Japan game giant Nexon plots western expansion
13/06/2022 24:00
By Sam Nussey and Dawn Chmielewski
TOKYO/LOS ANGELES, June 13 (Reuters) - The Japanese creator
of one of the longest-running online role-playing titles, whose
most popular video game has attracted nearly a billion
registered users, is gearing up for global expansion and setting
its sights on the West.
Nexon Co Ltd 3659.T - little known outside Asia - is one
of the world's 10 largest video game companies by market
capitalization; its $22 billion valuation is larger than
Take-Two Interactive, the company behind "Grand Theft Auto," or
Roblox.
Last year it completed the acquisition of Stockholm-based
Embark Studios, whose founder led development of the hit
"Battlefield" franchise. In 2022 it invested $400 million for a
minority stake in AGBO, the independent studio founded by
Anthony and Joe Russo, the creative duo who directed Marvel's
"Avengers: Endgame" and "Avengers: Infinity War."
"The idea overall with that is to combine what we're really
good at - making a virtual world last and grow forever - with
what they're really good at," Nexon's chief executive, Owen
Mahoney, told Reuters.
Nexon is working with AGBO to explore ways to extend its
game franchises to film or television and develop virtual worlds
or video games inspired by AGBO's movies.
"Our vision, which aligns well with Nexon's, recognizes that
audiences have come to expect real immersion in the IP they care
most about," said AGBO CEO Jason Bergsman.
The two companies are in early talks on adapting Nexon
franchises such as "MapleStory" and "Dungeon and Fighter," which
have rich lore and passionate fan bases. These talks are still
in preliminary stages, cautions one source with direct knowledge
of the situation.
They are also discussing a game or virtual world inspired by
"Battle of the Planets," an iconic Japanese anime show from the
1970s that AGBO is developing as a feature film.
Mahoney hopes to leverage Nexon's experience in operating
"live games" - updating titles while they are running - to
launch big budget titles with a Western sensibility, such as the
free-to-play shooter game "ARC Raiders," from Embark Studios.
Embark's founder, Patrick Soderlund, once led Dice, the
company that developed the "Battlefield" franchise and was
acquired by Electronic Arts EA.O when Mahoney was head of
mergers and acquisitions there.
VIRTUAL WORLD PIONEER
Nexon has assiduously avoided the frenzy around the
"metaverse" that has gripped tech giants Microsoft and Facebook.
"Nobody can define it and most importantly they can't define
why it's so darn great," Mahoney said. "It's a big
nothingburger."
Nexon was an early adopter of features that have become
common in the industry including in-game virtual currencies and
the free-to-play business model.
These features were rolled out in games such as Nexon's
"KartRider" racing game, which has been running for almost two
decades - one of what the company calls its "forever
franchises."
Its most popular franchise, the arcade-style fighting game
"Dungeon and Fighter," has earned more than $20 billion since
2005 - more than the combined box office proceeds of the "Star
Wars" or "Harry Potter" film franchises.
One big new challenge as part of Nexon's expansion will to
generate returns from higher-budget Western games.
"Nexon does not have much of a track record in operating
photorealistic games for hardcore gamers," Citigroup analysts
wrote in March, initiating coverage of the stock at "neutral".
Nexon wants to control the cost of developing titles in an
era when budgets top $100 million. For instance, it uses machine
learning technology to animate some character actions instead of
relying on workers.
"I don't really care what happens in the first one or two
quarters," Mahoney said. "What I care about is what happens from
years two to 20."
(Reporting by Sam Nussey in Tokyo and Dawn Chmielewski in Los
Angeles; Editing by Gerry Doyle)
((sam.nussey@tr.com;dawn.chmielewski@thomsonreuters.com))