARPG).

The latter of these is likely to have the largest impact in the West. Although little information exists about its business model, its mobile-first launch suggests it is free-to-play, and early impressions from beta testers suggest cosmetics monetization and multiplayer modes are on the way.

Netmarble is a tough nut to crack for an English-speaking analyst. It can be hard to find reliable information outside of Netmarble’s investor relations library, and the company’s corporate website is hilariously dated — the “News” section has not been updated since 2021.

To be fair, there may be some elements lost in translation. Whatever the case, it’s difficult to glean a clear-eyed strategy or long-term vision beyond “make more RPGs, occasionally with big licenses.” Then again, maybe that shouldn’t come as a surprise for a company with two CEOs.

I’m not certain that a diversified base of revenues was the initial goal of Netmarble’s leadership team, but it seems to be the case today. Relative to its peers, however, it’s not really that diverse: It’s mostly RPGs and casual games (53% and 39% of revenue in Q3, respectively) and it’s almost entirely mobile. The company touted its 77% overseas revenue in Q3, but that figure is down from 83% a year ago, and up only 1% from Q2.

To take a favorable view of Netmarble, one can argue the company does know what it’s doing with its RPGs (and also social casino games, to a lesser extent). As such, the company should refine its focus — reduce the projects in development and double down on bigger bets. Limit investment in experiments like MarbleX until a clearer business case has been proven out. Streamline domestic operations, reinvigorate the company’s public-facing brand as a leader in RPGs, and breathe some life back into its cash-cow games.

In a market as mature as mobile gaming, not every entity is destined for organic growth. This is doubly true for companies of Netmarble’s size, where only the biggest hit games will be able to drive top-line growth. Instead, Netmarble should focus on growing profitability. The company has already made some strides in this direction, but the market seemingly expects further improvements.

One way to do that would be to emphasize growth in owned IPs rather than licensed. Establishing a new in-house IP is no easy task, of course, but when executed over the long term could both help to reduce commission fees and potentially even establish a new tentpole franchise for the company.

Another way to emphasize profitability could come in the form of inorganic growth. Perhaps acquisition opportunities will arise in the mobile space as smaller studios struggle to keep the lights on, allowing Netmarble to leverage its economies of scale in live ops. Alternatively, maybe Netmarble will find an opportunity to divest some of its smaller games or studios that might be dragging down profitability — particularly those with expensive licenses and less favorable unit economics.

Either way, there’s no sugarcoating the challenges Netmarble is facing. The company will need to show investors it’s continuing to make progress in improving its profitability, otherwise the stock could be in for more tough times ahead.

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