Niko Partners Pre-Earnings Analysis: Q1 2025

Niko Partners Pre-Earnings Analysis is a quarterly write-up that presents our take on selected, publicly listed companies in Asia and MENA, with the aim of providing contextual direction to the financial performance they will declare. This Pre-Earnings Analysis forms part of the service set for institutional investors and companies subscribed to NikoIQ, our online knowledge base. To find out more about NikoIQ, you can schedule a demo at this link. To contact us regarding our syndicated or custom services, including market presentations and custom insights on particular companies, please click here.

Niko Partners Pre-Earnings Analysis: Japan

Capcom is set to perform strongly in Q1 CY2025 following the success of Monster Hunter Wilds. With the game having sold over 10 million copies globally as of April 1, it is on track to become the highest-selling title in Capcom’s history, setting the company up for a strong end to its FY2025 fiscal year; thanks to Wilds, its last quarter will account for over half of its FY 2025 earnings.

Capcom released Monster Hunter Wilds on February 28, 2025, for PC, PlayStation 5, and Xbox Series X|S. The game sold over 8 million copies in its first 3 days, significantly higher than World’s record of 5 million copies in the same timeframe and the fastest in Capcom’s history. Wilds expands on the mechanics of its predecessors by introducing a more open world and simpler gameplay. This, combined with its simultaneous launch on multiple platforms, a first for the series, makes Wilds the most accessible Monster Hunter title thus far.

The release of the Nintendo Switch 2 this year bodes well for Capcom, many of whose games did not receive Switch 1 releases due to its weaker hardware. While not confirmed, we believe Wilds may receive a Switch 2 release considering the console’s upgraded hardware, the confirmed launch of other AAA titles on the platform including Elden Ring and Hitman, and the success of Rise on the Switch 1. It is also likely that Capcom is developing a new Resident Evil game considering the franchise’s past release cadence, which, also likely to benefit from the Switch 2’s release, will drive Capcom’s revenue growth into the new FY.

Another positive factor is Wilds’ strong performance in China following its release on the international version of Steam. Niko Partners’ China Games & Streaming Tracker indicates that Wilds had more than 17 million views during the first week of its release on Chinese game live streaming platforms, positioning it in 7th place in terms of viewers. This is particularly strong for a premium title, as the second-best performing premium game for that week was Black Myth: Wukong, itself a major hit in China, at 43rd place. For March, Wilds ranked 12th in terms of streamers in China per Niko’s Streaming Tracker, ten ranks higher than Split Fiction, which was well received by Chinese gamers after it launched in early March itself.

While Wilds is Capcom’s best launch to date, the question will be whether they can sustain the momentum they’ve generated from its simultaneous day 1 release across platforms. As of December 31, 2024, Capcom has sold 1.91 million new game units in FY 2025, with 13 million units forecast for the fiscal year, meaning they need to sell around 11 million units in this final quarter. This presents a major risk for Capcom going forward; in placing all its eggs in the Wilds basket, it has necessitated the game’s continued success, player engagement, and sales into the new FY through regular title updates and new paid in-game content. A prospective Switch 2 release would go a long way to assist in this, but it still leaves the company greatly dependent on the title.

As noted, Wild’s post-launch content is a mix of paid and non-paid content, such as paid cosmetics and free title updates releasing new monsters and features. It is expected that Wilds will receive a large-scale DLC expansion like World’s Iceborne and Rise’s Sunbreak, though past timelines would suggest this to be over a year after initial launch. It will be up to Capcom to secure player interest with a drip-feed of content in the intervening period to retain user interest in the lead-up to the expansion, and in the meantime diversify its games lineup away from Wilds going into FY 2026 to not be so dependent on the continued success of a single title.

Niko Partners Pre-Earnings Analysis: Southeast Asia

Garena, the video games arm of Sea Limited, is likely to see growth in Q1 CY2025, primarily driven by the recovery of bookings from battle royale title Free Fire after a period of stagnation, as well as the continuous popularity of the IP on the esports circuit.

Free Fire achieved 34% revenue growth year-on-year in FY 2024, contributing to Garena’s 18.7% YoY revenue growth, as compared to less than 1% growth and 44% YoY decline, respectively, in the previous year. In 2024, Garena executed several policies that propelled Free Fire’s back to growth mode. These included changes to the Free Fire World Series (FFWS), unifying local leagues under the FFWS branding and launching the FFWS Southeast Asia League, both of which aimed to standardize and invigorate the IP’s esports ecosystem.

Regarding Free Fire’s relaunch in India since its ban in 2022, we believe a 2025 relaunch can take place, which will likely propel Garena’s revenue further. However, we note the relaunch still runs the risk of not being approved by India’s government. Free Fire MAX, the HD version of Free Fire, is still available in India and provides a significant amount of revenue for the company while being one of the most-played games in India across platforms.

Garena has also ramped up its localization efforts in developing countries such as Brazil, Indonesia, Thailand, Vietnam. For the latter two, Garena also operates the highly successful MOBA Arena of Valor, known as ROV in Thailand and Liên Quân Mobile in Vietnam. Arena of Valor continues to record revenue growth in both countries, and its esports scene continues to amass massive viewership. In 2024, for example, Thailand’s RoV Pro League 2024 Winter set a record with more than 366,000 peak viewers, the highest in the game’s history in Thailand.

Considering the positive trajectory and the projected growth, we believe it reasonable to anticipate that Garena’s bookings in Q1 2025 will surpass those of Q1 2024. The company is not without risk, with Sea Limited currently in the process to pay $46 million to settle a class action lawsuit alleging that the company made materially false and misleading statements regarding its Garena and Shopee business segments. While the company denies any wrongdoing, it agreed to settle the class action to avoid issues and problems that might arise from continued litigation.

Niko Partners Pre-Earnings Analysis: Korea

KRAFTON’s Q1 CY2025 earnings are projected to increase quarter-on-quarter, with continued growth in revenue and profitability driven by the company’s robust IP expansion, global market penetration and investments, and innovative technological application.

In Q1 2025, KRAFTON launched inZOI, a life simulation game, into Early Access on Steam on March 28, marking its entry into a new genre and positioning to target a broader audience. The company expanded regionally by acquiring around 75% of Nautilus Mobile (the operator of the Real Cricket franchise) in India for $14 million, boosting its mobile gaming presence.

KRAFTON also revealed its 2025 roadmap for PUBG: BATTLEGROUNDS on March 18, detailing plans for Unreal Engine 5 upgrades and user-generated content features. These initiatives and efforts reflect KRAFTON’s strategy to diversify, grow globally, and enhance its flagship titles. Additionally, KRAFTON initiated a soft launch of Dark and Darker Mobile in Canada and the United States on February 5, 2025, expanding early access to test the game and collect feedback ahead of a planned global release later in the year.

inZOI recorded 60,000 concurrent users globally during early access, placing it second on Steam’s weekly top sellers list for the week of March 25-April 2. PUBG: Battlegrounds, meanwhile, recorded a peak active user figure of over 1.34 million in Q1, an increase of 75.4% YoY. The game also recorded a higher number of hours played between January and February 2025 compared to the same period the prior year.

Q1 2025 projections estimate that KRAFTON’s will record revenue of around KRW 800 billion ($546 million), while operating profit will stand at approximately KRW 400 billion ($273 million).

PC sales are expected to increase QoQ driven by New Year events and record high peak-concurrent-users (PCU) levels, likely leading to peak revenue. Mobile sales are also expected to rise QoQ, with strong performance in both global and Chinese markets. Peacekeeper Elite (the Chinese rebranded version of PUBG Mobile) saw growth in both revenue and traffic due to the Lunar New Year and new map updates. In Q1 2025, KRAFTON also launched the AI-powered “PUBG Ally” system for PUBG: Battlegrounds partnering with NVIDIA. PUBG Ally introduces intelligent in-game teammates to enhance gameplay. The company has also announced several strategies that can have a positive impact on financial performance throughout 2025. These include a collaboration with a major K-POP idol group in Q2, collaboration with a premium car brand, customization system, new game mode, and reorganization of its overall AI systems in Q3.

However, despite positive earnings projections from franchise IPs and stable sales from Battlegrounds Mobile India in the Indian market, KRAFTON’s expansions are projected to significantly increase the company’s labor and marketing costs QoQ. Additionally, in 2024, Krafton invested in 10 overseas game startups, which in the short term could impact quarterly earnings from costs involved with acquisitions; however, the company expects ROIs to offset these costs as the year progresses.

We also note that InZOI, despite topping Steam charts in early access, fell short of market expectations with respect to weekend player traffic. While the title’s long-term performance may improve with upcoming updates such as mod support in May and new maps/DLC in August, considerations must be made that the game is in early-access, with content yet to be added in a way that meaningfully benefits a slower-paced genre such as life simulation.

Devsisters’ Q1 CY2025 earnings are expected to grow QoQ, driven by the success of its Cookie Run franchise. The company’s FY 2024 earnings saw 46.4% revenue growth and 27% increase in new users, and Niko Partners predicts this growth to continue well into Q1 CY2025.

Devsisters is well-placed to grow its main Cookie Run franchise, which has been active in domestic and international markets since 2013. The company is also expanding its reach to regions that were previously not extensively covered, with the launch of Cookie Run India (in collaboration with KRAFTON) in December 2024 and the upcoming Cookie Run: Oven Smash (in collaboration with VNG Games). With more than half of the company’s revenue generated from overseas, the company is actively courting gamers from outside Korea and aims to have China and India as major overseas markets.

Its latest title, Cookie Run India, however, received only 1 million pre-registrations, which caused some disappointment among investors. It should be noted that Indian gamers are generally unfamiliar with the Cookie Run franchise and playstyle and the company will need to improve local sales and marketing efforts to achieve success in India.

Setbacks in India might be offset by the upcoming launch of Cookie Run: Oven Smash, which are targeted toward 9 countries in Asia. In January 2025, Cookie Run: Kingdom saw a major update for its 4-year anniversary, leading to the game’s revenue increasing 54% and active users increasing 19% compared to the 3-year anniversary update. Additionally, Devsisters launched Cookie Run: Tower of Adventures in Japan with its pre-registration and recruited CBT mobile testers. Cookie Run: OvenSmash’s global user testing is scheduled for Q2 2025.

The company’s reliance on a single IP/franchise is a double-edged sword as it could build upon loyal gamers who have been playing the game for more than a decade while also risking fatigues and harder introduction to new gamers who have not heard of the game before, like in India. Costs related to overseas expansion and new game development could weigh down earnings in the long term. We note the push into the relatively niche TCG market with Cookie Run: Braverse, scheduled to launch in the U.S. in July, might result in unnecessary costs. However, we still expect positive revenue growth in Q1 CY2025 following Cookie Run: Kingdom’s stellar performance as well as new gamers in Asia adopting the company’s games.

Niko Partners Pre-Earnings Analysis: China

NetEase is set to report moderate games revenue growth in Q1 CY2025, primarily driven by strong performance from its PC games. The firm had a mixed 2024 with new PC game launches, including the relaunch of Blizzard PC games, offsetting weaker legacy title performance, downsizing overseas, and a lack of new hits on mobile.

Q1 2025 will include the full impact of the Marvel Rivals launch across PC and console from December 2024. The game performed well during the first two months of the year, reaching 40 million registered players, but has started to see a drop in concurrent players through March and into April. NetEase has moved quickly to address player concerns and put together a robust content roadmap, including new heroes every month, and has also introduced esports plans for the game to drive continued engagement.

NetEase also relaunched multiple games during the quarter including Blizzard’s Overwatch 2 and The Legend of Condor Heroes Mobile. Overwatch 2 had a successful relaunch according to our China Games & Streaming Tracker with the title being the #12 most viewed title on game live streaming platforms between February 19 – March 31. Overwatch 2 currently ranks as the #4 shooter title on our tracker, behind Valorant, Delta Force, and Counter-Strike 2, but ahead of CrossFire.

The Legend of Condor Heroes Mobile relaunch (March 13) was more muted, peaking at #62 on the China iOS game revenue chart during the month. The initial release in March 2024 was largely seen as a financial failure, and despite an overhaul including a more authentic visual style, revamped combat system, new narrative content and performance optimizations, we do not see this being a notable performer for NetEase.

Fragpunk also launched for PC during the quarter, with its console launch delayed, but has been unable to stand out from the pack when compared to other shooter games. While NetEase has tried to bring players back to Once Human on PC, the company is now betting on a mobile launch in April to revive the title.

Where Winds Meet has made a splash in China across PC and mobile, surpassing 30 million players, with its revenue performance looking promising. We believe it will be a notable contributor to the quarter across both platforms, helping to offset some weakness on mobile. Its overseas launch is scheduled for later this year. Identity V also continues to perform extremely well after 7 years on the market, becoming NetEase’s #1 mobile game by revenue and ranking in the top 10 on our streaming tracker.

NetEase has also made headlines this quarter due to its downsizing of operations overseas, including layoffs and studio closures. While US geopolitical risks have played a role here, we note that the downsizing impacts multiple regions, including internal restructuring in China. This does not signal a withdrawal from operating and investing in studios overseas. It instead reflects a more selective and strategic approach to overseas investments, prioritizing projects with clear market potential. We believe that NetEase has completed most of its restructuring at this point and has a solid pipeline for 2025 including Where Winds Meet (Intl ver.), Destiny: Rising, Ananta and more.

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