Nexon’s move to position itself as country’s top online game firm bewilders investors


Nexon has officially concreted its position as the country’s top game firm following its announcement that it took over nearly 15 percent of NCsoft’s shares last Friday.

Nexon said it has acquired about 3.21 million of NCsoft’s shares for 250,000 won ($214.39) per share from the firm’s chief executive Kim Taek-jin on the same day.

The move indicates that Nexon has paid up to 804.5 billion won for 14.7 percent of NCsoft’s stocks belonging to the firm’s chief Kim.

“This investment has been made to combine the development skills of NCsoft with Nexon’s global publishing platform,” said Nexon chief executive Choi Seung-woo. “Through the long-term partnership, the two firms will aim to grab a greater number of opportunities than before.” Nexon’s founder is Kim Jung-ju..

On a related note, NCsoft’s CEO Kim wrote in an e-mail message to his employees on Monday that the firm is now joined by a “friend,” which will jointly dive into the global gaming market.

“The global gaming industry that we’re currently facing is a market driven by fierce competition and doesn’t have boundaries,” he said. “I believe we need to put together our efforts to survive in this market.”

Stating that the two firms have their own unique colors, Kim asked NCsoft’s employees to work together with its partner Nexon to take on the challenges that the two will face on the international stage.

Looking roughly at last year’s sales figures, the merger of the nation’s two big names will enable it to be included in the list of the world’s top 10 game companies. Nexon scored about 1.2 trillion won in total sales in 2011, while NCsoft recorded up to 608.9 billion won.

However, the question remains as to why NCsoft ― a firm well known for striving to achieve growth based solely on its own development capabilities, without any mergers or acquisitions ― has granted its rival to become its biggest stakeholder.

The announcement also comes less than two weeks before NCsoft launches its blockbuster, massively multiplayer online role-playing game called “Blade & Soul” on June 21.

Joseph Chung, an analyst at Woori Investment and Securities, said he expects to see synergy from the mix of NCsoft’s development skills and Nexon’s global networks.

“From the view of NCsoft, the use of Nexon’s global networks and its know-how related to the partly-paying game services could lead to an increase in company value in the mid- and long term,” said Chung.

He also said that NCsoft’s overseas sales composed 33.6 percent of last year’s total sales and Nexon’s sales abroad took up over 67 percent of sales during the same term.

Ahn Jae-min of Kiwoom Securities also said Nexon’s stock takeover is seen in a positive light in the long term but the timing and the price remains to be a question.

“This decision reached by Nexon and NCsoft’s chief Kim is noted to have more positive factors when looking far in the future, but it is sought to have a negative impact in terms of the two firms’ stocks when considering the announced time and price,” he said.

Ahn added that he could not understand why they had to make the announcement ahead of the launch of its blockbuster games such as Blade and Soul and Guild Wars 2.

E-Trade Securities analyst Sung Jong-hwa also said that the selling of NCsoft’s stocks at a 40-percent lower price than the high mark could lead investors to think that the company is unsure of the success of its two upcoming online games.

“But if it turns out to be a swap of stocks between the two firms, it could be seen as their firm will to combine the two strong players to meet the challenges ― like the rise of mobile game market ― occurring in the PC online game industry,” said Sung.

By Cho Ji-hyun (sharon@heraldcorp.com)