Game firms turn to non-game biz mod­els

The Korea Times - - BUSINESS - By Jun Ji-hye [email protected]­re­

Net­mar­ble, NCSOFT, NHN and other game com­pa­nies here have been in­creas­ingly turn­ing their eyes to non-game busi­nesses in a bid to se­cure a fu­ture growth en­gine amid the slow­down in growth of the game in­dus­try, lo­cal an­a­lysts said Sun­day.

Game com­pa­nies are also fac­ing the pos­si­bil­ity of stricter reg­u­la­tions fol­low­ing the World Health Or­ga­ni­za­tion’s (WHO) en­dorse­ment of the re­vised 11th In­ter­na­tional Clas­si­fi­ca­tion of Dis­eases (ICD-11) in May, which clas­si­fies game ad­dic­tion as a dis­ease in the same cat­e­gory as sub­stance abuse and gam­bling ad­dic­tion.

Most re­cently, Net­mar­ble bought a con­trol­ling stake in Woongjin Coway, the na­tion’s largest home ap­pli­ance rental ser­vice provider.

In ex­plain­ing the rea­son for par­tic­i­pat­ing in the bid, the na­tion’s lead­ing game com­pany said it wanted to make in­roads into the so-called smart home sub­scrip­tion econ­omy mar­ket, not­ing that it will in­te­grate its ar­ti­fi­cial in­tel­li­gence (AI) and big data tech­nolo­gies as well as op­er­a­tional know-how ac­cu­mu­lated from its gam­ing busi­ness with Woongjin Coway’s de­vices.

But in­dus­try an­a­lysts said grow­ing un­cer­tain­ties in­side and out­side the coun­try have led Net­mar­ble and other game com­pa­nies to at­tempt to di­ver­sify their busi­ness port­fo­lio.

“Net­mar­ble has been ex­pand­ing its busi­ness port­fo­lio in var­i­ous ways due to ex­ports of Korean games to China be­ing blocked since 2017. Fur­ther­more, the global mo­bile game in­dus­try is los­ing its strong growth mo­men­tum,” said James Kang, a home and tech an­a­lyst at Euromon­i­tor In­ter­na­tional Korea.

Kang said Net­mar­ble’s ac­qui­si­tion of Woongjin Coway is ex­pected to de­liver syn­ergy in both the gam­ing and con­nected-con­sumer ap­pli­ances in­dus­tries, and will also en­able the game com­pany to se­cure a sta­ble cash flow.

NHN, which had fo­cused on pro­vid­ing on­line games and ser­vices, has also been mak­ing for­ays into new busi­nesses such as elec­tronic pay­ment and data­base se­cu­rity sys­tems.

The com­pany changed its name from NHN En­ter­tain­ment ear­lier this year to “make a new leap for­ward as an IT com­pany,” ac­cord­ing to an NHN of­fi­cial.

This year, the firm is con­cen­trat­ing its en­ergy on the cloud computing busi­ness, vow­ing to of­fer its TOAST Cloud ser­vices to more fi­nan­cial com­pa­nies and on­line shop­ping malls.

For its part, NCSOFT has se­lected AI as a cat­e­gory for its new busi­ness, sig­nif­i­cantly ex­pand­ing its in­vest­ment in re­search and devel­op­ment.

The com­pany cur­rently op­er­ates two rel­e­vant in­sti­tutes — the AI and NLP (nat­u­ral lan­guage pro­cess­ing) cen­ters — un­der the di­rect con­trol of founder and CEO Kim Taek-jin. About 150 soft­ware engi­neers spe­cial­iz­ing in AI are work­ing at the two in­sti­tutes.

The firm has also been aim­ing at the char­ac­ter mar­ket by cre­at­ing new char­ac­ters, Spoonz and Twotuck­gom.

An of­fi­cial from a Seong­nam­based game com­pany said an in­creas­ing num­ber of game com­pa­nies are mov­ing to se­cure sta­ble sources of in­come by seek­ing new busi­ness op­por­tu­ni­ties as it is dif­fi­cult to guar­an­tee the suc­cess of a new game though it takes years of devel­op­ment.

But she also ex­pressed con­cerns, say­ing, “Ex­ces­sive ex­pan­sion of the busi­ness could lead to fi­nan­cial dif­fi­cul­ties. Thus, com­pa­nies need to make the right choice.”

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