Hound13, the developer behind Dragon Sword, announced on the 19th that they have officially terminated their publishing contract with Webzen. The reason for the termination is Webzen's failure to pay the outstanding Minimum Guarantee (MG) balance, with the notice served on the 13th.

Dragon Sword, an open-world action RPG released on January 21st, was published by Webzen and developed by Hound13. The game garnered attention for its charming cartoon-rendered graphics and a combat system featuring various linked status effects such as aerial combos, knockdowns, bleeding, and stuns.

According to Hound13's announcement, Webzen stated they could not pay the remaining balance due to concerns that Hound13's financial difficulties would prevent them from continuing development. Hound13 explained regarding their financial situation, "The primary reason for our financial hardship is Webzen's failure to pay the MG balance, along with revenue falling short of expectations due to insufficient promotion and marketing."

On the 19th, Webzen released a statement via the Dragon Sword community. According to Webzen, they invested approximately 30 billion KRW in Hound13 in January 2024, with a development completion target set for March 2025.

The initial investment was calculated based on the developer's operating costs for at least one year after completion. Webzen explained that as development took longer than expected, they proactively provided a portion of the MG to Hound13 in December 2025 and January 2026 to mitigate the risk of insufficient operating funds.

However, Webzen claims that after a comprehensive review of the situation post-launch, they concluded that even if the remaining MG were paid, it would be difficult to maintain stable game service. Consequently, Webzen proposed additional investment to prevent service termination and continued discussions until recently, but stated that Hound13 notified them of the contract termination without prior consultation during these discussions.

Webzen announced that, prioritizing customer protection, they will provide full refunds for all payments made since the game's launch. Furthermore, payments have been suspended as of the announcement on February 19th, and the game service will be maintained until further notice. Details regarding the refund process will be provided in a separate announcement.

The MG is an amount that a publisher must pay to the developer regardless of whether the game meets its target revenue. Considering that MG payments are typically made around the time of official service, it is confirmed that the MG balance was not paid within the contract period as both sides stated. However, since it has been confirmed that there were discussions between the two companies, including proposals for additional investment, it is necessary to monitor the future positions of both parties.