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Japan lags behind in solid Q1 for Nexon

China and Korea continue to drive the online publisher forward, but Japanese revenue fell 30 per cent

China and Korea continued to drive revenue and profits for Nexon in the first quarter, even beyond its own forecasts, but the company's performance in Japan remained a cause for concern.

Overall, Nexon earned ¥52 billion ($277 million) in revenue in the quarter ended March 31, up 9.4 per cent year-on-year. That figure was considerably better than its ¥44.3 billion forecast.

The same was true of its net profit, which exceeded the forecast by almost ¥6 billion to reach ¥18.8 billion ($100.2 million) for the quarter, a year-on-year increase of 15.5 per cent.

Nexon cited lower costs associated with HR and marketing, but principally those results were down to strong performance in its two longstanding strongholds. China represents ¥22.7 billion in revenue, Korea another ¥20.5 billion, leaving less than ¥10 billion for the rest of the world.

Key performers in those regions are FIFA Online 3M in Korea and Dungeon&Fighter in China. Nexon signed a deal to release a mobile version of Dungeon&Fighter through Tencent during the quarter. It also acquired the Korean developer, Boolean Games.

In short, the dominance of China and Korea in the company's earnings will continue for some time to come. However, Nexon's attempts to make progress elsewhere in the world have yielded mixed results.

The biggest challenge Nexon faces is Japan, a lucrative market for companies that find the right product and the right strategy - as Mixi's $3.8 million-a-day Monster Strike proves. But Nexon's expertise lies outside of Japan's preferred platform, mobile, with 84 per cent of its total revenue coming from PC games.

Nexon's Q1 revenue for Japan amounted to almost ¥5.9 billion, ¥4.5 billion of which came from mobile - the mirror opposite of its other major markets. And that revenue was down 27.8 per cent versus the same quarter last year, the initial boost it received after the acquisition of the Japanese mobile developer Gloops now a fading memory.

The company has made better progress in another problematic market, North America, which Owen Mahoney targeted when he took the role of CEO in February last year. It has subsequently acquired a stake in Cliff Bleszinski's new studio, and established a publishing division entirely focused on finding Western content.

North America's contribution remains small, with just ¥1.75 billion in revenue, but that represents an increase of more than 35 per cent year-on-year. Nexon's investments in the region will start to pay off in the quarters to come.

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Matthew Handrahan

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Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.

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