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Evolving with the times

Adapting to changing player habits

The rise of short-form content has affected gaming habits, leading to a reduction in the average play time per session. Gamers, looking for quick dopamine hits, are less interested in titles that require long-term character progression and gravitating more toward single-session, short-duration games.

Krafton is actively adapting to this shift in preferences. For example, the firm has updated PUBG to increase item spawn rates and reduce the duration of “blue zone” phases (changes that have the effect of speeding up the game). Looking ahead, we think the firm could also expand the PUBG player base by enabling user-generated content (similar to how user-created maps helped boost the popularity of StarCraft).

PUBG traffic continues to grow; 1Q25 earnings surprise likely

PUBG has continued to perform strongly in 2025, with PC/mobile traffic hitting post-pandemic highs. In February, peak concurrent users on Steam (PC) reached 820,000 (+35% YoY). In addition, PUBG mobile revenue in China appears to have normalized following sluggishness in 4Q24, increasing more than 40% YoY in the first two months of the year (according to Sensor Tower).

For 1Q25, we raised our PC and mobile revenue estimates by 8% and 17%, respectively. We now forecast 1Q25 revenue at W830bn (+25% YoY; 10% above the consensus) and operating profit at W413bn (+33% YoY; 17% above the consensus). A new map release should provide a significant boost to the mobile segment, driving strong overall results.

Maintain Buy and raise TP to W500,000 (from W450,000)

We raise our target price for Krafton to W500,000 (based on a target P/E of 21x), as we revised up our 2025 earnings forecasts to reflect the strong performance of PUBG on both PC and mobile. The stock is currently trading at a 2025F P/E of 14x. While large-scale investments in developing/securing new IP have increased cost pressures, we believe the negative impact on earnings will be fully offset by solid growth in PUBG revenue.

PUBG has shown resilience even amid the industry-wide trend of declining player engagement, and the potential introduction of user-generated content could expand its player base further. In the medium to long term, we also see ample upside to pricing, given the game’s low ARPU relative to other genres. We expect PUBG’s sustained growth to remain a key driver of company-wide earnings this year.