Wemade game publisher reveals ₩31.6B loss in Q2

Wemade, a South Korean video game developer headquartered in Seongnam, revealed it incurred a hefty ₩31.6 billion loss or $24 million in the second quarter of this year.

The creator of the “Legend of Mir” massively multiplayer online role-playing games (MMORPG) game series said the loss was due to the surge in the cost of marketing for its latest mobile game title and the salaries of its employees. Wemade shared this information on Wednesday, July 27, during a conference call.

Wemade’s latest release was the “Mir M” online game which was dropped on June 23. According to Korea Joongang Daily, the company fell short of analysts’ expectations and incurred losses instead. Its April to June profits failed to reach the ₩21.4 billion market consensus that was collated by FnGuide Inc., a local financial services company based in Seoul.

It was reported that the result turned red for the first time since the fourth quarter of 2020 after its marketing expenses soared as it launched activities for the promotion of its “Mir 4” online game. Moreover, in the latest quarter, Wemade was said to have allocated ₩56.2 billion to pay for its staff’s salaries. The amount showed a 243% increase compared to the same period in 2021, which only amounted to ₩16.4 billion.

For the marketing expenses used in the promotions, Wemade spent around ₩24.5 billion, and this number is said to be 390% more than the previous year. Overall, the game publisher’s operating profit and revenue did not meet analyst forecasts.

Then again, Wemade is expected to recover from its losses in the next quarter's earnings since the sales from “Mir M” will now be included in the sheet. The company’s chief executive officer, Chang Hyun Guk, said during the recent conference call that they would continue to invest in new technologies even with the loss.

“It is impossible to tell whether an investment has been successful or not just by looking at the short-term earnings reports,” the CEO stated. “Among the plethora of ideas that pour out in the beginning stages of a market, only the competitive few will survive and lead the industry."

Finally, Pulse News reported that Wemade would also go ahead with its plan and promise to build a blockchain-based game under its Wemix gaming platform that uses cryptocurrency. The company is planning to integrate a blockchain system into its “MIR M” game.