Nexon FY2018 Q2 Earnings Presentation: Q&A Summary

Key insights

5 takeaways

01
Nexon plans a ¥7.0 billion marketing expenditure in Q3 2018 to support the global and regional launches of Darkness Rises, MapleStory M, and OVERHIT.See it on page 1
02
The company successfully migrated users from EA SPORTS FIFA Online 3 to FIFA Online 4 by allowing the conversion of in-game assets into points for the new platform.See it on page 2
03
Management expects revenue from the FIFA Online franchise to recover as users exhaust converted assets and begin engaging with the newly launched FIFA Online 4M mobile title.See it on page 2
04
Dungeon&Fighter remains the primary revenue driver in China, maintaining stable performance in Q2 2018 through increased paying user engagement via small-item event sales.See it on page 2
05
Nexon employs a data-driven marketing strategy that prioritizes long-term lifetime value over aggressive, short-term user acquisition to ensure positive returns on investment.See it on page 3

Summary

Nexon’s second-quarter 2018 earnings discussion focuses on strategic marketing investments, the transition of major sports franchises, and the performance of key titles in the Chinese market. The primary objective is to clarify the company’s financial outlook and operational strategy, specifically regarding the anticipated ¥7.0 billion marketing expenditure for the third quarter. This spending is driven by a robust pipeline of global and regional launches, including Darkness Rises, MapleStory M, and OVERHIT, reflecting a commitment to scaling new titles while maintaining a disciplined, long-term approach to return on investment.

A central theme is the successful migration of users from EA SPORTS FIFA Online 3 to FIFA Online 4. By allowing users to convert in-game assets into points for the new platform, the company has facilitated a smooth transition. Management expects revenue for the franchise to recover as users exhaust these converted assets and engage with the newly launched mobile version, FIFA Online 4M. This transition serves as a foundational case study for future user retention efforts.

Regarding the Chinese market, Dungeon&Fighter remains a critical revenue driver. Despite seasonal fluctuations in monthly active users, the title maintained stable performance in the second quarter, bolstered by an increase in paying users through small-item event sales. Looking ahead, the company aims to sustain the high performance levels achieved in 2017. Throughout these operations, the company emphasizes a data-driven marketing philosophy, prioritizing lifetime value over aggressive, short-term user acquisition strategies that could yield negative returns. This analytical framework ensures that marketing budgets are allocated only when expected returns justify the expenditure, reinforcing the company’s focus on sustainable, long-term growth across its global portfolio.