Kakao Games: "Performance to rebound from Q4 with World of Dokkaebi success

Date & Time: Wednesday, November 4, 2026, 09:00
Attendees: Co-CEOs Tae-hwan Kim and Si-woo Lee, CFO Kwon-ho Shin
Agenda: Q3 2026 Financial Results and Future Strategy

■ Kakao Games Q3 2026 Financial Results and Overview Summary

▣ Q3 2026 Revenue Summary

- Revenue: 69.1 billion won (-45.8% YoY, -7.9% QoQ)

└ Decreased 46% YoY and 8% QoQ due to the absence of new title launches

- Operating Loss: -26.3 billion won (remained in the red YoY and QoQ)

└ Operating loss widened QoQ due to upfront marketing expenses for upcoming launches

- Net Loss: -14.0 billion won (turned negative YoY, remained in the red QoQ)

└ Net loss narrowed QoQ due to factors such as the elimination of one-off financial expenses from the previous quarter

└ Mobile Games: Despite solid domestic performance from 'Odin', sales declined due to a lack of new releases and natural decay of existing titles (50.6 billion won, -40.3% YoY, -4.0% QoQ)

└ PC Games: Impacted by off-peak promotional season for 'PUBG' (18.5 billion won, -56.7% YoY, -17.2% QoQ)

▣ Q3 2026 Expenses Summary

- Operating Expenses: 95.4 billion won (-28.2% YoY, -2.7% QoQ)

└ Labor Costs: 36.7 billion won - Effect of operational efficiency

└ Commission Fees: 35.0 billion won - Fluctuations in game revenue

└ Marketing Costs: 6.2 billion won - Pre-launch marketing for 'World of Dokkaebi'

└ Depreciation & Amortization: 10.0 billion won

└ Other Expenses: 7.5 billion won - Continued efficiency in other SG&A expenses

▣ Presentation by CFO Kwon-ho Shin

Last quarter, we foreshadowed regular, predictable communication with the market and our growth strategy. Over the past three months, we faithfully executed our plans, including new game launches and strategic investments. World of Dokkaebi recorded the highest user traffic among MMORPGs published by our company to date, reaching #1 across major app markets.

Additionally, we signed an agreement to acquire social casino and casual game developer ME2ON, establishing a stable foundation for overseas revenue. Furthermore, we transferred capital reserves into retained earnings to secure resources for shareholder returns, and the executive team completed share buybacks. Moving forward, we will continue to build market trust by delivering on our promises.

In Q4, as ME2ON's consolidated financials and the performance of World of Dokkaebi are reflected, we expect metrics to improve. Starting with the domestic launch of Path of Exile 2 in December, followed by major releases such as Odin Q in Q1 next year, we aim to achieve a turnaround to profitability based on this lineup.

▣ Kakao Games New Title Lineup

Q4 2026

└ ArcheAge Chronicles (Online Action RPG) - PC/Console Launch

Q1 2027

└ Odin Q: Valkyrie's Call (MMORPG) - Mobile+PC Launch

└ God Save Birmingham (Open-World Zombie Survival Simulator) - PC/Console Launch

└ World of Dokkaebi (MMORPG) - PC (Steam)/Mobile Launch

Q2 2027

└ Chrono Odyssey (Online Action RPG) - PC/Console Launch

└ ArcheAge S: Strait of Freedom (MMORPG) - PC Launch

└ Guardian Maiden (Collectible RPG) - Mobile Launch

TBD

└ Odin (China) (MMORPG) - Mobile+PC

└ Project C (Anime Nurturing Simulation) - Mobile+PC

└ Project S (Third-Person PvP Shooter) - PC/Console

▣ Presentation by Co-CEO Si-woo Lee on New Lineup and ME2ON Acquisition

Last quarter, we promised results to restore market confidence, and the new management team's first title, World of Dokkaebi, is achieving meaningful results. In addition, with the acquisition of ME2ON, we have put our new investment strategy into action.

Released on October 8, World of Dokkaebi has maintained top rankings in major app market revenue and secured the highest player base among MMORPGs ever released by Kakao Games. Through a differentiated service strategy, it attracted a broad audience, and we find it particularly meaningful that it achieved the #1 spot despite a restrained monetization model (BM). Through its global launch on Steam and mobile in Q2 2027, we plan to highlight a business model distinct from traditional MMORPGs along with a uniquely Korean setting, growing World of Dokkaebi into a long-term flagship IP.

Odin Q is undergoing final preparations for its targeted January launch next year, as promised. Capitalizing on Odin's success and maximizing Lionheart's development capabilities, it is a blockbuster title that offers a quarter-view, large-scale competitive MMORPG environment. We aim to expand the competitiveness of the Odin IP across Asia and globally.

Furthermore, Odin has been granted an ISBN license in China, establishing a foundation for the proven 5-year Odin IP to enter the Chinese market, which gives us high expectations. We will share detailed service plans as soon as they are finalized.

Early Access for ArcheAge Chronicles begins today, and Path of Exile 2 will officially launch domestically in December. We are also preparing upcoming titles like God Save Birmingham and Guardian Maiden to ensure smooth launches next year without setbacks. Additionally, we are continuously reviewing unannounced publishing deals and will share new additions to our lineup as concrete plans emerge.

To explain the background of acquiring ME2ON, we approached it from three major aspects. First was its solid cash generation capability. ME2ON's subsidiary, Ghost Studio, has long operated social casino and casual games centered on overseas markets like North America, consistently generating stable revenue unaffected by genre trends. In this regard, we believe it will complement our portfolio, which has suffered high volatility tied to new game releases.

Another key point is its exceptional financial health. ME2ON is a debt-free company holding approximately 100 billion won in net cash on a consolidated basis. As a result of this transaction, our consolidated net debt actually decreased by 30 billion won. This structure satisfies both objectives: investing for growth and improving our balance sheet. The third aspect is expanding our global operational capabilities. We expect ME2ON's overseas live service and marketing expertise to support global launches of blockbuster titles like World of Dokkaebi. Future investments will be prudently directed toward reinforcing our core business and global capabilities.

Furthermore, with Q3 as the bottom, performance recovery will begin in Q4, driven by World of Dokkaebi and ME2ON's consolidated financials. The new title launches, strategic investments, and shareholder returns promised last quarter will proceed as planned, and we will disclose progress transparently. Based on the launch of Odin Q in January next year, we aim to return to profitability.

■ Q&A

Do you assess that World of Dokkaebi has achieved its targets, and how do you project its future revenue trajectory?

Co-CEO Tae-hwan Kim: Regarding the performance and success factors of World of Dokkaebi, we believe it holds significance in three major areas. First and foremost, we secured a new player base beyond traditional MMORPG core users. While players in their 30s form the largest demographic, we are seeing balanced inflows across various age groups. We also view the continued spread via word-of-mouth as a strong positive.

Second, an in-game economic system driven by actual players is highly meaningful. World of Dokkaebi achieved the highest active user traffic of any MMORPG published by Kakao Games. We do not allow multi-accounting or multi-client play, making this achievement even more significant as figures are driven by real players rather than inflated numbers.

Post-launch, rather than heavily promoting paid items, we focused on service stabilization and letting players adapt and enjoy the core gameplay experience. It is encouraging that user support for the game quality and direction translated into solid revenue. While it is difficult to disclose daily revenue figures, the scale of revenue will be visible through our Q4 results.

For our long-term success strategy, we believe World of Dokkaebi demonstrates a new direction for K-MMORPGs, so we are focusing on strengthening content competitiveness. We have already unveiled a roadmap for bi-weekly major content updates, covering various aspects from competitive to life-skills content to cater to diverse player segments. As the development team rapidly incorporates player feedback, the game's overall quality continues to improve, and we are also considering collaborations that leverage various IPs alongside its appealing pixel-art aesthetics.

It is particularly encouraging that revenue is generated not just from a small number of heavy spenders, but across a broad base of low-to-mid spenders. As they progress, enjoy content, and revitalize the in-game economy, this creates sustained motivation, contributing to long-term revenue stability. Above all, domestic success is just the beginning. With global launches on mobile and Steam slated for Q2 next year, we aim to replicate this success based on the low barrier to entry, pixel-art charm, and player-centric economy proven domestically. Since these elements appeal strongly to Steam users, we will cultivate World of Dokkaebi into a long-term revenue stream and globally recognized IP.

What performance expectations do you have for Odin Q?

Co-CEO Si-woo Lee: The original Odin gained broad appeal by reducing the progression burden compared to core MMORPGs popular at launch. In contrast, Odin Q leverages Odin's six years of live service to target the hardcore MMORPG segment. We plan to present it tailored to 2027 standards by evolving its quarter-view mechanics and large-scale competitive content.

We also plan to differentiate our launch strategy and service direction. Having operated Odin globally over an extended period, we confirmed demand for MMORPGs and high expectations for blockbuster titles across markets. Furthermore, MMORPGs rooted in progression and competition become significantly more engaging as player numbers grow. In the case of the original game, relatively smaller user pools in Japan and Taiwan made it difficult to sustain dynamic interaction. Therefore, Odin Q will offer a single stage from launch where players from all three countries can grow, compete, and challenge each other, taking core MMORPG gameplay to the next level.

We are confident in Lionheart Studio's development expertise, proven by Odin's sustained success, and Kakao Games' publishing capabilities. As such, we will make it another flagship hit following Odin to drive company growth.

With major MMORPGs featured in next year's lineup, including ArcheAge Chronicles, are there concerns about cannibalization?

Co-CEO Tae-hwan Kim: The currently operating Odin, recently launched World of Dokkaebi, and Odin Q are all mobile-based Korean-style MMORPGs. Meanwhile, ArcheAge Chronicles and ArcheAge S are MMORPGs built on the ArcheAge IP to meet global demand.

Regarding World of Dokkaebi and Odin Q, they target distinctly different player bases, so we believe the mutual impact is limited. Actual data shows that following the launch of World of Dokkaebi, Odin's DAU fluctuated by only tens of players, indicating virtually no cannibalization.

Odin targeted a broader audience than the popular hardcore MMORPGs of its time, building a stable foundation through six years of updates. World of Dokkaebi is meaningful because it captured a demographic Kakao Games previously could not reach; combining progression, competition, and exploration, its user base expands into players in their 20s, unlike traditional MMORPGs.

While Odin retains broad MMORPG demand, World of Dokkaebi reaches beyond genre enthusiasts, and Odin Q targets hardcore players. We expect these three titles to generate synergy together and solidify Kakao Games' MMORPG revenue.

With many new titles scheduled for release next year, could you provide guidance on marketing expenses?

CFO Kwon-ho Shin: We typically set marketing budgets at around 10% of potential revenue. These expenses are not spent all at once; a significant portion is executed post-launch through user acquisition (UA) marketing while monitoring metrics, making cases where large marketing spend yields no ROI extremely rare. For World of Dokkaebi, having confirmed its success, we will increase marketing spend to pursue more aggressive promotional campaigns.

If World of Dokkaebi and Odin Q succeed back-to-back, a turnaround seems likely, but aren't there risks such as large Q4 write-downs every year and net profit leakage to non-controlling interests of consolidated subsidiaries? How much revenue growth is needed to turn net profit attributable to controlling interests back into the black?

CFO Kwon-ho Shin: It is difficult to give a definitive revenue target for returning net profit attributable to controlling interests to profitability. Beyond consolidated profit, various factors such as intangible asset amortization/impairment, financial gains/losses, corporate tax, and non-controlling interests exert influence. Regarding impairments, while there may be concerns surrounding project delays or scheduling, release dates are mostly fixed starting this year, so intentionally recognizing large impairments like in the past will not occur.

Additionally, with World of Dokkaebi succeeding and a diverse slate of titles releasing in January, Q1, and Q2 next year, our reliance on Odin alone will decrease significantly. Concerns regarding a wide gap between non-controlling and controlling interest profits will be much less of an issue than in the past.

Most of ME2ON's operating profit comes from Ghost Studio, but beyond social casino, they have recently diversified into webtoons and beauty. How do you plan to streamline or manage these business areas post-acquisition?

CFO Kwon-ho Shin: As the transaction has not yet closed, it is difficult to state definitive business directions. Overall, social casino is a highly profitable cash cow, while entertainment, media, and webtoon segments are recording minor operating losses, though their trends are improving. Rather than simply divesting these business units, we plan to consult constructively with ME2ON management on how to create synergy.

Originally written in Korean, this article was translated with AI assistance and edited by a native English-speaking editor. Every translation is reviewed by our editorial team before publication. [Read Original]