Kakao Games, limited only by game distribution… Start developing games through M&A

Input 2021.03.26 15:06 | Revision 2021.03.26 16:38

Last month, developer’Neptune’ became the largest shareholder
Head of Neptune, representative of subsidiary’Friends Games’
No food after publishing’Black Desert’
Raising the possibility of further acquisition of a developer

Kakao Games is expanding its business area in cooperation with game development company’Neptune’. Neptune is a place that developed’Friends Sacheonseong’ and’Eternal Regression: Black Survival’. Kakao Games became Neptune’s largest shareholder in February by investing 237.5 billion won from 2017 to last year. It is interpreted that they showed a willingness to go beyond the limits of the publishing (game distribution) business by investing in a developer rather than directly developing a high-risk game.

According to the game industry on the 26th, Kakao Games appointed Neptune CEO Jung Wook as the new representative of Friends Games, a subsidiary of casual mobile games the day before. The CEO of Friends Games has been joined by Nam Gung-hoon, the CEO of Kakao Games. As the developer Neptune was incorporated as an affiliate, the development capabilities were effectively combined into Neptune.

It is known that Namgung and Jeong are from Hangame, founded by Kakao Chairman Kim Bum-soo in the past, and have a long relationship. An official in the game industry said, “There were many interpretations that’the Hangame family has united again’ over Kakao Games’ Neptune investment,” and said, “It is interpreted that Kakao Games is going beyond publishing to develop games.”

In fact, there are many views in the industry that Kakao Games is starting to develop a full-fledged game with Neptune. Kakao Games has been servicing Pearl Abyss”Black Desert’ so far, but as the contract ended on the 24th of last month, the big axis of sales has disappeared.

In this situation, as Elion,’Pay-to-Game (a package sales method that allows you to play games by paying a license), developed by Krafton and serviced by Kakao Games is sluggish, there are concerns that a new growth engine should be prepared.

Kakao Games is expected to start developing games with Neptune in front of it, but it is not possible to expect the same sales as before with casual games that have been mainly developed so far. The reality is that the sales of paid items that can generate sales are limited compared to the role-playing game (RPG) genre in casual games, where puzzles, racing, and finding the wrong pictures are the main.

However, it is practically impossible to develop and distribute masterpiece RPGs that cost hundreds of millions of dollars to as many as billions of dollars in a short period of time. This is why Kakao Games invests in small and medium-sized game developers, and at the same time turns to businesses other than games such as Metaverse (a three-dimensional world where reality and virtual coexist) and NFT (non-replaceable tokens).

Kakao Games announced its plans to actively engage in screen golf and smart home training, which combine advanced technologies such as artificial intelligence (AI), location-based (LBS), and virtual reality (VR) into major businesses in last year’s earnings announcement. CEO Namgung said, “We are continuously investing in game developers with the funds invested in the listing. We are also considering investing in a platform company that can be grafted with game contents.”

In the investment banking (IB) industry, Kakao Games is expected to acquire additional game developers by issuing a convertible bond (CB) worth 500 billion won at the end of this month. Lionheart Studio, Second Dive, Ocean Drive, etc. are popularly discussed. These developers have already invested 10 billion to 18 billion won by Kakao Games from 2018 to last year.