The non-AI information technology (IT) sector, including gaming, is experiencing significant workforce reductions. Venture capital is increasingly focused on AI, while talent in this field is leaving for better-paying opportunities abroad due to wage disparities.
According to data from the Financial Supervisory Service's electronic disclosure system, as of the first half of this year, the workforce of nine out of the top ten publicly listed gaming companies in South Korea decreased by 0.9% compared to the end of last year, with six of these companies reducing their staff.
Restructuring began with major firms. NCSoft's workforce shrank by 35.1% over the past year, from 4,886 employees in 2024 to 3,170 at the end of last year, following large-scale voluntary retirements and the separation of its development organization. Krafton has accepted voluntary resignations from over 200 employees since November of last year, while Nexon has halted new hiring and is reallocating existing staff.
During the same period, NCSoft's research and development expenses fell from 421.8 billion won to 325.1 billion won, a decrease of 22.9%. Other companies, including Netmarble (from 634.7 billion won to 616.4 billion won), Pearl Abyss (from 132.8 billion won to 128.6 billion won), and Kakao Games (from 26.2 billion won to 25.5 billion won), also reduced their R&D budgets.
The trend has also affected mid-sized companies. Kakao Games' subsidiary XL Games proposed voluntary retirements during collective bargaining, but faced pushback from the union. The company reported a revenue of 31.1 billion won last year, with an operating loss of 24.2 billion won, and its new title, 'The Cube, Save Us,' launched in early access in March, was discontinued within two months.
AI is filling the gaps left by departing developers. Gaming companies are applying generative AI to repetitive tasks such as concept art, background graphics, text, quality assurance (QA), and translation. Han Sang-woo, CEO of Kakao Games, stated that the company has established a system to develop new titles without significantly increasing its workforce.
The number of entry-level positions has also decreased. According to the Korea Labor Institute, the proportion of entry-level positions in software development job postings dropped from 53.5% in 2022 to 37.4% in 2024, a decline of 16.1 percentage points. The Bank of Korea's analysis indicated that from June 2022 to June 2026, youth employment in the publishing sector, which includes game software development and supply, fell by 27.4%, while the computer programming, systems integration, and management sector saw a 16.6% decrease.
Similar trends are observed internationally. Amir Satvat, a labor tracker in the gaming industry, predicts that the number of layoffs in the global gaming sector will rise to 14,259 this year, up from 9,197 last year.
Despite workforce reductions, average compensation per employee has increased. Krafton's average salary rose from 100.9 million won in 2024 to 129 million won last year, while Pearl Abyss saw an increase from 98.48 million won to 134.05 million won. NCSoft's average salary also increased from 100.8 million won to 117 million won.
However, overall wages in the sector have declined. According to the Ministry of Employment and Labor's business workforce survey, the average wage in the information and communication sector was 5.323 million won in July, a 1.3% decrease from the previous year, while the average across all industries rose by 2.5% during the same period.
The funds saved from workforce reductions are being reinvested in AI. Krafton announced its transition to an 'AI-first' company last October, committing over 100 billion won to build an NVIDIA GPU cluster. At the same time, it froze hiring across the company, excluding positions related to original intellectual property (IP) development and deep learning, and implemented a voluntary resignation program offering up to 36 months' salary based on years of service. This decision came shortly after the company reported its first quarterly operating profit exceeding 1 trillion won. Krafton's R&D expenses increased from 424.7 billion won in 2024 to 612.2 billion won last year.
Overall investment in the gaming industry has decreased. According to the Ministry of SMEs and Startups, venture capital investment reached a record 8.8676 trillion won in the first half of this year, with AI-related sectors accounting for 51.2% of that total. In contrast, investment in the gaming sector fell to 424 billion won, a 76.3% decrease from 1.788 trillion won during the same period last year, making it the only sector to experience a decline.
* This article has been translated by AI.
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