Nexon Co. – Growth and Challenges in Fiscal Year 2023

Nexon Co., Ltd. (3659.TO), a pioneering company in the production, development, and operation of online games and virtual worlds, has released its comprehensive financial report for the fiscal year 2023. With a rich history dating back to its founding in 1994 and a strong presence on the Tokyo Stock Exchange since 2011, Nexon continues to dominate the global gaming industry with its popular franchises like MapleStory, KartRider, and Dungeon&Fighter.

Financial Performance and Highlights for FY2023

Revenue and Profitability

Nexon reported a significant increase in its financial performance for FY2023, with net revenue reaching ¥423,356 million, a 19.69% increase from the previous year’s ¥353,714 million and a 54.25% increase from ¥274,462 million in FY2021. The company’s revenue structure was primarily driven by the PC online segment, contributing 71.40% of total revenue at ¥302,273 million, while the mobile segment accounted for 28.15% at ¥119,178 million. Other revenue streams contributed a minor 0.45% at ¥1,905 million.

Regional Sales Distribution

Nexon’s sales were robust across various regions, with the following distribution:

• Korea: 60.31% (¥255,330 million)
• China: 23.74% (¥100,488 million)
• Rest of the World: 6.59% (¥27,901 million)
• North America and Europe: 6.54% (¥27,704 million)
• Japan: 2.82% (¥11,933 million)

Equity and Dividend

As of December 31, 2023, Nexon’s total equity amounted to ¥906,575 million, showing a 4.50% increase from ¥867,546 million in 2022 and a 7.17% increase from ¥845,893 million in 2021. Total current assets stood at ¥689,506 million, surpassing total current liabilities by ¥600,132 million. Nexon declared a dividend of ¥10.00 per common share, totaling ¥8,485 million.

New Game Releases

FY2023 saw the launch of several new game titles, including:

• HIT2 (May 2023)
• DAVE THE DIVER (June 2023)
• MapleStory: The Legends of Maple (August 2023)
• THE FINALS (December 2023)

Strategic Initiatives and Market Positioning

Innovation and Market Expansion

Nexon continues to push the boundaries of innovation in the gaming industry. In 2023, the company focused on expanding its market reach and enhancing its game offerings. Notable strategic initiatives included the launch of new titles and the continued development of its existing franchises. The acquisition of Embark Studios AB in 2021 remains a significant milestone, reinforcing Nexon’s commitment to global expansion and innovation.

Sustainability Initiatives

Nexon is committed to sustainability through its initiatives in environmental, social, and governance (ESG) areas:

• Environment: Creating a social environment conducive to sustainable practices.
• Social: Supporting society through Nexon’s “FUN” and “CONNECT” initiatives.
• Governance: Aiming for sustainable growth and improvement of corporate value.

Challenges and Controversies

Dark and Darker Controversy

In April 2023, Nexon was accused of “anti-competitive intimidation tactics” by a lawyer representing Ironmace, the developer of Dark and Darker. Nexon claimed Ironmace used stolen code from its “P3” project, leading to a raid on Ironmace’s office, a copyright infringement lawsuit, and the game’s removal from the Steam platform. Ironmace’s lawyer argued that Nexon’s accusations were baseless and aimed at destroying the independent studio.

MapleStory Hand Gesture Incident

In November 2023, Nexon faced backlash when a hand gesture associated with a defunct radical feminist community was spotted in promotional videos for MapleStory. The company promptly removed the videos, produced by an outsourced company, and issued an apology for failing to review the content thoroughly.

Looking Ahead: MapleStory Universe and NEXPACE

MapleStory Universe: The Genesis

Nexon launched the pre-launch campaign for MapleStory Universe: The Genesis in June 2024. The campaign aims to build a community-based ecosystem, fostering a contribution-reward experience. Key features include quests, a dressroom event, and the launch of an official Discord channel to support community-building efforts.

NEXPACE Initiative

NEXPACE, an IP-expanding project based on blockchain technology, aims to bring creators and users together, fostering an innovative games community. With its transparent and secure services, NEXPACE encourages creativity and fresh inventions, aligning with Nexon’s philosophy and ambition.

Nexon Co., Ltd.’s fiscal year 2023 performance showcases its resilience and strategic growth in the dynamic gaming industry. With significant revenue growth, strategic game launches, and a focus on sustainability, Nexon remains a leader in global entertainment. Despite facing legal and ethical challenges, the company’s innovative initiatives like MapleStory Universe and NEXPACE highlight its commitment to staying ahead in the competitive market. Investors, stakeholders, and industry professionals can leverage this comprehensive report to make well-informed decisions and capitalize on opportunities in the thriving gaming sector.