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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