NHN and Neowiz showed the strength of their cash-cow web board games in the first quarter, when the impact from major new releases was limited. Both companies saw improved web board payment indicators on the back of changes in the regulatory environment.

Web board games are frequent targets of South Korea's game regulations. After the monthly spending cap was set at 300,000 won in 2014, the sector has faced pressure for tighter rules whenever gambling-related controversy flared. Even so, NHN's Hangame and Neowiz's P-mang have long been their flagship web board brands. A partial amendment to the Enforcement Decree of the Game Industry Promotion Act was approved at a cabinet meeting in January and took effect on Feb. 3, raising the monthly spending cap for web board games to 1,000,000 won from 700,000 won.

In NHN's first-quarter earnings, total web board game revenue rose 11 percent from a year earlier and from the previous quarter. After the higher spending cap took effect in early February, average revenue per paying user climbed evenly across all web board titles, including poker and matgo. Mobile web board revenue alone rose 18.5 percent year on year and 8.3 percent quarter on quarter.

The gain was larger with the addition of successful offline tournaments. Hangame Royal Hold'em, a Texas Hold'em-style mobile poker game, wrapped up its second offline tournament, HPT (Hangame Poker Tour), in February. Its first-quarter revenue jumped 51 percent from the previous quarter. With per-user spending rising across web board games after the higher cap, Hangame Royal Hold'em can be seen as having created a separate growth catalyst through offline tournaments.

NHN held an additional third HPT from May 1 to 3. NHN CEO Woo-jin Jung (정우진) said in a conference call, "Through stable tournament operations, we established our position as a trustworthy hold'em tournament operator," and added, "We will continue to provide users with differentiated experiences through regular offline tournaments."

Neowiz followed a similar trend. In its previously released first-quarter results materials, Neowiz said, "Web board games saw ARPPU rebound due to the effects of regulatory easing such as the higher cap implemented in February." Neowiz's web board games are included in its mobile games segment. First-quarter mobile segment revenue was 51.4 billion won, up 13 percent from a year earlier and 8 percent from the previous quarter, leading overall revenue growth. In the process, the rebound in web board ARPPU also served as a factor improving results.

Web board games are a genre with high sensitivity to earnings depending on regulatory changes. The monthly spending cap was eased to 700,000 won from 500,000 won in 2022, and then raised to 1,000,000 won from Feb. 3 this year. In the first-quarter results, NHN confirmed a rise in average revenue per paying user across all web board titles, while Neowiz confirmed a rebound in web board ARPPU. As a result, web board games again stood out as a revenue base that defends short-term results regardless of the timing of new releases.

◆ Cannot rely only on web board games... both companies pursue mid- to long-term new title strategies in parallel

Still, it is difficult to explain the companies' mid- to long-term growth with web board games alone. Because web board performance can change depending on the regulatory environment, securing stable cash while building the next growth engine remains a task.

NHN is looking for the answer in the Japanese market. Performance has already been confirmed in Japanese mobile games. Line: Disney Tsum Tsum saw first-quarter revenue rise 47 percent year on year and 94 percent quarter on quarter, driven by a 12th anniversary event in January and a Detective Conan collaboration in March. #Compass recorded the top spot in the iOS revenue rankings with a Chainsaw Man collaboration in April.

Jung said in a conference call, "We are currently preparing a strategic change for our game business targeting the Japanese market," and added, "We are pushing ahead with contracts with IP that has high recognition in Japan, or working on projects that still have only codenames."

Neowiz is focusing on expanding its development pipeline. Five of its six current projects have entered full-scale development. A follow-up title to Lies of P has completed verification of key fun elements and moved to the stage of improving completeness, known as the vertical slice. A first-person RPG from WolfEye Studios and a western noir CRPG from Zakazane Studio have entered the production stage. The strategy is to defend short-term results with web board games and live IP while securing mid- to long-term growth drivers with follow-up titles that have long development timelines.

An industry official said, "Web board games have a structure that steadily generates cash regardless of whether new titles become hits," adding, "Because this revenue provides backing, it creates room to invest in projects with long development periods and high costs, such as new PC and console titles."