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M&A of the Century Changed the Game Industry's Landscape


Nexon, Netmarble, Krafton and other major players in the Korean game industry have grown thanks to bold M&As and their achievements. Today, we will be joined by Seo Jung-geun, a reporter from the Ministry of Information and Science, to hear about their M&A history and their competitive points.

Anchor One. A clerk, Netmarble recently confirmed its acquisition of Coway, and it's a case of a game industry where we've achieved a very large M&A, so please tell us a story.

Reporter 1)Sometimes, Chairman Kim Jung-joo and Nexon have the highest M&A rate, and Chairman Bang Joon-hyuk and Netmarble have the best M&A performance.

In the early 2000s, Netmarble had many potentials, but in the process of development and business, it provided funds in the form of a three-way paid capital increase and turned it into a subsidiary.

The companies that made the most popular games, such as harnesses, monster taming, and Raven, were pre-sold at a relatively low price. It's a case where the Nexus Games, the creator of the Seven Knights, took over at a reasonable price.

And when they were out of control at the end of their life cycle, they were buying one more company. In 2017, it acquired Canadian game company Kabam for 900 billion won.
I still don't remember the big failure of Netmarble's M&A.

Anchor 2) The success story of Nexon's M&A original would have been spectacular. Recently, there has been a story about Nexon’s M&A winning rate going down a bit.

Journalist 2) Nexon Giti, a subsidiary of Nexon, had a subsidiary called Nexon Red. Nexon Red is a group of companies that Nexon acquired, including Game High’s mobile game development division, Well Games, and Endoz. The combined cost of Nexon's acquisition of the companies is over 300 billion won.

However, Nexon recently acquired Nexon Red for 100 million won from Nexon Gity after the company suffered a severe deficit and a financial impact on its parent company Nexon.

The Japanese game company Gloops, which Nexon Japan Corporation bought for 500 billion won, was sold to a local company called GR Drive for only one yen.

Of course, we can make up for the loss from this failure with one Neo-Fle acquisition. Neople, which acquired 400 billion won, has been receiving more than 1 trillion won in royalties from China every year. Neople's annual revenue from China is one third of the total annual trade volume between North Korea and China.

Anchor 3)How is NCsoft's M&A performance? Come to think of it, Nexon has become the No. 1 shareholder of NC, and Netmarble has pushed for the acquisition of Nexon before the acquisition of Woongjin Coway.

Reporter3)Nexon has done well in M&A before, and Netmarble has been doing well lately.Nn is not good at M&A now. There are also many history of M&A failures such as Fantagram and Entrysoft.

NC is uniquely specialized in the MMORPG genre and Kim Taek-jin's leadership is firm. After being absorbed by NC, the game is difficult to overcome the high hurdles of NC after the game has been absorbed, and the company that makes other casual genres seems to have difficulty matching Kim's leadership or NC's team color.

While Nexon is aggressive in M&A, corporate culture is free. The opposition is against the yen, but when Nexon tried to intervene in the management of NC, saying that it was not synergistic since the two companies were together, it caused a management dispute.

Anchor 4) NETmarble was involved in the management rights dispute, so Nexon couldn't achieve its goal.
Reporter 4) Chairman Bang Joon-hyuk acted as a white knight for CEO Kim Taek-jin. Netmarble and NC exchanged shares. Nexon once took over Game High, the creator of Netmarble's core game "Sudden Attack," and put Netmarble in trouble, in partnership with En and took revenge on Nexon.

Over the years, Nexon, the No. 1 player on the market, and Netmarble, which had been struggling due to a stagnant business, offered to take over Nexon, which had a lot of "things" between Chairman Kim Jung-joo and Chairman Bang Joon-hyuk. The difference in the amount was too large to close the deal.

Anchor (5)I hear that Chairman Jang Byung-kyu of Krafton promised to donate 10 billion won to his alma mater, KAIST, in the name of the power generation fund. Krafton also wrote a dramatic story as an M&A.

Reporter (5)In 2015, the pub was held by Krafton stock exchange. Both companies did not have enough money, so they could not afford cash-and-carry M&As, and they joined hands only on dreams and hopes.

In fact, we expected the development of MMORPG genre in pubs, and all the key games failed and the shooting game "Battleground," which we didn't expect at all, became Cinderella.

Tencent also sent a love call to take over Krafton and worked hard, but without the existence of Krafton and Battleground, the chances of Tencent's acquisition of Nexon would have been significantly higher.

Anchor6) Do you think there is a possibility that each company will continue its aggressive M&As?

Big 4 companies have already wiped out game companies that can buy at home or abroad, and Netmarble has taken over Nexon and found Coway-like offerings outside the game industry. The chances of another big deal are slim.

The key to this fight is how they continue their legacy from the M&A they have built in the past.
Nexon is offering Neople's 'Dungeon & Fighter Mobile' via Tencent during the first half of the year. Ten million people gathered in four days to recruit local pre-subscribers. In four days, the number of people in Seoul said they would play this game.

Netmarble promoted Vice President Lee Seung-won, who made a contribution to the acquisition of Kabam, to CEO of its headquarters, and appointed Vice President Seo Jang-won, who made a contribution to the acquisition of Coway, to head the Coway TFT. That proves how important the two M&As were. We expect Coway to generate stable profits and reinvest them in game development in the long run.

Crackton and pubs are busy developing a sequel to "Battleground," and depending on how fast and well this game is played, the corporate value will change by the order of magnitude next year when Krafton pushes for a corporate disclosure.
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