The intense standoff between Smilegate, which argued that an IPO was difficult due to net losses, and the FIs, who claimed deprivation of investment opportunities, has finally been settled by the court’s decision. However, attention is now focused on how this ruling will intertwine with Smilegate’s 2026 business strategy. How will Smilegate navigate this challenge?

The Inside Story of the ₩100 Billion IPO Dispute Loss

At the heart of this lawsuit was a convertible bond (CB) agreement signed by Smilegate RPG with Rhinos Asset Management in 2017. The contract included a clause stating that an IPO should be pursued if the net profit for the preceding fiscal year exceeded ₩12 billion. However, Smilegate RPG argued that in the process of applying Korean International Financial Reporting Standards (K-IFRS), the CBs were recognized as liabilities, leading to a large net loss. Consequently, they claimed that the IPO obligation was nullified as they no longer met the listing requirements.

The court, however, did not accept Smilegate RPG’s argument. Citing the possibility of choosing accounting standards, the court upheld the obligation to pursue an IPO, siding with the FIs. Industry observers interpret this ruling as focusing on the essence of fulfilling investment contracts rather than merely interpreting accounting standards.

• Contract Blind Spot: The claim of net loss due to CB liability recognition was not accepted.
• Investor Protection: It sent a message that avoiding obligations after raising funds on the premise of an IPO is not permissible.
• Industry Impact: This will significantly affect future FI investment contracts and IPO deal practices.

Smilegate Seeks Breakthrough Amid Profitability Decline with New Titles

In addition to the IPO dispute, Smilegate is grappling with declining profitability. In 2025, revenue reportedly decreased by 5.6% compared to the previous year, and operating profit also fell by nearly 30%. This is analyzed as a combined result of declining revenue from major IPs, a lack of new titles, and increased R&D investment.

However, Smilegate aims for a rebound starting in 2026. Expectations are high, especially with a wave of new titles scheduled for release from the second half of the year. ‘Chaos Zero Nightmare,’ released in October 2025, has been performing well, ranking #1 in free downloads on app stores in 8 countries immediately after launch. It continues to engage with users through consistent updates, including a recent half-anniversary update that enhanced content.

• Key Reasons for Performance Slump:
  • Declining revenue from existing IPs
  • Lack of new titles
  • Increased R&D investment
• 2026 Rebound Strategy:
  • Launch of new IPs such as ‘Eclipse’
  • Release of highly anticipated titles like ‘Lost Ark Mobile’
  • Consistent updates and operations for existing new titles like ‘Chaos Zero Nightmare’

Supporting K-Indie Games and Global Expansion Through the ‘Stove’ Platform

Smilegate is also actively fostering the indie game ecosystem through its proprietary game platform, ‘Stove.’ Stove aims not just to sell games but also to support user creativity and creation, and to provide developers with a convenient development and marketing environment.

Indeed, Smilegate is committed to global market expansion, as evidenced by its participation in the ‘Taiwan Game Show’ in January 2026, where it promoted K-indie games under the theme ‘STOVE PLAY TOUR.’ Furthermore, it has strengthened its platform competitiveness by releasing four flagship titles from Relic Entertainment on Stove. This suggests that Smilegate is not solely relying on its self-developed games but is attempting to secure new growth engines by leveraging its platform capabilities.

• Role of the Stove Platform:
  • Support for indie game creation and distribution
  • Connecting global users and developers
  • Expanding the lineup of games across various genres
• Global Market Expansion Efforts:
  • Participation in ‘Taiwan Game Show 2026’ and promotion of K-indie games
  • Attracting games from renowned international developers like Relic Entertainment

Smilegate is currently burdened by the ₩100 billion IPO dispute loss. However, it has clearly expressed its determination to achieve a performance rebound in the second half of 2026 through new game releases and strengthening its platform business. It remains to be seen whether Smilegate can turn this crisis into an opportunity and leap forward once again. Its future moves are eagerly anticipated.

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The uncomfortable truth hidden behind the convenience of digital content has surfaced. In fact, this controversy goes beyond a simple policy change, raising fundamental questions about game ownership in the digital age. Are we truly ‘buying’ games, or merely ‘renting’ access rights? Sony’s decision is amplifying gamers’ anxieties and prompting a re-evaluation of the future of digital content across the industry.

I bought it with my own money, but I need to renew the license every 30 days?

Sony Interactive Entertainment (SIE) has announced a policy mandating online license renewal every 30 days for PS5 and PS4 digital games purchased after March 2026. This measure effectively restricts offline play and has been met with criticism, being labeled as ‘game rental.’ Users are expressing their anger, claiming that their ownership of purchased games is being infringed upon.

• Policy Details: PS5 and PS4 digital games purchased after March 2026 must be re-authenticated via internet connection every 30 days.
• Core Controversy: Critics argue that this is not true digital game ownership but rather ‘conditional access rights,’ as prolonged offline status could restrict game execution.
• User Reaction: The prevailing sentiment is that it’s difficult to understand why ‘self-purchased’ games require authentication every 30 days.

While this policy has been officially confirmed through Sony’s customer support channels, there appears to be internal confusion, with some representatives stating it’s ‘not a new official policy.’ However, anxiety has already spread among overseas PlayStation users as the phrase ’30-day validity period’ has appeared on PS4 and PS5 digital game information screens. This situation is truly a self-inflicted wound.

Digital ownership debate, not the first time

In fact, the debate over digital content ownership is not new. In the past, physical games were owned through physical media like discs or cartridges, but now most are sold as licenses linked to platform accounts. This has consistently raised concerns that access to purchased games could be restricted due to platform server operations, DRM (Digital Rights Management) authentication, and platform policy changes.

• Past Cases: Ubisoft‘s racing game ‘The Crew‘ became unplayable after server shutdown, sparking the ‘Stop Killing Games’ movement.
• Key Issues: There is strong criticism over whether users are purchasing games or merely holding conditional access rights granted by the platform.
• Institutional Discussion: In Europe, the ‘Stop Killing Games’ movement has gathered nearly 1.3 million signatures through the European Citizens’ Initiative (ECI), elevating it to a consumer protection legislative issue at the EU level.

Sony’s latest policy has fueled this digital ownership debate. Gamers are not just enjoying games; they are raising their voices to protect their rights to the content they have purchased. This situation is not just a problem for the gaming industry but shows a future we may face across all digital content. It’s hard to shake off the anxiety that digital content, once easily ‘snapped up,’ could disappear at any time.

Price hikes and license controversies, the shaky PlayStation ecosystem

Sony’s PlayStation ecosystem has recently been a source of gamer dissatisfaction in several ways. Even before the digital game license renewal controversy subsided, news of a PS5 console price increase in Korea was announced. Sony Interactive Entertainment Korea (SIEK) stated on April 27 that it would increase PS5 product prices starting May 1, 2026. The cheapest PS5 Digital Edition saw a shocking 43% increase, from 598,000 won to 858,000 won.

• PS5 Price Increase: The PS5 Digital Edition will increase by 43% to 858,000 won, and the Disc Edition to 948,000 won.
• Cause Analysis: The main reasons cited are the semiconductor supercycle driven by AI proliferation and ‘chiplation,’ leading to a surge in memory prices.
• Adding Insult to Injury: In March, a global PlayStation Network (PSN) service outage further exacerbated the inconvenience for PlayStation users.

The series of unfortunate events has pushed PlayStation users’ dissatisfaction to an all-time high. There were even purchase verification posts saying, ‘I bought it because the price was going up,’ stimulating consumer anxiety. With price increases, license policy controversies, and service outages all converging, Sony’s PlayStation ecosystem faces strong criticism. It remains to be seen how Sony will address these user complaints.

Sony’s recent actions seem to be moving further away from the essence of ‘choice for gamers.’ The digital game license renewal policy and sudden price increases have only fostered distrust among users. Ultimately, while corporate profit pursuit is important, Sony must remember that not betraying long-standing trust is paramount.

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