Krafton Inc

KRX:259960

Good afternoon. I'm Sophie Lee from KRAFTON's IR team. Dear investors and analysts. Thank you all for joining our company's 2024 annual and Q4 earnings release. With me today are CEO of KRAFTON Changhan Kim; and CFO, Dong-geun Bae. For the benefit of investors from Korea and overseas, presentation will be made through simultaneous interpretation, followed by consecutive translation during the Q&A. As a reminder, today's presentation is based on K-IFRS consolidated estimates, which are subject to change upon the independent auditor's review.

Let me first invite our CEO, Changhan Kim to present on the next 5 years of KRAFTON, franchise IP.

Good afternoon, dear investors and analysts from Korea and abroad. Thank you for joining KRAFTON's 2024 annual earnings release. I'm Changhan Kim, CEO of KRAFTON. I would like to begin by thanking shareholders and investors for your unwavering interest in and support for KRAFTON. 2024 was a year of continuous challenge and innovation working towards PUBG IP franchise in step with the changes in the game industry. We drove meaningful results across AI adoption, new game development, global market expansion through which we were able to enhance corporate value. On the back of such outcome, we've come up with our 5-year mid- to longer-term growth target.

Let's begin with PUBG IP franchise, which is KRAFTON's core IP. In 2024, we solidified KRAFTON's footing on the global game market, whilst sustaining growth. Based on PUBG IP, we drove innovation and expansion, which led to great performances in terms of key metrics. PUBG PC has shown solid growth over the past 2 years, proving its long-term growth potential. It's worth noting that since 2018, PUBG PC service posted record high revenue, attesting to a bigger growth potential. In mobile, with the historical growth of BGMI in India, we established a powerful positioning. BGMI India reported record high traffic and top line becoming a national game in India. PUBG Mobile also expanded its user base through content updates and global marketing, driving a solid performance.

2024 was a year that proved our efforts behind growing PUBG IP and it did indeed work. After free-to-play, there were continuous content updates, fresh new collaborations and synergies with premium content, many users actually returned. As a result, even 8 years into the release of the game, growth of trend is still intact. We want to take this formula of successful development and services to broader PUBG IP franchise. In other words, we will strengthen collaboration content to deliver a cultural experience beyond simply gaming, develop high-quality map and modes, which will be adopted across PC, mobile, BGMI to maximize efficiency and effectiveness. Also to evolve PUBG PC into evergreen service in the longer run, there will be an Unreal Engine 5 upgrade, many well-made modes developed, and we plan on adding UGC feature as well.

Through such efforts, PUBG will set itself up as a platform, offering wide-ranging gameplay experience going beyond being just a simple Battle Royale game. As we speak, we're actively developing new titles based on PUBG IP to diversify the offering. We have Black Budget and Extraction Shooter game that inherits PUBG's gunplay. Blindspot, a top-down tactical shooter showcased a G-Star that deliver novel shooting experience and tactical gameplay. And Valor will support gameplay based on controllers targeting Western console users, while retaining Battle Royale experience of PUBG, and we are also studying a new PUBG experience for a more younger user base. With PUBG being such a powerful IP, we will continue to drive its value up by expanding into different geographies and platform and also by expanding into domain of new gameplay experience.

Next, I will talk about our plans in securing new growth drivers. To recap 2024 under scale of the creative strategy, we discovered original creative, both internally and externally and implemented the scale-up strategy. In so doing, we are developing new titles such as inZOI, Dark and Darker Mobile, Subnautica 2 and are undertaking powered mobile development and by acquiring Tango Gameworks, we've gained their track record in developing fresh new IPs.

KRAFTON's core business, which is all about growing the game business eventually leads to securing big franchise IPs. To this end, since 2 years ago, we ran 2PP investment strategy to drive original creative discovery at the global level, and we have completed investments into 30 or so studios. From this year onwards, based on our internal capabilities, we will accelerate the speed of securing big franchise IPs and do more of self production. Based on KRAFTON's development service, investment experience over the years, we plan to focus on development and investment into 4 core domains. Emerging is where we meet the challenge of popularizing key characteristics of market emerging gameplay to shape and complete the formation of genre challengers is where we drive innovation in new gameplay in an already established genres with the incumbent champion to claim the championship for our own.

In these 2 domains, the focus is on genre characteristics where market is already showing certain results. Genre Champion may seem a small market, but it's where we are vying to be the ultimate game in a sharpened genre that has core fans affection. Pioneer is all about pioneering a completely new genre where no one has ever tried just like PUBG. These 2 domains focus on original creative. And it is these 4 domains that we will focus speeding up to PP investment and self production. Ultimately, to secure big franchise IP under an enhanced management framework, we need to tap into a multiple number of new titles via preemptive investment.

We will also aim to maximize scale-up efforts for IPs in global publishing. To that end, we will increase annual development budget to around KRW 300 billion for the next 5 years to scale up the publishing revenue volume.

So here are 4 major titles in the pipeline, the IPs, which we've developed slated for upcoming release. inZOI adopts up-to-date engine technology and deep learning equipped to be a champion in the new genre of life simulation where no competition existed for more than a decade. Dark and Darker Mobile, we aim to popularize Extraction RPG, which is an emerging gameplay into a mobile platform. Subnautica 2 is a sequel to a unique underwater survival game already with more than 10 million fans, and we expect to further broaden that fan base.

Dinkum is a solo developed frontier simulation game that KRAFTON will publish and will expand into mobile and the console platform concurrently. Over the past 4 years, Deep Learning division, starting with game production carried on with research to innovate gameplay mechanism. And finally, players can now experience firsthand the gameplay that incorporates deep learning starting this year. KRAFTON's deep learning development and use is by far the most advanced amongst its peers.

At last CES, CPC, co-playable character feature was showcased in collaboration with NVIDIA, which will be used in inZOI, delivering a more natural simulation experience. And we will also be showcasing PUBG Ally on PUBG IP, which will allow players to cooperate and communicate as teammates while playing the game. For BGMI, based on its strong footing in India, we will continue updates and run the community to foster longer-term growth. We will further strengthen publishing and development capabilities in India, expand esports ecosystem to broaden its global influence. India is KRAFTON's core market, and we will continue to explore additional business opportunities there.

In 2025, through continuous development of PUBG IP, Indian market expansion, new title release and adoption of AI technology, KRAFTON will solidify its positioning in the global game market. Our aim is to grow driven by game being our core business, reaching KRW 7 trillion in revenue in 5 years and doubling the corporate value. We will hence carry on with unwavering innovation and challenge. KRAFTON is not simply developing video games, it's growing into a company that create future game experience, broadening the global entertainment ecosystem. Highly immersive gameplay powered by AI will set us apart as a strong brand on the global stage.

We look forward to your continued interest and support. Thank you very much.

Next, CFO, Dong-geun Bae, will present on KRAFTON's fourth quarter and full year 2024 financials.

Hello. I'm Dong-geun Bae, the CFO. To make PUBG IP into a sustainable service, KRAFTON took various attempts at its business and development. We were thus able to achieve 20% average top line growth over the past 5 years. And in 2024, recorded both highest revenue and operating profit since the founding of the company. Since early access in 2017, PUBG PC and Console pioneered a new genre of Battle Royale, and the game is well into almost 8 years of strong live servicing. With free-to-play in 2022, we are reaching greater number of global users with peak concurrent user count of 890,000 in 2024 as we continue the traffic uptrend.

And with the selection of buzz-generating popular brands, we had IP collaborations offering content that are highly appealing to users, driving combined revenue of PC/Console to KRW 1 trillion per annum. Since the global launch of PUBG Mobile in 2018, it has become popular in developed and multiple emerging markets alike. With 7-year anniversary nearing based on solid traffic and revenue, PUBG Mobile is cementing its position as a frontrunner in Battle Royale on the mobile platform. BGMI is also rewriting quarterly revenue record and through content localization and regional expansion in India, it is building on its influence.

All in all, on the growth seen across all of the mobile services, total mobile platform yearly revenue posted 36% year-on-year growth. We are confident of sustainable growth powered by validation and strengthening of levers that drove PUBG IP's traffic and revenue growth. As the CEO mentioned, we plan to have full momentum behind investment and new releases of multiple titles to fuel KRAFTON's longer-term growth. Once we have concrete plans and results to share, we will communicate such in a timely manner.

Next, on the fourth quarter 2024 business. '24 annual revenue was KRW 2,709.8 billion, up 42% year-on-year and Q4 revenue was up 16% year-on-year, reporting KRW 617.6 billion. Looking at each of the platform, annual revenue of PC platform was KRW 941.9 billion, up 61% year-on-year on the back of traffic growth and continuous upgrade of proven monetization methods. In 2024, we had intensive deployment of various content and new modes and have sustained elevated traffic trend after the Rondo map release. We also had enhanced monetization, coupled with collaborations with [ New Genes ] Lamborghini that resonated well with users driving sizable revenue growth.

New Arcade modes for PUBG PC and Console which are our Hot Drop and Sanhok world update were popular with users with Q4 peak concurrent user count exceeding 800,000 and terrain destruction feature applied to Sanhok Map for the first time, offered fresh new gameplay supporting year-over-year traffic growth.

Following on from last year, Black Market shop update was carried out for the second time and the relaunch of 4 Progressive Weapon Skin and Chroma drove good performance leading Q4 revenue at KRW 232.6 billion, up 39%. In 2025, through various collaborations and well-made game modes, we plan to deliver new game experience to PUBG's fan base end users. During the third Spring Fest held this year, users gave positive feedback to Greek mythology themes. So we expect to see better performance from the seasonal events compared to last year, giving us the confidence that we could achieve about 20% of the revenue.

We believe and we are confident that PUBG IP will contribute to the growth of KRAFTON in 2025. Mobile platform was powered by high traffic and revenue from all of PUBG IP's core mobile product with annual revenue increasing 36% year-on-year reporting KRW 1,689.8 billion. In the emerging market, PUBG Mobile has tried different ways to activate traffic, and we are maintaining solid traffic through sophisticated monetization of high-value products such as the Mummy Skin X-Suit, we enhanced revenue efficiency, thereby sustaining growth across the globe. With the launch of voice pack item for non-Hindi speaking regions, done with an aim to expand regional footprint in India and co-marketing with movies and localized content, BGMI has solidified its positioning as India's premium Battle Royale game title.

Q4 mobile platform revenue increased 6% year-on-year to KRW 362.2 billion and starting Q1 of this year, we will mutually use major content across all of PUBG IP franchise, like, for instance, incorporating Rondo Map and PC content to the mobile platform in servicing the game. Annual revenue from the console platform was KRW 44.3 billion, down 20% year-on-year and Q4 revenue posted KRW 12.3 billion, down 29% year-on-year.

Next is breakdown of full year and quarterly operating expense. On the back of new hires to gear up for new game launch annual labor cost increased 21% year-on-year, reporting KRW 516.8 billion. But on slowdown in hiring in Q4, quarterly labor cost was flat Q-o-Q at KRW 132.7 billion. On higher revenue from PUBG PC/Console and BGMI, which we serve directly, platform fee and cost of revenue of FY '24 was up 54% year-on-year, to KRW 349.3 billion. And Q4 results were impacted by seasonality, pushing down revenue hence, falling 16% Q-on-Q to KRW 84.8 billion, an increase in outsourced development cost and higher revenue, which led to an increase in engine and server costs, and bigger esport event spending, commissions paid for the year was up 22% year-on-year to KRW 316.1 billion, while Q4 was up 22% Q-on-Q to KRW 97.9 billion.

An increase in cost for participating in 2024 gamescom and G-Star and higher marketing spend for live service games FY '24 marketing expense was up 54% year-on-year to KRW 101.4 billion and Q4 figure increased 27% Q-on-Q reporting KRW 37.9 billion. Rising share price drove full year SBC up 271% year-over-year to KRW 102.4 billion. In August 2024, cash settled stock option previously assigned change to stock settled options with changes to the way the expense is recognized having an impact of driving down Q4 SBC down 27% Q-o-Q to KRW 10.5 billion. Operating profit was driven by high revenue growth, growing 54% year-on-year to KRW 1,182.5 billion, exceeding KRW 1 trillion level for the first time since the founding of the company. Q4 operating profit was also up 31% year-on-year to KRW 215.5 billion. 2024 adjusted EBITDA after accounting for SBC was up 54% year-on-year and Q4 adjusted EBITDA was up 15% year-on-year to KRW 253.4 billion.

Moving on to nonoperating profit. Strong dollar drove up FX-related gains with nonoperating profit reporting KRW 540.2 billion for the full year. All in all, FY '24 net profit was KRW 1,302.6 billion, growing 119% year-over-year. Q4 net profit was up 305% Q-on-Q, reporting KRW 491.2 billion. This ends the presentation. Thank you.

[Operator Instructions]

[Interpreted] First question comes from Goldman Sachs, Eric Cha.

[Interpreted] My question goes to the CEO. And I apologize and beforehand that I have a bit too many questions. There are actually 3 questions. First being, I would like to understand what justifies this large-scale investment that you are currently envisioning? And I would like to understand as to the basis of the rationale behind this quite large sum of investment that you've guided us on today.

Second question is that in terms of the revenue guidance in 5 years to come, because right now, your revenue is KRW 2.7 trillion. And in 5 years' time, you've shared and guided that you will be achieving KRW 7 trillion. And I take it that most of the key driver behind that KRW 7 trillion is going to be PUBG franchise and the remainder would be the other projects that you are undertaking. So if that is the assumption, and because the company wants to also explore new global mega IPs, if for instance, you have list of 50 projects, are you assuming about 2% success rate of each of those game projects, which will lend you at the goal that you currently have?

Third question is regarding risk management and whether the strategy that you shared is realistic because for Korea, the key driver is going to be the head count investment, but Korea has a labor market where you cannot be all that flexible. So if you miss on your target and/or if PUBG growth slows down, how will you be able to respond to such risk because currently, the size of your head count is 1.5 trillion, which is quite big to begin with. So would you also consider M&A in that regard?

[Interpreted] Yes, this is the CEO. I will respond to your first and the third question and the second will be taken by our CFO. I explained to you last year that the company had focused on step-wise growth. Our assessment was that and I think this applies to all the other game companies as well when it comes to the corporate value of game providers, it is a small number of big IPs that really contribute to that value not many number of multiple titles that have small scale or small performance.

So if you think from this type of perspective, we really thought hard as to the size of the competitive investment amount that we need to put in, in order for us to gain a competitive and very strong IP. So if we want to have another IP that is on par with what we see in terms of PUBG or even half of what we have in terms of PUBG IP, we really thought hard as to the size of the investment that would be required for us to get there.

And if you look at PUBG IP over the past 3 years, we have accumulated the experience of growing this IP. And if you think about the investment that we're making for new development, there are many constraints that we have to work on there. So for instance, last year, the new title development investment amounted to about KRW 140 billion. So if you were to spread that out across 5 years and for us to really develop a KRW 1 trillion worth of IP, now that is too high an objective to set. So we came up with the most appropriate level of investment. And we felt that in light of the new title development, the appropriate budget or the amount for new titles will be about KRW 300 billion on a yearly basis.

So in terms of the timing as to why now, because we are confident in light of the experience that we had on building and further developing PUBG IP over the past 3 years. And hence, we felt that this was the right timing. And as we were able to go through development -- actual development process for a handful number of new titles, we feel that we have the production-related capability that we -- that is required. So we believe that right now is the right timing and an important timing for us. And if you look at the development process we have, we start from concept -- concepting stage, vertical slicing, full production and launch. And as you go towards the latter part of this process, there is more investment that is required.

So in the first stage, which is the concept development stage, it's quite important that you go through multiple iterations and that is the way for you to enhance efficiency of this whole process. So before we kick off, actually, we're going to be working with about 50 people head count on the initial stages. And during the vertical slicing and full production, that head count would probably increase to around 150 head count. So each of the stages in terms of selecting the concept, going through the development and management, we will have different metrics, and we will track the progress rate and determine the appropriate level of investment. And once the game title is launched, we will also track the market performance and adjust the investment accordingly.

[Interpreted] This is the CFO responding to your second question. Yes, we set the target of KRW 7 trillion in 5 years' time, and you asked about the share of that between PUBG IP and the rest. Just rough breakdown as we expect PUBG IP to continuously grow into the future and 60% of that KRW 7 trillion will come from PUBG IP. And the remainder, other big IP franchises will account for the remainder 40%. In terms of the methodology that you've mentioned in your question, yes, internally, we've made that projection based on the methodology that you -- quite similar to the one that you have mentioned. From now on and every year to come, we've run some simulation as to how many projects that we would need to either develop and launch or make it a success in order for us to get to the KRW 7 trillion target. So yes, we did run a similar methodology and have run the similar simulation.

If I may also add relating to the other questions, I understand that because we are saying that we want to expand the development and investment going forward, you may be a bit concerned from the cost perspective. But if I were to just compare it to, for instance, the AI, semiconductor chip industry, just because the performance from HBM chips is not good. It's not the right choice for the company to decide to slash cost from making investment into those such chips because that's not the way for that company to gain competitiveness. Rather, the company would need to further expand their development investment in order for them to find what is competitive for that company. So as our CEO has previously mentioned, we need the so-called big franchise IPs in order for us to achieve a step-wise growth. So we've come to a very natural conclusion that in order for us to further grow, gaining that big franchise IP is critical.

So in fact, in terms of managing a business, there are certain periods where we need to focus, of course, on cost efficiency. Over the past 3 years, as you would agree, all the commitments that we've made to the outside of the market in terms of the strategic direction forward. I feel that we've been able to prove that our decisions have been right through the outcomes and the results that we are generating.

If you go to the Steam platform and look at the top 10 wish list game titles, there are not 10 game companies, but 9, and there's only 1 company that has 2 titles on that top 10 wish list, and that is KRAFTON. So it's not just about spending the money we earn. We really thought long and hard about this approach before making this decision. And this -- because we set this goal, that will also mean that the CEO and myself are like, we will probably need to work 3x harder in order for us to achieve that goal. So we ask for your support and your trust.

[Interpreted] Next question comes from Samsung Investment & Securities, [indiscernible]

[Interpreted] I am [indiscernible] from [indiscernible] Samsung & Securities. My question relates to your AI. I would like to understand how on the inZOI content, the Smart Zoi, how it actually is incorporated into the game itself? And also, what is the type of synergy that you are going to expect in terms of incorporating AI to different simulation games, what do you think the synergies and impact would be like?

And the second question is on PUBG Ally. After seeing the video footage, I was very much impressed on how it's communicated well with the gamers. When will this AI feature be commercialized? That's my question. And third question, I don't know if you could share, but I understand that you've met with Sam Altman, can you share with us what it is that you discussed with him, if at all possible?

[Interpreted] So in terms of Smart Zoi, basically, it's all about bringing large language model LLM to the simulation aspect because inZOI is a live simulation game. It basically has around 300 different MPCs that's running in the program as a simulation.

Basically, in the past, it was actually a human developer or the game designer, who would have to set all of these parameters. For instance, if this character feels hungry, then the character has to go eat. Those types of parameters and prompts would have to be entered one by one by the game designer. But LLM is based off of common sense, and it allows for a more natural human-like simulation, and we've worked with NVIDIA to implement a small language model, so much lightweight version of language model on device. And we've tested that and we were able to simulate a more natural human-like behavior and also we're able to imbue it -- imbue the persona with the specific characteristics of personality.

And so from early access of March 5, we will be able to showcase this. And I think we have a short video that we will be able to share with us and that will be more easier for you to understand.

So basically, what you see here is Smart Zoi, and we have a feature called Smart Pen and using the pen to enter a prompt for the MPC. So for instance, if you enter the prompt by saying that, okay, you're going to be very tidy and neat person, then this MPC is going to react by cleaning the room, for instance. If you say that you're a person who likes junk food, then the MPC reacts to that prompt. So we believe that there will be many different ways for us to make use of these types of simulations, very natural simulations and have the game players experience many different things, and this would also lead to some other derivative secondary content as well.

Now for PUBG Ally, this one uses a more complicated elements like TTS, STT and basically all simulated plans and behaviors, all of which is implemented on device, because it uses a more complicated model, for instance, you can listen, you can plan. It uses multiple number of small language models and STTs and uses up more memory as well. We ran a live demo at CES event. And so we believe that we are at a level where PUBG Ally is playable. However, because it uses a quite a bit of capacity on the memory card of the graphic card, it requires a high level of requirement and specification.

So we need to go through more optimization. So at this point, our plan is to against selected group of users, we're planning on running a beta and to test and validate the service ability, serviceability of this feature. And our plan at this point is to incorporate or adopt this feature by next year.

Regarding the conversation I had with Sam Altman, I mentioned NVIDIA before. And with NVIDIA, we cooperated on implementing the model on device with OpenAI because they have higher -- high-quality LLMs and flagship model. We discussed about cloud-based, for instance, having a cloud-based high-quality CPCs and also small because they are more of a generic model, AI model, we also talked about the possibility of a game vertical specialized fine-tuning that would best fit the game vertical. So I was able to see that we both had an intention to cooperate. And at this point, the working levels are discussing various aspects.

[Interpreted] Next question comes from JPMorgan, Stanley Yang.

[Interpreted] My question relates to the revenue coming from PUBG IP. Looking at the revenue of Q4 and the outlook for 2025, first, if you look at PUBG Mobile, the growth rate had softened in Q4. The FX environment actually was quite supportive. So I would like to know as to why growth rate for Mobile slowed? And if you look at PUBG, if you look at the Steam platform, it's wielding a #1 position. And since the Rondo update, Rondo Map update, in the App Store Peacekeeper Elite performance is also quite good. What is your outlook for the trend going forward for the first quarter this year?

And one of the things that the investors are concerned about is because last year, PUBG IP growth was very steep. So we're concerned that maybe that growth was slow coming into this year. And if we do some calculation based on your 5-year target, the growth rate on a per year basis from PUBG IP has to be about 9%. So I would like to know as to what your growth outlook for PUBG IP is for this year and for Q1? And what is the key driver behind this growth for PUBG? And when Unreal Engine 5 is applied to PUBG probably most likely next year, do you also expect to see another push towards revenue growth?

[Interpreted] Regarding the PUBG Mobile question for Q4. I think you're a bit mistaken with regards to the numbers because both on Q-on-Q and Y-o-Y basis, we did report a growth during Q4. Maybe you are a bit confused because we also have a partner who deals with PUBG. But if -- in most cases, basically the content update sometimes is geared towards the first quarter, and maybe that's why the content-related performance seem softened in Q4. Anyhow, for KRAFTON on both Q-on-Q and Y-o-Y basis, we did record a growth.

And also the second question on the revenue outlook for Q1. You understand that we do not guide you on any specific numbers. So combining that question with the third question, we admit that last year, the growth rate has been quite steep. Since the update of the Rondo map at the end of 2023, the user base has broadened quite significantly, which explains that steep growth. So although the growth rate last year was quite high, still, we are planning for a double-digit PUBG growth for this year as well. Despite the fact that it is quite challenging because that base itself had already enlarged quite extensively, we are still thinking that we will be able to drive that double-digit growth.

So just because we transition to Unreal Engine 5, that doesn't directly translate into a revenue boost. The whole significance of going Unreal Engine 5 at upgrade is that we are making PUBG IP into an evergreen service. Basically, telling our users that we are adopting the most up-to-date and cutting-edge engine technology and that we are fully prepared to meet the user and the gamer's expectation in regards to servicing our game. So a good case in point would be the case of Counter-Strike 2 upgrade if you refer to that, I think that will help with your understanding as well. And once we do upgrade to our Unreal Engine 5, I believe that the churned users will return, and we will be able to also expand to Western user base as well.

[Interpreted] Due to the time constraint, we will be taking the final question.

[Interpreted] Our next question comes from CLSA, Christopher Kim.

[Interpreted] So because of most of the questions that I wanted to ask has already been dealt with. I just -- since you're taking my question, just a couple of questions. So you've introduced -- or you've announced today the 4 major domains or framework under which you say that you will be making your investment. So all the investment that you've made so far were that based on this framework that you mentioned today? Or is this framework going to be applied to your future endeavors or future investment? And going forward, you'll be categorizing your investment into these 4 domains. And also out of the 4 domains, where would you focus your resources on most? And it seems the company has high hopes for titles like inZOI and Subnautica 2 to make a step-wise growth going forward. And if that is the case. I would like to understand what your take is. And also today, you shared with us many new news and many substantive information. So we are very happy to be having this opportunity to talking to the CEO directly. So we look forward to more such occasions in the future.

[Interpreted] So we are not a company that likes to come up with a top-down approach. We like doing things bottom up. In terms of our experience in developing game titles and dropping game titles, many different trial and errors and also bringing PUBG into a success through all of it all -- through all of this process, we were able to build our experience and expertise. So originally, we began with the vision of original creative and that was the framework under which we selected the concept of the game titles that we felt would be successful. And that is based on -- that was the approach that we used when we came up with PUBG and that we felt that such large success and offering new experience is very key and that original creative actually forms the very core of all of that.

So however, because it was too broad, that there was also some shortcomings as well because we met with thousands of studios, and we decided that we will zone in on these types of opportunities and categorize it into 4 key domains. So all of the investment activities that we've undertaken in the past can be categorized into one of these 4 domains and it gives us a very intuitive view as to why we are making such investment.

When we make investment into games or develop games, of course, we do it with the hope that it will all become a big IP, and we make that investment based on possibility. But of course, we will never know up until the time that we go through the whole process, and we get the conclusion. But we attempted these investments based upon the possibilities that we have identified. So for instance, inZOI is going to begin as a life simulation game.

But because of its high visual quality as well as high level of freedom in the game mechanics we believe that next step for inZOI will be to expand domain and scope of the experience that inZOI offers.

And for Subnautica, it's a very unique game genre because it's an underwater. It takes place in underwater. And basically, this would be a way for us to expand into other fan base that we have not been able to tap into. And then the next chapter will be to explore ways for us to offer different types of experience through the game.

And on your last question, yes, I will do my best to make more time so that we have more opportunities to share my views and my strategic direction for the business that I am leading. Thank you.

[Interpreted] This brings us to the end of 2024 fourth quarter and full year earnings release of KRAFTON. Once again, our deepest gratitude to all the investors and analysts for your interest and for joining us today. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]