Gravity Co., Ltd. (GRVY): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear map of the risks and opportunities surrounding Gravity Co., Ltd. (GRVY), and honestly, the picture is defined by global regulatory shifts and the aging of their core intellectual property (IP). The direct takeaway is that while their global expansion, particularly in Southeast Asia, continues to be a strong revenue driver, the lack of clear 2025 fiscal guidance creates an information gap you need to factor into your valuation models. Still, the global mobile gaming market is defintely projected to exceed $160 billion in 2025, so understanding the Political, Economic, Sociological, Technological, Legal, and Environmental (PESTLE) forces at play is how you turn risk into a clear action plan.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Political factors

South Korea's shifting gaming regulations, especially on loot boxes (gacha), create revenue uncertainty.

The regulatory environment in South Korea is becoming defintely more stringent, directly targeting the randomized monetization mechanics (loot boxes or gacha) that drive a significant portion of the gaming industry's revenue. For Korean gaming companies generally, this model accounts for about 75% of their income. The core shift is the amendment to the Game Industry Promotion Act (GIPA), which mandated the disclosure of item probabilities effective March 22, 2024.

The risk is not just compliance, but the potential for user lawsuits and fines. In a clear example of this 2025 enforcement, the Korea Fair Trade Commission (KFTC) fined Gravity Co., Ltd. 2.5 million won (approximately $1,756 USD) on April 21, 2025, for falsely advertising drop rates in Ragnarok Online. Specifically, the drop rates for certain paid, probability-based items were found to have been inflated by up to eight times.

What this regulatory pressure hides is the ongoing legislative push: a bill was re-introduced in September 2025 seeking to outlaw 'complete gacha' systems entirely, which would necessitate a fundamental redesign of monetization strategies for many titles. You need to budget for compliance and the potential for reduced average revenue per user (ARPU) as transparency increases.

Regulatory Action (2025)	Impact on Gravity Co., Ltd.	Financial Ramification
KFTC Fine for False Disclosure	Fined on April 21, 2025, for Ragnarok Online loot box probability discrepancies.	KRW 2.5 million fine (approx. $1,756 USD), plus mandatory user refunds and prevention plan reporting.
GIPA Amendments (Effective Aug. 1, 2025)	Shifts burden of proof to game companies in damage cases; allows courts to award up to triple damages for intentional violations.	Increased legal and financial risk from consumer class-action lawsuits.
Proposed 'Complete Gacha' Ban (Sept. 2025)	Requires a potential overhaul of core monetization mechanics in games reliant on this system.	Revenue uncertainty and significant game development/re-design costs.

Increased scrutiny on data localization and transfer laws in key operating regions like Japan and the US.

Operating a global game service means navigating a patchwork of data privacy legislation, and 2025 is seeing a rise in complexity, especially in key markets like the US and Japan. In the US, a record number of state-level privacy laws are taking effect, which means Gravity Interactive, the US subsidiary, must constantly adapt its compliance framework.

In Japan, while there is no strict data localization rule, the Act on the Protection of Personal Information (APPI) requires the company to perform an 'external environment understanding' for any cross-border data transfer, ensuring they grasp the foreign jurisdiction's privacy regime. Plus, new Japanese laws banning online casino advertising, active from September 2025, signal a broader regulatory tightening on gambling-like mechanics, which could spill over to gacha advertising. You need to treat every major market as a separate regulatory silo.

Furthermore, the political climate between the US and South Korea is tense regarding digital regulation. The US administration has warned South Korea against proposed domestic digital platform laws, like the Platform Competition Promotion Act, which are seen as discriminatory against American tech firms. While Gravity is a Korean company, this geopolitical friction increases the overall trade and regulatory risk for all South Korean tech companies operating in the US market.

Geopolitical tensions between South Korea and China affecting game licensing and market access.

The China market remains a high-risk, high-reward proposition, primarily due to the unpredictable nature of the game licensing process (the Hao). For years, South Korean games faced a de facto ban following the 2017 deployment of the US THAAD anti-missile system. While the licensing freeze has eased somewhat since late 2022, with over a dozen licenses granted to other major Korean firms in 2024, the process is still politically mediated and slow.

The main risk for Gravity is that newer titles struggle to gain approval, meaning their portfolio growth is hampered in the world's largest gaming market. Gravity's Q3 2025 results did mention pipeline updates including launches in China, indicating they are actively navigating this challenge. However, the competitive imbalance is stark: Chinese games face no such regulatory hurdles in South Korea, leading to a significant expansion of their market share there.

Government support for the Hallyu (Korean Wave) culture defintely aids international IP promotion.

On the positive side, the South Korean government views the creative content industry, including gaming, as a strategic national growth engine and is providing substantial financial support under the banner of Hallyu (Korean Wave). This support is a direct tailwind for Gravity's global expansion of its Ragnarok IP.

Key government commitments for the 2025 fiscal year include:

• Guarantees and Funds: Expanding cultural industry guarantees to 220 billion won to cover content production and distribution.
• K-Content Fund: Full operation of a 500 billion won K-Content and Media Fund to attract large-scale investment.
• Console Game Focus: A dedicated budget of 15.5 billion won is allocated to support domestic console game development, nearly doubling the previous year's 8.7 billion won. This push for console titles helps companies like Gravity diversify away from the mobile-centric model that is under regulatory fire.
• Export Goal: The Ministry of Culture, Sports, and Tourism projects total exports from the Korean content industry to reach 165 trillion won in 2025.

This state-backed promotion reduces the marketing and capital risk for international expansion, especially for established IPs like Ragnarok that benefit from the global cultural recognition of K-Content. This is a clear opportunity.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Economic factors

Global economic slowdown impacting discretionary consumer spending on mobile games.

You're operating in a global economy where high inflation and interest rates are directly hitting consumer wallets, and that means reduced discretionary spending. For a company like Gravity Co., Ltd., which relies heavily on in-game purchases (microtransactions), this is a near-term risk. Data from Q3 2025 shows mobile revenue for Gravity Co., Ltd. fell 23.9% quarter-over-quarter (QoQ) to KRW 109,571 million (US$ 78.0 million), partly because momentum from a key title, Ragnarok M: Classic, moderated. This drop is a clear signal of market sensitivity. When consumers feel the pinch, they cut back on non-essential items, and in-game cosmetics are often the first to go. Honestly, a slowdown in the global economy means your monetization strategy needs to be defintely more resilient.

Currency fluctuation risk, especially the Korean Won (KRW) against the US Dollar (USD) and regional Asian currencies, affects repatriated profit.

Gravity Co., Ltd. is a South Korean company reporting in KRW, but a significant portion of its revenue is generated internationally, especially across Asia. The continued weakness of the Korean Won (KRW) against the US Dollar (USD) is a double-edged sword. While a weaker Won makes KRW-denominated operating costs cheaper in USD terms, it severely impacts the value of repatriated profits when converting foreign earnings back to KRW. Global investment banks forecast the USD/KRW exchange rate to hover in the mid-1,400s through Q3 2025, reflecting continued bearish sentiment on the Won. The rate was approximately 1,474.45 KRW per USD as of late November 2025. This persistent weakness creates translation risk (the risk that foreign-currency-denominated assets and liabilities will change in value when converted to the home currency), which can mask underlying operational performance.

Here's the quick math on the currency impact:

• A stronger USD means the US$ 98,883 thousand in Q3 2025 revenue is worth more KRW, which is favorable for top-line reporting in KRW.
• But, a weaker KRW increases the cost of any USD-denominated expenses, like global server hosting or US-based marketing.
• The net effect is a volatile and unpredictable impact on the bottom line.

High inflation rates increasing operational costs for server infrastructure and talent acquisition.

High global inflation rates are translating directly into higher operational costs across the tech sector. For a gaming company, the most immediate impacts are seen in server infrastructure and labor costs. Gravity Co., Ltd.'s Q3 2025 financial report showed a Cost of Revenue of KRW 88,542 million (US$ 63,036 thousand), which was a substantial 16.1% increase year-over-year.

This cost pressure is driven by a few factors:

• Server Infrastructure: Data centers and cloud services, which are often priced in USD, become more expensive due to the weak KRW and general inflationary pressures.
• Labor Costs: Wage pressure is high across the gaming industry, especially for specialized developers and engineers, as companies compete for talent. Mass layoffs in the broader gaming industry in 2024 were a precursor to companies trying to 'Survive till 2025' by cutting costs in the face of rising development expenses.

What this estimate hides is the long-term impact on R&D investment if cost of revenue continues to climb at a double-digit rate. You simply can't sustain a 16.1% YoY cost increase without eventually slowing new game development.

Strong growth in the mobile gaming market, projected to exceed $160 billion globally in 2025, provides a massive opportunity.

Despite the economic headwinds, the overall mobile gaming market remains a massive growth engine. The global mobile gaming market is projected to reach approximately $142.190 billion in 2025, with the total global games market (including PC and console) projected to hit around $188.8 billion. Mobile gaming still accounts for over 50% of total gaming revenue. This scale provides a huge opportunity for Gravity Co., Ltd. to capture market share, especially in Asia-Pacific, which dominates the market. Gravity Co., Ltd. is positioned well, with its core Ragnarok intellectual property (IP) having a strong following in this high-growth region. The company's strategy of launching new titles like Ragnarok: Twilight and Ragnarok M: Classic Global in Q3 2025 is a direct action to capitalize on this enormous market size.

The table below summarizes the key market and financial data points for context:

Metric	Value (2025 Data)	Significance
Mobile Gaming Market Size (Projected)	~$142.190 billion	Massive scale provides a clear growth runway despite economic slowdown.
Gravity Co., Ltd. Q3 2025 Revenue	KRW 138,894 million (US$ 98,883 thousand)	Indicates strong quarterly revenue generation, but was down 18.7% QoQ.
Gravity Co., Ltd. Q3 2025 Cost of Revenue (YoY Change)	+16.1%	Direct evidence of high inflation increasing operational costs for the company.
USD/KRW Exchange Rate (Late Nov 2025)	~1,474.45	Weak Won creates significant foreign exchange translation risk for repatriated profits.

Finance: Draft a detailed FX exposure report for Q4 2025 revenue, focusing on USD and TWD (Taiwanese Dollar) conversion risk by the end of the week.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Social factors

Shifting player preferences from traditional Massively Multiplayer Online Role-Playing Games (MMORPGs) to shorter, hyper-casual mobile titles

You need to be acutely aware that the gaming audience is moving away from the long, deep commitment of a traditional MMORPG like the original Ragnarok Online. The market is now dominated by mobile-first experiences. The shift is clear: the global mobile gaming market is projected to generate between $120 billion and $135.06 billion in revenue in 2025, making it the largest segment of the industry.

Hyper-casual games, characterized by simple mechanics and short sessions, are the primary entry point for billions of players. The top 100 hyper-casual titles alone generated over 2.4 billion downloads in the first half of 2025. This is a direct challenge to GRVY's core genre, but the company is adapting. Your mobile game revenues reached US$78.3 million in Q1 2025, accounting for approximately 84% of total revenue in Q2 2025, showing your success in migrating the IP to the mobile platform. The real opportunity lies in the emerging 'hybrid-casual' model, which adds deeper progression systems to simple gameplay, bridging the gap between hyper-casual reach and midcore retention, something your mobile MMORPGs must defintely embrace.

Growing demand for cross-platform play and social integration features in games

Gamers no longer want to be locked into a single device; they expect to play with friends regardless of their hardware. This is a fundamental social shift. As of 2025, approximately 50% of gamers globally play across multiple platforms, and 61% have adopted cross-play functionality. This is a non-negotiable feature for modern multiplayer titles.

Cross-platform support isn't just a nice-to-have; it's a retention engine. Games offering cross-progression and cloud saves show 45% higher engagement retention within the first 30 days post-install compared to single-platform titles. Since GRVY's strategy is to aggressively leverage the Ragnarok IP across PC, console, and mobile, your multi-platform development is well-aligned with this social demand. You must ensure that the social features-guilds, chat, trading-are seamless across all versions of games like Ragnarok M: Classic and Ragnarok V: Returns.

Cross-Platform Adoption Metric (2025)	Value
Gamers playing across multiple platforms	Approx. 50%
Global cross-platform play adoption rate	61%
Engagement retention increase for cross-platform games (30 days)	45% higher

Increased public and regulatory pressure for responsible gaming practices and anti-addiction measures

Societal concern over gaming addiction and excessive spending is translating into tangible regulatory risk globally. This pressure is moving beyond traditional gambling and is increasingly encompassing games with heavy microtransaction (in-app purchase) models, which is the primary monetization for GRVY's mobile titles. In 2025, new regulations are emerging, focusing on early intervention and player protection.

The industry baseline is shifting, requiring more than simple self-exclusion tools. For example, in the US, New Jersey is proposing new rules for online operators in September 2025 that mandate a dedicated Responsible Gaming Lead employee and require earlier, ensured intervention for at-risk users. Globally, countries like Ukraine have introduced a national standard for gambling addiction support in 2025, and there is a growing trend of using AI to detect harmful player patterns.

For GRVY, which relies on in-app purchases that contribute 76% of all online gaming revenue globally in 2025, this means a need for a proactive, unified approach to player safety across all its titles. You need to move past basic limits and implement advanced behavioral monitoring and intervention systems.

• Implement mandatory age verification tools.
• Offer clear, easily accessible options for players to set spending and playtime limits.
• Integrate AI-powered systems to detect and flag 'at-risk' spending or play patterns early.

Strong nostalgia and community loyalty remain a key asset for the Ragnarok Online franchise

The Ragnarok Online IP is your greatest social asset, a classic example of a 'nostalgia play' that continues to generate significant revenue decades after its initial launch. The community loyalty is extremely strong, often manifesting in a willingness to follow the IP across new platforms and game genres.

This loyalty is a key reason why Gravity Co., Ltd. reported $98.88 million in total revenue for Q3 2025, a testament to the enduring power of the franchise. While the original PC MMORPG may see declining performance in specific markets, such as a 5.1% quarter-over-quarter decrease in online game revenues in Thailand in Q1 2025, the overall IP remains robust. The community is active, with players in 2025 still discussing the best ways to start a new character on official servers and emphasizing the social aspect of joining a guild or clan. This deep-seated social connection is what differentiates your IP from fleeting hyper-casual hits.

The action here is simple: Protect and nurture the core community, because they are the first adopters and highest lifetime value customers for every new mobile spin-off, like Ragnarok M: Classic.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Technological factors

Rapid adoption of 5G and cloud gaming infrastructure enables higher fidelity mobile experiences.

The rollout of 5G networks is a massive opportunity for a mobile-focused publisher like Gravity Co., Ltd. because it directly addresses the latency and bandwidth issues that limit complex mobile games. Honestly, the global mobile gaming market is expected to surpass $110 billion in 2025, and 5G is the backbone of the next growth phase. This faster network allows for higher fidelity (better graphics and performance) in your flagship titles like the Ragnarok series, making them feel less like a mobile game and more like a console experience.

Plus, 5G fuels the shift to cloud gaming, which is projected to grow from an estimated $2.27 billion in 2024 to approximately $3.3 billion in 2025 globally. This trend means players don't need the latest, most expensive phone to run a high-end game; they can stream it. This expands your potential user base in emerging markets, especially in Asia-Pacific which already holds the largest market share in cloud gaming. This is a defintely a tailwind for global expansion.

Need for continuous investment in anti-cheating and security technologies to protect game integrity.

As your games become more complex and competitive-especially with new launches like Ragnarok: Twilight and the Web3-enabled Ragnarok Online Landverse America-the incentive for players to cheat rises, and so does the need for advanced security. Cheating compromises game integrity, which damages community trust and, ultimately, hurts retention and revenue. This isn't a minor cost; it's a core operational investment.

You must prioritize continuous investment in Artificial Intelligence (AI)-driven anti-cheat detection systems that can identify and mitigate cheating in real-time. This is an arms race, so your security updates need to be as frequent as your content updates. For a company with Q3 2025 total revenue of KRW 138,894 million (US$ 98,883 thousand), a small percentage loss in player trust can translate to millions in lost in-app purchases.

The rise of Artificial Intelligence (AI) for game development, testing, and personalized player experience.

Artificial Intelligence (AI) is moving beyond simple Non-Playable Characters (NPCs) and is now a core tool for efficiency and personalization. AI-driven procedural content generation can create new, tailored challenges and scenarios that match a player's skill level, keeping the game fresh and extending its lifespan. This is huge for a company relying on long-term engagement with its core IP.

AI also streamlines the development process. Here's the quick math on why this matters: reducing the time and cost of quality assurance (QA) testing or asset creation directly improves your margin on mobile game revenue, which was KRW 109,571 million (US$ 78,007 thousand) in Q3 2025. Using AI to personalize in-game offers and subscription models also drives higher monetization rates, a key factor in the mobile market where games accounted for 53% of consumer app spending in 2024.

Dependence on third-party mobile app store policies (Apple App Store, Google Play) for distribution and revenue share.

Your primary revenue stream is tightly controlled by the two major platform owners: Apple and Google. This dependence is a major risk, but recent regulatory changes are creating opportunities. The standard revenue split remains 70% for the developer and 30% for the store on in-app purchases (IAP) and paid apps. However, for subscription-based apps, this often shifts to 85% for the developer after a user's first year.

Crucially, 2025 saw significant policy shifts, especially in the US and EU, forcing Apple and Google to allow developers to link to external payment systems. This is a business model shift. In the EU, for instance, commissions can drop as low as 10-13% for small businesses using external payments, down from the standard 30%. While this is regionally specific for now, it signals a global trend that you must be prepared to capitalize on to reduce your commission expense, which is part of your cost of revenue.

The table below breaks down the core financial impact of this distribution model, based on your Q3 2025 mobile revenue:

Metric	Q3 2025 Mobile Game Revenue (KRW)	Estimated Store Commission (30% Standard Rate)	Potential Developer Revenue (70% Standard Rate)
Amount (Millions)	KRW 109,571	KRW 32,871.3	KRW 76,699.7
Amount (US$ Thousands)	US$ 78,007	US$ 23,402.1	US$ 54,604.9

What this estimate hides is the potential to save millions by shifting a portion of your revenue to external payment systems, even if only in specific regions. You should be aggressively exploring this new monetization channel.

• Analyze: Model a 15% commission scenario on 20% of Q4 2025 mobile revenue.
• Action: Legal/Finance: Draft a plan to implement external payment links in all US and EU mobile titles by Q1 2026.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Legal factors

Stricter enforcement of global General Data Protection Regulation (GDPR) and similar privacy laws in Asia and the US

You need to see the global data privacy landscape as a significant and immediate cost center, not just a theoretical risk. The trend is clear: regulators are targeting global companies, and the gaming sector is a major focus. Gravity Co., Ltd. operates across 91 regions, making it a prime candidate for multi-jurisdictional compliance scrutiny.

In the first half of 2025 alone, total General Data Protection Regulation (GDPR) fines in Europe surpassed €3 billion, with the largest single fine hitting €1.2 billion for a major tech company. While Gravity Co., Ltd. has not faced a public fine of this magnitude, the maximum penalty is up to 4% of global annual revenue or €20 million, whichever is higher. With the company's 2024 consolidated revenue at KRW 500,845 million (approximately $338.9 million), a maximum fine could be substantial.

The real risk isn't just the fine, but the cost of building out the compliance infrastructure. You defintely need to budget for enhanced data minimization and consent management across all titles, especially those targeting a younger demographic, given the industry has seen over $2 billion in child safety violation fines since 2023.

Intellectual property (IP) protection challenges, particularly concerning unauthorized private servers and clones of core games

Protecting the Ragnarok Online intellectual property (IP) is a core business function, and it's an ongoing, costly legal battle. Gravity Co., Ltd. must continuously demonstrate active enforcement to maintain its IP rights, especially against unauthorized private servers and clones that directly siphon revenue and player base from official channels.

In 2025, the company has ramped up its legal efforts to 'hunt down' illegal private servers, particularly in the Latin American (LatAm) market, a region where the game's popularity is high. This strategy involves securing immediate injunctions-a legal tool that forces a server to cease operations under penalty of contempt of court-to stop the revenue bleed quickly, even though the full litigation can be a slow, multi-year process. This is a necessary, albeit 'astronomical,' cost that should be viewed as an ongoing operational expense, not a one-time legal fee. The cost of inaction is a loss of market share, which is a much bigger financial risk.

Evolving labor laws in South Korea affecting developer contracts and working hours

As a South Korean-based company, Gravity Co., Ltd. faces direct and immediate impact from the nation's evolving labor standards, particularly in the high-pressure game development environment. The government's push for worker protection is driving up labor costs and forcing a change in production schedules. Here's the quick math on the near-term cost pressure:

Legal Change (South Korea)	Effective Date (2025)	Impact on Gravity Co., Ltd.	Financial/Operational Detail
Minimum Wage Increase	January 1, 2025	Higher base salary and contract costs for junior/support staff.	Minimum wage increased to ₩10,030 per hour.
Maximum Workweek Policy	Ongoing enforcement	Limits intensive crunch periods (e.g., before a major launch) to 52 hours maximum per week.	Requires better use of flexible work models to maintain development pace.
Serious Accident Punishment Act (SAPA)	Fully applicable to SMEs (2024-2025)	Increased executive liability and mandatory investment in workplace safety programs.	Requires proactive safety audits and executive oversight to avoid heavy penalties.

The 52-hour workweek rule is a constant friction point for the gaming industry, which relies on 'crunch' periods. While the policy aims to curb overwork, it forces Gravity Co., Ltd. to hire more developers to meet deadlines, increasing the overall payroll expense, or risk project delays.

Compliance with age-rating systems (like ESRB, PEGI) across diverse international markets

Global expansion means navigating a complex web of age-rating and content-control bodies, which has moved far beyond simple violence and language checks. Compliance is now a product design issue.

The key challenge is the shift from voluntary content rating (like the Entertainment Software Rating Board (ESRB) in the US or Pan European Game Information (PEGI) in Europe) to mandatory, technical age assurance for in-game features. For example, the UK's Online Safety Act (OSA) now requires 'Highly Effective Age Assurance' (HEAA) for services likely to be accessed by children. This compliance assessment was due by April 16, 2025, with protection duties coming into effect in July 2025.

This means Gravity Co., Ltd. must now implement technical measures to verify age for features like:

• Restricting access to chat and friends lists for minors.
• Scrutinizing microtransaction (payment) flows to comply with child safety laws.
• Ensuring usernames and avatars are not considered personal data under laws like the Children's Online Privacy Protection Rule (COPPA).

These requirements add significant development and auditing costs to every new game launch and major update.

Gravity Co., Ltd. (GRVY) - PESTLE Analysis: Environmental factors

Increased investor focus on Environmental, Social, and Governance (ESG) reporting, especially concerning energy consumption of data centers.

You need to understand that for a company like Gravity Co., Ltd., which operates online and mobile games globally, the 'E' in ESG is now a major investor concern, not a side project. By 2025, ESG reporting is effectively a 'right to play' for securing capital, and investors are demanding transparent, financially relevant disclosures, not just high-level narratives.

While Gravity Co., Ltd. has not publicly disclosed specific 2025 environmental metrics like its carbon footprint or energy usage, its scale suggests a significant footprint. The company's Trailing Twelve Months (TTM) revenue for 2025 stands at approximately $0.40 Billion USD, indicating a substantial, non-trivial server operation. This operational size means the company is exposed to the industry-wide scrutiny on data center energy consumption. If you can't report on your emissions, you risk exclusion from key sustainable finance opportunities.

Pressure to reduce the carbon footprint associated with large-scale server operations.

The core environmental pressure for a gaming company comes from the energy needed to run its servers and the network infrastructure that delivers games like Ragnarok Online to its global user base. The entire gaming industry's carbon footprint accounts for roughly 2.5% of global greenhouse gas emissions, and the data centers supporting this infrastructure consume around 1% of the world's electricity.

Here's the quick math on the industry trend: The global data center energy usage surged to 310.6 TWh in 2024. To manage this, leading data center operators have reduced their average carbon emissions intensity from 366.9 mtCO2e/GWh to 312.7 mtCO2e/GWh over the last five years, largely by shifting to renewables. Gravity Co., Ltd. must pressure its cloud and hosting providers to meet these benchmarks, or it inherits the carbon risk.

• Gaming industry's carbon footprint: 2.5% of global GHG emissions.
• Data center average PUE (Power Usage Effectiveness) improved to 1.38 in 2024.
• Hyperscale providers now use renewable sources for roughly 91% of their energy needs.

Limited direct environmental impact, but supply chain ethics for hardware procurement are a growing concern.

Gravity Co., Ltd.'s direct environmental impact is low since it is a developer and publisher, not a hardware manufacturer. The real risk lies in Scope 3 emissions (indirect emissions in the value chain), specifically the hardware procurement for its own offices and the servers it leases. Hardware manufacturing and the energy consumed by the end-user's gaming devices account for the largest portion of the gaming industry's total carbon impact.

Supply chain transparency is no longer optional. Consumers are increasingly aware of issues like conflict minerals and labor practices in electronics manufacturing, and they are willing to pay a premium-surveys suggest an average of 9.7% more-for sustainably sourced goods. If a major server provider is implicated in a supply chain scandal, Gravity Co., Ltd.'s reputation, and by extension its Q3 2025 net profit of KRW 19,869 million (US$ 14,145 thousand), is at risk.

Opportunities to promote virtual, low-carbon entertainment alternatives to physical goods.

The biggest environmental opportunity is leveraging the inherent low-carbon nature of digital goods compared to physical alternatives like movies, music, or physical media games. Gravity Co., Ltd. can position its intellectual property, like the Ragnarok franchise, as a sustainable entertainment choice. The shift to cloud gaming, which the company is exploring with new regional rollouts, reduces the need for powerful, energy-intensive hardware on the user side.

The company should actively quantify the carbon offset of its digital distribution model versus physical goods sales to capitalize on this. For instance, while the adoption of cloud gaming services experienced a 35% increase in 2023, which does increase data center load, it fundamentally reduces the manufacturing and disposal burden of consumer hardware.

The immediate action you should take is to mandate that the IT and Procurement teams get a full Scope 1, 2, and 3 emissions assessment for the 2025 fiscal year. Finance: draft a credible, public ESG disclosure plan by the end of the quarter.