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The authors are analysts of Shinhan Securities. They can be reached at and, respectively. — Ed.

Review of The Callisto Protocol

The Callisto Protocol was released on December 2 for PC (Steam), Xbox, and PlayStation. The game, focusing mainly on following the storyline, took 11 hours from start to finish on PlayStation 5. Although not a personal fan of the survival-horror action genre, we reviewed the game in detail and subsequently lowered the target multiple applied in our valuation of Krafton.

World view and narrative: The Callisto Protocol tells a typical story about a pilot seeking to escape from a prison hit by a deadly zombie virus outbreak. Although the game is set on Jupiter’s moon Callisto, the environment is nothing special aside from the cold setting outside the prison walls. The narrative was intriguing to a point, but the continuous repetition of simple tasks made it difficult to become immersed in the game. Moreover, the game came to an abrupt end with many loose ends, seemingly on purpose for the release of a sequel. All in all, the game was not worth the money in our view.

Action and cutscenes: The game offered great graphics and good action combat with close-in weapon systems. A wide array of weapons was available, but actual use was limited to a small number of effective options. Violent cut scenes that befit the horror genre were created using various in-game situations and landmarks. However, gravity weapons lowered the overall difficulty of the game and simple combats became too repetitive.

Retain BUY for a revised-down target of KRW210,000

We retain our BUY rating on Krafton for a revised-down target price of KRW210,000. The outlook on sales of The Callisto Protocol from launch to end-2023 has been lowered from 3mn to 2.4mn copies, and our target PER for the company has been down-adjusted from 25x to 20x.

We did not expect the new game to drive steep earnings growth, but believed it needed to prove that the company’s high-profile new hires and developer acquisitions were paying off. In our view, The Callisto Protocol, the first large-scale game released since Krafton’s M&A drive, falls short (scored 70 on Metacritic due to bugs, technical issues and fun factor) and raises doubts over the company’s management of subsidiaries and project quality. Large sales generated on globally popular IP assets allowed Krafton to trade at valuations on par with global peers up to present, but we believe the disappointing performance of the company’s newest game and lack of promising new releases in 2023 warrant downward revisions of earnings forecasts and target valuations.

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