Kakao Games is proceeding with steps to replace its management as it prepares for a change in its largest shareholder from Kakao to an investment-purpose vehicle funded by Line Yahoo. It also signalled a new game push in the second half of the year. Attention is focused on whether it can reverse the mood and end six consecutive quarters of losses.

A change in the largest shareholder and management points to a co-CEO structure.

According to industry sources on Thursday, Kakao Games will hold an extraordinary general meeting of shareholders on June 22 at the Kakao AI Campus in Yongin, south of Seoul. It will discuss appointing Line Games Vice President Kim Tae-hwan (김태환) and Kakao Games Chief Business Officer Lee Si-woo (이시우) as inside directors. The two candidates are expected to take co-CEO posts after being appointed as directors, the sources said.

The industry interprets that their roles will be divided given their different backgrounds. Kim is known as an external strategist who joined Line Games in 2023 after working at Nexon Korea, Nexon Japan and Nexon America, and is known to have led Line Yahoo's acquisition of a stake in Kakao Games. Lee is an internal business specialist who has led the mobile business since Kakao Games' early days and is trusted within the organisation. The expected structure is that the external strategist takes charge of strategic links with the new shareholder, while the internal figure manages the organisation steadily.

The meeting also includes an agenda item to appoint Petrico Partners managing director Seo Seok-ho (서석호) as an other non-executive director for a nine-month term. Given the short term, some in the industry interpret it as a move made with a possible future overhaul of governance or the business structure in mind. Kakao Games and Line Games say no merger or business integration has been discussed so far.

The management change is linked to the process of Line Yahoo becoming Kakao Games' largest shareholder. LAAA Investment will buy part of Kakao's stake and will also invest a total of 300 billion won by taking part in a 240 billion won paid-in capital increase and purchasing 60 billion won of convertible bonds from Kakao Games. After the deal is completed, LAAA Investment will become the largest shareholder with a 33.2 percent stake, rising to 35.8 percent after conversion of the bonds, while Kakao will fall to the second-largest shareholder with a 14.6 percent stake.

The industry is focused on synergy between the two companies after the shift to the Line Yahoo structure. The key is whether Kakao Games can transplant its platform marketing capabilities built in South Korea into Asian markets.

Kakao Games has used KakaoTalk-based pre-registration, coupons and event promotions to gather users before launch and continue operations after launch. Line Yahoo has a large user base centred on its messenger app LINE in major Asian markets including Japan, Taiwan and Thailand. Its LINE GAME service also includes functions such as adding official accounts as friends, pre-registration, in-game currency rewards and social features, making it structurally similar to Kakao Games' marketing approach. This creates an environment in which Kakao Games can apply in regions with a strong LINE user base the methods it has validated in South Korea.

Synergy will still need to be proven. LINE and Yahoo have limited influence in the global games market, and affiliate Line Games is in a state of capital impairment after a prolonged slump in new releases. A likely first stage for practical verification of synergy is the subculture title ProjectC, which is targeting a simultaneous release in Japan in the fourth quarter. Japan is Line Yahoo's core base market and is also cited as a key release region for ProjectC, making it an early case to confirm the effects of platform linkage.

Kakao Games plans to sequentially release five new titles from the third quarter through year-end. It posted first-quarter 2026 revenue of 82.9 billion won and an operating loss of 25.5 billion won, extending a run of six consecutive quarterly losses. In that context, this release cycle is less a simple expansion of the lineup than a make-or-break move aimed at a performance rebound.

Two MMORPGs are slated for the third quarter. OdinQ, developed by subsidiary Lionheart Studio, is a sequel to Odin: Valhalla Rising, which ranked No. 1 in South Korea in mobile MMORPG sales in 2021. The strategy is to carry over the original's visual strengths with a full 3D seamless open world based on Unreal Engine 5 and a Norse mythology setting. It is targeting a global one-build launch for South Korea and Taiwan, among others, and the securities industry views whether OdinQ becomes a hit as a turning point for a return to profit in the first half of next year.

Supercat's Dokkaebiui Segye, formerly ProjectOQ, is an MMORPG that combines 2D dot characters based on traditional Korean folk tales with 3D backgrounds. It targets a different user base from OdinQ by emphasising free skill combinations without class restrictions and clan-centred cooperative play. It was reported to have confirmed positive reactions across its world view, visuals and cooperative content in an earlier focus group test.

In the fourth quarter, it expands into PC and console and subculture genres. ArcheAge Chronicles is a PC and console action RPG developed by subsidiary XL Games and will be released on multiple platforms including Steam, the Epic Games Store, PlayStation 5 and Xbox Series X/S. It signals Kakao Games stepping up expansion into PC and console beyond a mobile-centred revenue structure. Ocean Drive Studio's God Save Birmingham is a medieval open-world zombie survival game targeting a global release in the fourth quarter. Lionheart Studio's first foray into the subculture genre, ProjectC, is a simulation game for nurturing girl characters and targets the South Korean and Japanese markets at the same time.

The second-half lineup includes a mix of titles developed by subsidiaries and third-party publishing. Among them, OdinQ, ArcheAge Chronicles and ProjectC are closely tied to development capabilities within the Kakao Games group, including Lionheart Studio and XL Games, meaning their performance could affect not only the core business but also valuations of development subsidiaries.

Samsung Securities analyst Oh Dong-hwan (오동환) assessed that "for a rebound in the stock price, new management needs to present a growth strategy that can offset dilution effects from the paid-in capital increase, and propose synergy measures with the parent company."