Game Companies’ Labor Costs Soar on Salary Hikes

August 19, 2021 13:29

The labor costs of Korea’s major game developers have soared by over W90 billion in the first half of this year because they paid out bumper incentives to keep top staff from being poached (US$1=W1,170).

According to business reports Wednesday by the six major game developers, top-ranked Nexon spent W403 billion on labor costs in the first six months, up W93.8 billion on-year despite having eight fewer staff.

NCsoft spent W427.1 billion, up W45 billion and Netmarble W262.7 billion, up W37.1 billion. All hiked annual salaries by W8-13 million early this year.

The story is similar for smaller players Krafton, Pearl Abyss and Kakao Games.

Krafton early this year said that it would raise developers’ annual salaries by W20 million and its payout to staff increased W24 billion on-year in the first half to W138.7 billion. But added labor costs were also a result of the company’s expansion, which added 663 more workers.

Pearl Abyss paid out W82.3 billion, up W19.1 billion, and Kakao Games W58.6 billion, up W14.3 billion. As a result their operating profits took a sharp hit, falling between 60 and 90 percent.

“Because of the pressure from added labor costs, game companies are desperate for success with new games to be launched in the second half of this year,” an industry insider said. “But due to fierce competition in luring talented developers, labor costs are likely to keep rising.”

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