South Korean game companies are increasing or sustaining research and development spending to secure new intellectual property, proprietary technology and future titles despite short-term earnings pressure. Krafton recorded the largest year-on-year increase in first-half 2026 R&D costs, investing 426.8 billion Korean won, or approximately $311.6 million, up 49.2% from 286.1 billion won a year earlier. Revenue rose more than 73% to 2.66 trillion won, or approximately $1.9 billion, keeping its R&D-to-revenue ratio at 16.0%. Its research covers game-specific reinforcement learning, local large language models (LLMs), interactive story generation, persona-based chatbots, generative AI game engines and world-model-based prediction technologies, while its Big Franchise IP strategy targets new and expanded franchises. Pearl Abyss increased R&D spending 30.2% to 79.7 billion won, or approximately $58.2 million, but its ratio fell to 15.3% from 37.5% as revenue surged 339.3% to 521.1 billion won following the release of Crimson Desert, its major new title released 11 years after Black Desert. NCSoft raised R&D costs 32.2% to 212.9 billion won, while Netmarble remained the second-largest spender despite a 2.2% decline. Kakao Games and Nexon Games maintained or expanded investment amid weaker results. The industry is responding to longer development cycles, higher graphics and content expectations, Unreal Engine 5 and Unity-based rendering advances, and cloud gaming by treating proprietary engines and AI capabilities as essential competitive tools.