TOKYO/LOS ANGELES — The Japanese developer of one of the longest-running online role-playing game titles, whose most popular video game has attracted nearly a billion registered users, is preparing for global expansion and turning its gaze to the West.
Nexon Co Ltd – little known outside of Asia – is one of the top 10 video game companies in the world by market cap; The $22 billion valuation is bigger than either 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 the 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 behind this is to combine what we’re really good at – growing a virtual world permanently and forever – with what they’re really good at,” Nexon chief executive Owen Mahoney told Reuters.
Nexon partners with AGBO to find ways to expand its game franchises into film or television and to develop virtual worlds or video games inspired by AGBO’s films.
“Our vision, which aligns well with Nexon’s, recognizes that audiences expect true immersion in the intellectual property they care about most,” said Jason Bergsman, CEO of AGBO.
The two companies are in early discussions about adapting Nexon franchises like MapleStory and Dungeon and Fighter, which have rich histories and passionate fan bases. Those talks are still in the early stages, a source with direct knowledge of the situation warns.
They are also discussing a game or virtual world inspired by Battle of the Planets, an iconic 1970s Japanese anime show that AGBO is developing into a feature film.
Mahoney hopes to leverage Nexon’s experience in running “live games” – updating titles as they’re running – to launch big-budget, western-sensitive titles, such as the free-to- Play shooter game ARC Raiders by Embark Studios.
Embark founder Patrick Soderlund once ran Dice, the company that developed the “Battlefield” franchise and was acquired by Electronic Arts when Mahoney was its director of mergers and acquisitions.
VIRTUAL WORLD PIONEER
Nexon has been keen to avoid the frenzy around the “metaverse” that has gripped tech giants Microsoft and Facebook.
“No one can define it and most importantly, they can’t define why it’s so freaking awesome,” Mahoney said. “It’s a big nothing burger.”
Nexon was an early adopter of features that have become commonplace in the industry, including in-game virtual currencies and the free-to-play business model.
These features have been introduced in games like Nexon’s “KartRider” racing game, which has been running for almost two decades – one of the “Forever” franchises the company calls.
His most popular franchise, the arcade fighting game Dungeon and Fighter, has grossed more than $20 billion since 2005 – more than the combined box office revenues of the “Star Wars” or “Harry Potter” film franchises.
A major new challenge as part of Nexon’s expansion drive to generate returns from higher-budget Western games.
“Nexon doesn’t have a great track record of powering photorealistic games for hardcore gamers,” Citigroup analysts wrote in March, beginning to upgrade the stock to “neutral.”
Nexon wants to control the cost of developing titles at a time when budgets are exceeding $100 million. For example, it uses machine learning technology to animate some character actions instead of relying on workers.
“I don’t care what happens in the first quarter or two,” Mahoney said. “What matters to me is what happens between years two and 20.”
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