unsigned

Microsoft $69 bn bet spurs Korea game makers' search for metaverse deals

Korean game developers seek new profit sources in metaverse, NFT sectors to replace existing business models based on paid games

Jun-Ho Cha 2

Jan 20, 2022 (Gmt+09:00) chacha@hankyung.com

Games

Microsoft　logo　is　seen　on　a　smartphone　placed　on　displayed　Activision　Blizzard's　games　characters　in　this　illustration　taken　Jan.　18.　(Courtesy　of　Reuters,　Yonhap)

South Korea’s game developers are expected to seek more acquisitions of the metaverse and non-fungible token (NFT) companies for new profit sources after Microsoft Corp. made a $68.7 billion bet on virtual online worlds through a takeover of Activision Blizzard Inc.

Game publishers in the country have already been extending their business into new technology sectors such as metaverse, blockchain and NFT since last year. Microsoft’s acquisition of Activision, maker of Call of Duty, is predicted to accelerate such expansion.

Krafton Inc., South Korea’s game maker of PlayerUnknown’s Battlegrounds (PUBG), decided to set up business units on metaverse and NFT, according to industry sources on Wednesday. Krafton started hiring talent and looking for companies for potential acquisition.

The company had been cautious on the new sectors, saying “it is a key to think about whether they will help expand the fun and ecosystem,” even as its competitors such as Netmarble Corp. and NCSoft Corp. formalized the start of NFT business late last year.

METAVERSE, NFT: CORE ACQUISITION TARGETS

The South Korean game industry has already been targeting metaverse and NFT sectors for acquisitions.

Netmarble last year bought the world’s No. 3 social casino game publisher SpinX Games for 2.5 trillion won ($2.1 billion). Social casinos, if combined with blockchain technology, are considered one of the best sectors to help game makers start the paly-to-earn (P2E) business. Netmarble also took over a South Korean P2E game developer ITAM Games.

Netmarble　established　Metaverse　Entertainment　Inc.　in　August　2021

Com2uS Holdings Corp., formerly known as Gamevil Inc., in December, bought a 38% stake in Coinone to become the second-largest shareholder of the local cryptocurrency exchange. Com2uS Holdings’ subsidiary Com2uS Corp. joined hands with WYSIWYG Studios Co. to acquire Artist Company, a talent agency founded by Lee Jung-jae, the lead actor of Netflix’s smash hit Squid Game.

Kakao Games Corp. merged Way2Bit Co., a blockchain game maker it acquired in 2020, and its subsidiary Friends Games.

DoubleU Games Co. invested $1.5 million in North Carolina-based Epic Games, Inc., the developer of Fortnite, one of the most popular metaverse platforms.

Such moves came as South Korean game publishers have been making every effort to find new profit sources, replacing the existing business models based on paid games.

They can combine intellectual properties such as characters in a game with NFT to obtain asset value and make profits by trading them, for example.

“Since the probability of success in major new games gradually declines, the game industry’s competition in new sectors such as metaverse and P2E is expected to intensify with game makers holding content or acquiring companies with technology,” said an investment banking industry source.

Write to Jun-Ho Cha at chacha@hankyung.com
Jongwoo Cheon edited this article.