South Korean Web3 Game Developer Wemade Reports Widening Losses in Q4 2023
Web3 game developer Wemade, based in South Korea, has revealed a significant increase in operating and net losses for the fourth quarter of last year, according to its latest earnings report. The company’s net loss rose to 189.5 billion won ($142.6 million) in Q4 2023, compared to 74.4 billion won in the same period the previous year. Operating losses also increased to 70.8 billion Korean won in Q4 2023, up from 28.7 billion won in Q4 2022.
Wemade Reports Sales Growth Despite Widening Operating Losses
Despite the widening operating losses, Wemade managed to generate 118.4 billion won in sales during the fourth quarter, representing a 2.8% YoY increase. However, Wemade’s stock closed down by 2.25% to 49,950 won.
The company attributed the sales growth to the launch of its game Night Crows and a licensing agreement for its “MIR” franchise. The increasing operating losses were primarily due to rising sales-related and labor costs. Losses from stock investments by affiliated companies and a decrease in the value of convertible bond derivatives also contributed to the expansion of net losses.
Wemade shifted its focus from traditional video games to Web3 gaming and introduced its native utility token WEMIX through its blockchain subsidiary Wemade Tree in 2020. It also launched its mainnet and stablecoin.
Wemade Launches $100-Million Web3 Game Fund with Whampoa Group Amid Tax Controversy
In December 2023, Wemade partnered with Whampoa Group to establish a $100 million Web3 fund for investing in digital asset initiatives in the Middle East. The collaboration also includes Whampoa Digital becoming an ecosystem partner for Wemade’s Wemix Play Center in the Dubai International Financial Centre Innovation Hub. The fund will support developers working on Wemix Play projects.
The newly launched Wemade Web3 Fund focuses on investing in blockchain gaming projects, primarily in the Middle East, with the aim of promoting the adoption of blockchain technology in the gaming industry.
However, Wemade disclosed an unrelated issue, revealing its outstanding tax liability to South Korea’s tax authorities. The company owes 53.7 billion won ($41 million) in taxes, which is about 10% of its equity, potentially impacting its financial stability.
Hot Take: Wemade Faces Challenges Amid Expansion into Web3 Gaming
Despite its efforts to transition into Web3 gaming and launch various initiatives, including a native utility token and a $100-million Web3 game fund, Wemade is facing widening losses and tax controversies. The company’s operating losses have increased significantly, while it continues to struggle with rising costs and stock investment losses. Additionally, the outstanding tax liability poses a threat to its financial stability.
These challenges highlight the difficulties faced by traditional gaming companies as they navigate the emerging Web3 landscape. While there are opportunities for growth and innovation in this space, companies like Wemade must carefully manage their finances and navigate regulatory hurdles to succeed in the evolving gaming industry.
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