Pearl Abyss held a corporate briefing for shareholders on the 7th. The session, which lasted nearly three and a half hours, was attended by CEO Huh Jin-young, COO Lee Dong-won, and CFO Cho Mi-young, and included management presentations followed by a Q&A with shareholders.

The briefing began with an apology from management regarding the recent decline in stock price. CEO Huh Jin-young stated, "I would like to take this opportunity to express my sincere apologies. Management takes the disappointment, anxiety, and frustration regarding the recent stock performance very seriously." He added, "I clearly recognize our responsibility to those who felt that the company's explanations and communication were insufficient. We prepared this session with the hope that it would serve as a starting point for the company and its shareholders to examine the business and confirm our future direction from the same perspective."

CEO Huh Jin-young: "We will make great games, share our achievements, and communicate with the market"

CEO Huh summarized the concerns and demands identified from shareholders into four categories: #1 The future trajectory, sales sustainability, and growth potential of Crimson Desert; #2 Development progress of the next title, 'DokeV'; #3 Responsible execution of shareholder return policies; and #4 Action plans to restore corporate value, along with transparent information disclosure and follow-up communication to regain market trust.

He summarized these as "making good games, generating results to share with shareholders, and communicating well with the market to restore trust," and presented four key tasks within the company's control.

The first is the long-term growth of the Black Desert and Crimson Desert IPs. CEO Huh defined these two as "core assets that the company must manage as long-term IPs," emphasizing that it is crucial to expand growth potential for Crimson Desert even after its launch. The second is the successful development and unveiling of next-generation growth engines 'DokeV' and 'Plan 8'. The third is the fulfillment of promised shareholder return policies, and the fourth is improving communication with the market by refining how information is provided to ensure company strategies and achievements are accurately conveyed.

COO Lee Dong-won then presented the performance and future plans for Crimson Desert. Crimson Desert recorded 2 million units sold on its launch day and a cumulative 6 million units based on full-price sales. COO Lee remarked, "This is a path no other Korean game company has taken before. We have created a new user experience in the open-world single-player package game market, where the world's top game companies compete."

Beyond the numbers, he highlighted trust in the game's quality, a global fandom, and the 'Pearl Abyss' brand itself as key achievements. He predicted that the perception that "if Pearl Abyss makes it, it's worth buying" would act as a lever to lower marketing costs and boost sales for future titles, noting that these intangible assets would translate into long-term sales for Crimson Desert and future projects.

Regarding future plans, he said, "The next phase for Crimson Desert has already begun. While we sold 6 million units in three months, we expect to reach even more users in the future." Pearl Abyss is currently preparing story updates with improved cinematic flow, as well as DLC containing new stories, exploration, and expanded gameplay, which they plan to release at the optimal time to maximize market expectations. He also revealed that they are technically preparing for a release on new platforms to reach a wider user base.

"New Title DokeV is in the Play Loop Verification Stage"

Regarding the next title, DokeV, the discussion shifted to the development process. COO Lee explained, "The goal of developing Crimson Desert was not just to release a single game; the true goal was to build a development process." He noted that the company has secured a next-generation engine, multi-platform optimization systems, a maintainable codebase, highly scalable asset and content production pipelines, and an experienced workforce with a collaborative system. DokeV will be the first project developed using this rapid-cycle system.

DokeV is currently past the world-building and asset-creation stages and is now in the content production phase, where the team is building and verifying the play loop. Once the loop is finalized, they plan to hold demonstrations for global users. The target release is the second half of 2028.

He remained cautious about when to release new footage. "Releasing footage is a strategic decision to build market anticipation," he said. "Because final polish significantly enhances quality in the later stages, releasing it too early creates a gap. It must not become a one-off event just to show progress."

Shareholder Return Policy: "Moving Beyond Announcements to Execution"

CFO Cho Mi-young explained the shareholder return policy and principles of market communication. Pearl Abyss maintains a dividend policy of ₩10 billion annually plus 10% of net profit, and has completed the cancellation of 50% of its treasury shares. A ₩100 billion share buyback is also underway within the year.

Regarding concerns about short selling and securities lending, she stated, "These occur within the market system, and there is effectively no room for the company to intervene," but added that they are internally monitoring trading trends and checking for abnormal signs through external agencies. No clear evidence or objective grounds have been found so far, and the company's stance is to request cooperation from relevant authorities if any suspicious circumstances regarding illegal or unfair trading are reported.

Regarding information disclosure, she explained that the company adheres to principles of fairness and accuracy, considering time zones in service regions when making public announcements. She added that providing guidance in the Q1 earnings report was "a way of communicating with the market to reduce uncertainty by narrowing the wide range of earnings estimates."

Pearl Abyss' Next Decade: Preparing to Expand into a 'Participatory Creative Ecosystem'

The presentation concluded with a vision for the next decade. Pearl Abyss emphasized that in an era where content is rapidly produced and consumed by AI, what becomes rare is "an overwhelming experience that is deeply immersive and long-remembered," and that they have been accumulating the capabilities to create such experiences for a long time.

The company explained that it used Crimson Desert not just as a single game launch, but as an opportunity to build a system that continuously creates IPs. These accumulated production capabilities are expanding in three directions: first, the expansion of the IP portfolio from Crimson Desert to DokeV and Plan 8; second, the expansion of worlds and genres beyond medieval fantasy into modern and future settings; and third, the expansion into a creative ecosystem where players participate as creators.

Pearl Abyss stated, "The next decade is not a time of waiting for a single game. The BlackSpace Engine is the foundation for all these expansions. We will turn the possibilities we have imagined together into reality, one by one."

Shareholder Q&A

Despite the achievement of 6 million units sold in 83 days, the stock price remains similar to pre-launch levels. There are concerns about a performance gap until DokeV and Plan 8 are released. Are there plans to accelerate the release of next titles or obtain a Chinese license for official distribution.

CEO Huh Jin-young = Management takes the disappointment shareholders feel regarding the current stock trend very seriously. Even though we are forecasting good results, I believe we have not yet provided the market with sufficient confidence in our next titles, nor have we properly appealed our future prospects and growth expectations. Until this year, the launch of Crimson Desert was our most important task, and we were so focused on that that we may have neglected market communication. Moving forward, we will communicate more to ensure the market understands our performance, growth expectations, and future title prospects, and we will work to ensure our corporate value is properly evaluated through continuous results and the restoration of trust.

Regarding a Chinese license, we are interested and reviewing it. However, because China is a large market, we must carefully consider various factors such as licensing, local service regulations, partnerships, and content localization. We are reviewing cases from other global companies and opinions from local firms, but at this stage, we do not believe a release via a license is a significant opportunity yet. It is difficult to say definitively whether or when we will apply for a license, but if there is meaningful progress in any specific region, including China, we will announce it through official channels.

You mentioned platform expansion for Crimson Desert. What is the possibility of a Nintendo Switch 2 version?

CEO Huh Jin-young = We believe it is important to showcase Crimson Desert on as many platforms as possible. We are reviewing the Nintendo Switch 2, and it is currently being developed to a level where basic gameplay is possible. However, platform expansion is not just a simple port; the key is whether we can fully maintain the graphics, action, and open-world experience of Crimson Desert on that device. The Switch 2 version still requires optimization and technical verification, and we must also review partner collaboration and whether it meets our quality standards. Therefore, it is difficult to confirm a release schedule. We will announce it transparently once there is confirmed information.

I am curious if there is a possibility of developing a multiplayer mode for Crimson Desert.

CEO Huh Jin-young = I am aware of the high interest in multiplayer, given that Crimson Desert was initially planned as an online game. It is true that the action and open-world structure of Crimson Desert have long-term expansion potential. However, multiplayer is not just a matter of adding a mode. It is a major task that requires reviewing server structures, balance, platform-specific stability, and operating systems.

We are currently conducting various studies on both technical feasibility and gameplay. While it is not the stage to discuss a confirmed release plan, we are continuously reviewing ways to allow users to enjoy the Crimson Desert IP for longer, and I believe there is room for a multiplayer mode in that process.

Are there plans to sell the BlackSpace Engine externally or use it in conjunction with other companies.

CEO Huh Jin-young = There are currently no concrete plans to sell the BlackSpace Engine externally. We believe our focus should be on using it for internal development to enhance the competitiveness of our own IPs. Selling an engine externally requires technical support, documentation, customer response, and maintenance organizations. This could disperse our development resources. We believe that using the engine to create competitive games is more beneficial to the company's value than selling the engine itself.

However, we are reviewing ways to expand the accumulated technology not just as an engine, but as a tool for an ecosystem where creators can participate and activate user-generated content. We see this as a vision that can expand us into a platform company, as well as ensure the continuous growth of our own IPs.

How do you take the initial ratings and the issue of the early-game completion? Do you plan to change the development process to prevent the same problems from recurring in future titles.

CEO Huh Jin-young = I feel ashamed that the initial reception of Crimson Desert caused disappointment and worry for our shareholders. Before the launch, there were many positive evaluations from overseas influencers, so expectations were high, and I believe the shock was equally significant. Looking at feedback after the launch, while some of the fun and strengths we intended were conveyed, there were parts that should have been prepared more meticulously, such as early-game immersion, accessibility, and balance.

We are currently prioritizing patches based on user feedback and are seeing positive reactions to the improvements. More importantly, we are reflecting this experience in our future development processes. Moving forward, we will strengthen internal testing, feedback acceptance, and early-game experience verification to ensure higher completion from the point of launch. The story reinforcement work and DLC preparation currently underway for Crimson Desert are also part of the process of accumulating experience necessary for the development of future titles like DokeV.

How are the DLC and discount plans for Crimson Desert progressing.

CEO Huh Jin-young = The company also believes that we should expand Crimson Desert with DLC so that it can be enjoyed for a long time. We are currently developing DLC while checking the content direction and completion to ensure that users who enjoyed the main game can find additional fun. Basically, we are considering it as paid DLC. However, the pricing structure and release timing are tied to game completion, marketing schedules, and platform discussions, so it is difficult to confirm right now. Instead, we will complete discussions on the release timing and direction within this year and provide a clear answer within the third quarter.

Discount sales are an important sales strategy for console package games. We have a plan for how to utilize the optimal timing internally and are preparing for it. However, if we disclose discount plans in advance, more users might stop purchasing and wait. Therefore, we will disclose them according to our marketing schedule.

Are there plans to conduct share buybacks more aggressively or cancel them immediately after purchase.

CFO Cho Mi-young = Share buybacks are being conducted within a set range based on market prices in accordance with relevant regulations. If the company artificially raises the buy order price to boost the stock price, it could be misunderstood as an attempt to influence the market price, and there are legal and institutional constraints. We believe that if we concentrate the same budget on higher bid prices, the number of shares secured will decrease, which could actually reduce the effect of enhancing shareholder value when they are eventually cancelled. We intend to continue buybacks in a way that is genuinely helpful to shareholder value in the long term, rather than for short-term stock price boosting.

Regarding cancellation, I understand the opinion that buying back and immediately cancelling shares is helpful to shareholder value. However, since the current share buyback is being conducted through a trust agreement, it is realistically difficult to cancel immediately after purchase during the trust period. Whether to cancel after the buyback is complete is not something I can confirm at this time; it is a matter to be decided by the board of directors after comprehensively reviewing financial structure, investment plans, and shareholder return effects. We will disclose the decision transparently through public announcements.

Pearl Abyss is currently listed on the KOSDAQ. Are there plans to review a transfer to the KOSPI.

CFO Cho Mi-young = I believe a transfer to the KOSPI could have advantages in terms of corporate awareness, investor accessibility, and supply and demand. I also understand the intent behind shareholders' requests for this. However, a transfer is not just a matter of moving markets. We must comprehensively review listing requirements, costs, procedures, shareholder meeting approval, exchange review, and the actual effect on enhancing corporate value. At this point, we are not at a stage where we can definitively say we will or will not transfer. We will review it in a direction that helps corporate value.

I am curious about what preparations Pearl Abyss is making regarding the introduction of the KOSDAQ segment system.

CFO Cho Mi-young = We consider the segment system that the government and the exchange are pushing for to revitalize the KOSDAQ to be important. Since specific criteria and detailed guidelines have not yet been finalized, we are closely watching the exchange's official announcements and progress. As soon as the evaluation indicators are outlined, the company will prepare company-wide to enter the first-tier segment. We will maintain continuous performance to meet the major indicators mentioned, such as market capitalization, financial evaluation, and governance, and proactively refine our company-wide systems and shareholder return policies, such as dividends.

The gaming industry is a human-resource-intensive industry. Since the HR issues in 2019, how have you been managing the organization, retaining development talent, and accumulating capabilities.

CEO Huh Jin-young = The period of the 2019 HR issues was a time when the company was growing rapidly after the launch of Black Desert. Since the launch of Black Desert in 2014, the company grew from under 100 people to nearly double in size every year, and after the success of Black Desert Mobile in 2018 and the KOSDAQ listing, it grew even faster.

However, we learned that capabilities do not increase in proportion to size. Since then, we have judged that it is important to work with people who fit the company's vision and goals, and we are paying a lot of attention to hiring. The team currently developing Crimson Desert and DokeV is a structure that combines personnel who have continuously created results since Black Desert with new talent. The short average length of service is also influenced by the company's relatively short history and our structure of hiring many new developers and growing them internally. Looking at our business reports, the average length of service is increasing every year, and the accumulated production capabilities will continue into the development of future titles.

A gap of more than two years is expected until the release of DokeV. Can you quantitatively present how much DLC and platform expansion can fill the revenue gap? Also, I would like to hear about the development progress of Plan 8.

CEO Huh Jin-young = It is difficult to explain the gap until the release of DokeV with numbers at this time. We will try to explain it within the possible scope through future earnings letters, etc. We view Crimson Desert as an IP that must be kept alive long-term, like the live service of Black Desert, and we are currently making preparations for that.

I understand that Plan 8 was mentioned as being in the concept stage during the previous earnings report. It is a project being prepared as one of the company's mid-to-long-term new title lineups. It is a shooter genre, and it is currently in the stage of concretizing the concept and direction. Once DokeV development reaches a certain level, key personnel will sequentially move to Plan 8, and development will proceed in a way that increases development speed.

Please explain the story overhaul of Crimson Desert in detail. Also, I know that users are responding well to the weekly patches, but I am worried that the weekly patches might have a negative impact on DLC or future title production in a situation where human resources are limited.

COO Lee Dong-won = While it is difficult to say here that "we are overhauling the entire story," I will say that we are comprehensively reviewing and improving the story from beginning to end, including added cinematics and content.

I agree to some extent about investing resources in weekly patches. Although I am not in the position of developing it directly, development efficiency and speed are secured. I judge that the level of weekly patching is in a state of mastery that can be handled without significantly affecting other areas.

The free weekly patches currently being conducted are ultimately for Crimson Desert to be sold more in the future and for new users to have a better experience when they encounter it, which is the same reason as overhauling the story. I hope you understand that it is not significantly affecting DLC or DokeV development.

I know that the active mod community had a significant impact on 'The Elder Scrolls 5: Skyrim', one of the most famous open-world games in the world, being able to record over 60 million units sold. I am curious if the company is planning to support mods for 'Crimson Desert'.

COO Lee Dong-won = We are reviewing it broadly. We are watching the situation of the mod community and reviewing it in various ways, such as whether it would be better to distribute official mods that can be used without having to search for them, and giving users the option to turn mods on and off within the game.

CEO Huh Jin-young = We have had an interest in mods since before the launch, and although we haven't decided internally, we recognize that there are many opportunities in the mod community. As I mentioned the vision for 10 years later, I think open-world-based sandbox games can grow into a foundation where communities and creators can be active.

Pearl Abyss has its own engine and production tools, so it also has global competitiveness. We are also seeing the mobile expansion potential of the BlackSpace Engine through internal development. The dream we had when we started engine development is gradually being completed, and we are at a stage where we are thinking about whether we can expand our development capabilities toward expanding the market.

In a situation where AI has developed, I think it doesn't automate everything, but it has a huge impact on R&D time or repetitive tasks. I am curious if the company is actively introducing AI.

CEO Huh Jin-young = We view AI as an important technology for increasing development efficiency. Pearl Abyss is also using it in various areas within the development pipeline, such as automating repetitive tasks. However, the core fun and creative decision-making of a game are important roles for the developer, and I view AI as a tool to make better results faster and more stably. Of course, because it is developing rapidly, various attempts using AI are constantly underway.

I expect GTA6, which is scheduled to be released in the second half of the year, to revitalize the game market. How do you view the impact of GTA6's release on 'Crimson Desert' sales?

CEO Huh Jin-young = I received many questions about this in past earnings reports, and I think it is very fortunate that Crimson Desert was released first.

GTA6 contains elements that can change the market after its release, so we are watching it closely. As you know, when a blockbuster of that magnitude comes out, there is a gap in new titles. Internally, we are verifying how we can utilize that gap for the sales of 'Crimson Desert', which has already been launched, and are making strategies.

Also, when a major anticipated title comes out in the market, there is an aspect where devices and platforms are released and the market expands. In that context, we see that market expectations or room for price setting will arise when our next title is released. Since GTA6 has already set a higher price than our product, we will refer to it and utilize it well for the next game launch.

I am curious if you are considering directions such as reviewing M&A for external expansion, although cash assets and past operating profits from the sale of CCP will go into investment in the company's next titles.

CEO Huh Jin-young = Because there are many cash assets and investment capacity for development, there are many things we are thinking about. However, looking back at previous cases, we have no choice but to be cautious about M&A. At this point, there is nothing I can say is confirmed or being discussed, but because there are parts that need to be pursued with a new vision while focusing on the development of the next title, if an opportunity that is practically helpful is seen in the process of reviewing strategies, we intend to approach it with an open attitude.

I know that Pearl Abyss will be presenting on the BlackSpace Engine at Gamescom this coming August. Besides the presentation, is there any room for new footage or new titles to be revealed at the booth.

CEO Huh Jin-young = Starting with what is confirmed, we plan to hold a lecture related to BlackSpace Engine development at the Gamescom Dev event, and we also plan to meet users through Crimson Desert with the support of Samsung Electronics. However, the disclosure of the development status of new titles such as DokeV is not included in this Gamescom.