Home PC News How Nexon is expanding its PC online games to mobile

How Nexon is expanding its PC online games to mobile

Nexon is a fortunate online-only online game firm with 5 main franchises which have generated billions of {dollars} in revenues over time. That’s the payback from being the primary firm to launch a free-to-play on-line sport — the Kingdom of the Wilds, launched on the PC in 1996.

And by the tip of this yr, all 5 of these main franchises shall be accessible on cellular gadgets, Nexon CEO Owen Mahoney mentioned in an interview with GamesBeat. After releasing stellar earnings this month, Nexon’s shares hit document highs on the Tokyo Stock Exchange. The Tokyo-based firm, which has a lot of its operations and employees in South Korea, has been benefiting from the habits of recent and veteran players alike in the course of the pandemic. And if these video games are as massive on cellular as they’re on the PC, then Nexon shall be golden.

Mahoney spoke with us at our GamesBeat Summit digital occasion in April, the place he mentioned, “We’ve all gotten a lesson on what we don’t know, in the economy and science. We’re living in crazy times.” But because the second-quarter outcomes confirmed, the loopy occasions have been financially good for large sport corporations. Still, it’s not simple. PC gaming cafes are a giant a part of Nexon’s enterprise, they usually’re nonetheless iffy bodily areas that will or might not come again as locations to play video games.

Even if the occasions take a flip for the more serious, Nexon has $5 billion in money that may assist it keep the course. I caught up with Mahoney about his views of the world just a few months after our final interview, and he as soon as once more mentioned some enlightening issues. And he continues to pursue the long-term objective of making video games that do properly within the West in addition to in Asia and the remainder of the world.

Here’s an edited transcript of our interview.

MapleStory debuted in 2003 and it is still going strong.

Above: MapleStory debuted in 2003 and remains to be going sturdy.

Image Credit: Nexon

GamesBeat: You reported earnings. How did it go?

Owen Mahoney: We had an awesome quarter. We had been up 20%. Our group is firing on all cylinders. We gave steerage for about 50% for Q3. It’s an excellent time. The query you requested me earlier than, final quarter, was, “Is this about COVID?” You’ll most likely ask about that once more. I believe our reply, now greater than ever, is it’s a part of a a lot bigger pattern that’s been happening for a while that has been made very apparent by COVID. But it’s clearly been taking place for a while.

It was that the 20th century media and leisure was like the economic age. You went to a bodily area to be entertained, in a theme park or a sports activities area or a live performance or a cruise ship. The world is changing into more and more digital. You nonetheless need to be related. Through on-line video games and digital worlds, that are like digital theme parks that may now be delivered to you, and to all people on this planet. There are roughly three billion extremely game-playable workstations in individuals’s pockets all over the world. That’s iPhone X or better. Now we will ship a digital theme park, software-derived, delivered via the cloud, to everybody on this planet.

That’s a revolution that is occurring within the leisure enterprise proper now. We suppose there are going to be some corporations that win massive as a part of that. We suppose Nexon is certainly one of them. It’s not well-covered by conventional media. If you take a look at the Hollywood media, the final enterprise press, particularly within the west and Japan, it’s not well-covered or well-understood, but it surely’s clearly happening. It’s not a COVID factor. It’s a lot larger and longer-term than COVID.

GamesBeat: You need to be the digital Disneyland?

Mahoney: Well, I believe we’re. MapleStory was up 151% in Korea. It was up 171% in Japan. That’s on prime of the 24% development it had a yr in the past. It’s rising double and triple digits. It grew 173% in North America and 217% in Europe. That’s 17 years into this product, this digital theme park we created. Nobody’s ever achieved that earlier than. It’s unprecedented. Nobody would have guessed it might occur. It’s a matter of execution, actually, however we additionally suppose it’s a matter of a a lot larger wave that’s happening within the leisure trade. It’s revolutionary.

GamesBeat: I wrote a column that included an fascinating survey from a few of these people who interviewed 13,000 individuals all over the world about their gaming conduct. They had been taking a guess at what number of new gamers there are. They mentioned there was a 4% web improve in new gamers for video games. They additionally had this notion of the place the income development would settle after we’re again to regular. Those had been some questions I’ve at all times had about the place we’re proper now. It was fascinating to see, primarily based on a survey, what these people thought was the truth of it. I’d guess that perhaps no one’s actually able to exit on that a lot of a limb, although, and make these exact predictions.

Mahoney: The exact predictions — there are two fascinating issues concerning the query you’re asking. One is, is it price making a exact prediction? I’d posit no as a result of no matter occurs within the brief time period goes to be overwhelmed by the long-term pattern.

The second is, inherent in your query about exact prediction is the concept of reversion to the imply. That we’re going to return to an previous means of doing issues. I simply take a look at the leisure consumption in my circle of relatives, my two boys, and their pals. Of course, we’re a gaming household. We like enjoying video video games with one another. But they’ve little interest in doing the stuff I did. I stood in line to observe the unique Star Wars for 4 hours with a blanket and a few KFC with my pals as a result of that’s what we did. I nonetheless love going to dwell music and issues like that. I can’t wait to return.

Above: Nexon’s MapleStory.

Image Credit: Nexon

What do they need to do? They discuss technique and techniques for tips on how to play their favourite on-line sport. They need to join with their pals there. That was happening lengthy earlier than. They watch YouTube movies about it. They contribute to dialogue boards. There’s this secular shift we discuss, and it’s not a COVID phenomenon. It’s a secular shift from linear, lean-back experiences to lean-forward experiences, the place you’re collaborating within the leisure.

That’s clear as day. You as a gamer perceive that. Numerous occasions it’s high quality to sit down again and be informed a narrative, however when you begin collaborating and interacting and having a bunch of individuals you’re social with on-line, doing that in a digital world, that’s compelling leisure. There’s little doubt a generational shift concerned on this. Whatever exact name we make now or within the subsequent couple of quarters is overwhelmed by this pattern that’s happening, a years-long pattern.

Again, we see it in our enterprise. Talking about MapleStory or Dungeon Fighter or — the actually fascinating factor we see in our enterprise now could be we simply launched The Kingdom of the Winds on cellular in Korea. Now, you and I’ve by no means talked that a lot about The Kingdom of the Winds, however The Kingdom of the Winds is the primary MMORPG. Most individuals don’t notice this. This began all of it, lengthy earlier than World of Warcraft, earlier than Ultima Online or any of the western MMORPGs. There was a sport known as Kingdom of the Winds, and it got here out in 1995 or 1996.

We simply launched it on cellular. If you look it up on App Annie in the present day in Korea, or no less than as of final evening, it was No. 1 on iOS and No. three on Google. It’s been that means now for greater than per week. We’ll see the way it goes from right here. But that is The Kingdom of the Winds. You can take a look at the graphics. It’s pixelated as a result of it was created on mid-’90s know-how. But individuals like it. It’s an awesome on-line sport expertise. For the people who find themselves youthful, it’s very accessible to them. For the people who find themselves older, it reminds them of their youth. It’s a well-architected, well-made sport that we’ve been in a position to convey to a a lot bigger viewers, i.e. everybody, as a result of everybody has cellular.

We’ll see the way it goes from right here. We’re not making predictions about the way it continues out. But it provides you a way of this concept that I can have a digital theme park. All my pals are there. We can take part in an interactive means in our expertise, and we will try this any time, wherever. We don’t must journey down, keep at another person’s lodge, park within the car parking zone, get on the bus with 1,000 different individuals, so we will perhaps see Goofy. We can do that anytime, wherever. That’s tremendous thrilling and tremendous compelling as an leisure expertise.

Dungeon Fighter Online debuted in 2005.

Above: Dungeon Fighter Online debuted in 2005.

Image Credit: Nexon

GamesBeat: You mentioned that 5 main franchises can be on cellular by the tip of the yr. Is Kingdom of the Winds certainly one of them?

Mahoney: Yes. MapleStory. KartRider. KartRider Rush+ has been doing terrific — that’s the cellular model of KartRider 1. FIFA Mobile, which is the total FIFA expertise on a cellular gadget. Then The Kingdom of the Winds and Dungeon Fighter Mobile. With Dungeon Fighter, we’ve generated greater than 60 million pre-registrations. It’ll launch in China first. We’re excited concerning the suggestions. The pleasure we’ve picked up has been terrific.

GamesBeat: Is that each iOS and Android?

Mahoney: Yes, it’s.

GamesBeat: That shift to cellular, or growth to cellular, how lengthy within the making has that been? How a few years?

Mahoney: Well, it’s been a while. We discuss how we see the online game trade by way of 4 quadrants. You divide it between immersive and light-weight. Some individuals would say “hardcore” as an alternative of “immersive,” however we don’t actually use that time period, as a result of it’s complicated. Similarly, some individuals would say “casual” as an alternative of “light,” however you get what that is about. And then on the X-axis, offline versus on-line.

The sport trade began within the higher left quadrant, immersive offline. We had issues like SimCity and Metal Gear and Civilization. We picked these video games as examples for our investor deck, by the way in which, as a result of they’re a few of my favourite video games, and I’m normally the one drawing this on the whiteboard. Then, within the mid-’90s, the web occurred. It was clear to everybody that this was going to alter the video games trade.

Several corporations, notably in Korea, the place broadband was very quick and really low-cost very early on — you possibly can get a megabit obtain in Korea within the mid-’90s for about $20 a month. We had been fortunate if we had been on DSL on the time. Most of us had been on 56Ok dial-up. But in Korea, that they had this explosion in on-line sport corporations as a result of everybody had what was then a really quick connection. There was a era of sport corporations, first in Korea after which in China, that got here up and constructed this enterprise. Nexon with Kingdom of the Winds, then NCsoft with Lineage, then Neowiz and a few others, these had been actual pioneers. It made Korea the Hollywood of on-line video games.

Above: Nexon’s KartRider Rush+.

Image Credit: Nexon

Numerous western corporations, and plenty of Japanese corporations, seemed on the Korean video games and mentioned, “Oh, that’s low resolution. It’s pixelated. It’s not 3D. Those don’t look like games.” But they had been video games, they usually had been very compelling leisure experiences. They simply seemed completely different and performed completely different from conventional video games on the time. Then, within the early 2000s, informal occurred. It was already there on PC, but it surely actually occurred with the rise of Facebook in 2008 and 2009. Mobile occurred across the identical time. When the App Store opened up round that point, it opened the informal market to a wider viewers.

That’s a technique to consider the historical past of the trade. Nexon, like most each different sport firm, has experimented in each a kind of quadrants. We’ve achieved informal video games, offline story-driven video games, story-driven RPGs. We’ve achieved all these issues. We simply realized we’re solely good at one factor, and that’s deeply immersive on-line digital worlds. That’s the place our coronary heart is. Heart issues rather a lot within the inventive enterprise.

Coincidentally, it’s additionally an excellent time to have that be your core competency and the place you need to spend your time. As I mentioned, we’re going from about 300 million game-playable PCs all over the world to greater than three billion game-playable cellular gadgets, able to enjoying deeply immersive on-line video games and digital worlds. That means a GPU and a networking layer that’s strong sufficient to deal with the sorts of video games we make. Now we’ve that, and so this enterprise could be very fascinating.

We’re going to look again on the first half of 2020 as the purpose at which we are saying, all people woke as much as perceive the pattern that was actually taking place. Today it’s nonetheless not taking place. If you learn the western or the Japanese enterprise press or leisure press, they’re not seeing this. But you and I are going to be dwelling in a digital world in some kind or one other, in a really substantial means, in only a few years. Lots of people already do. COVID is simply drawing this ahead and making it extra apparent.

GamesBeat: It does nearly really feel just like the affect of cellular might be as vital for Nexon as no matter achieve is going on due to sheltering in place.

Mahoney: Absolutely. It explodes our complete addressable market, in a great sense. It’s rather a lot larger. What we realized was that informal video games and story-driven video games, offline experiences, are usually not the place we convey rather a lot to the desk. Other corporations try this a lot better than we do. We do one factor. That was the belief, and so we determined — we’ve among the greatest and greatest franchises in the complete leisure trade. Let’s deal with what we’re good at, deal with our personal IP for probably the most half, and deal with another areas that convey that to a broad consumer base in a compelling means. If we try this properly, we’ll have a terrific future. We don’t must do every part else.

GamesBeat: I used to be interested by how massive a combination there’s in Asia for you so far as PC gaming café clients versus those enjoying of their properties. One is affected by the pandemic and one shouldn’t be. How does that look so far as the place it’s in that disruption cycle?

Mahoney: We’ll see the way it performs out from right here. Clearly we’ve been within the PC café companies — it’s not what it was earlier than COVID. It relies upon a bit on what area you discuss, however mainly it’s robust occasions as of late. Having mentioned that, our enterprise remains to be up considerably yr over yr in a spot like Korea, which is the house of the PC cafes. It’s not simply on cellular that that’s taking place. It’s additionally on PC.

Kart Rider is one of Nexon's biggest titles.

Above: KartRider is certainly one of Nexon’s greatest titles.

Image Credit: Nexon

GamesBeat: Having taken a more in-depth take a look at what you report, it’s somewhat extra clear than the way in which U.S. corporations must report now. The GAAP and non-GAAP are very exhausting to determine now for U.S. corporations. There appears to be a great submit to be written on why the accounting trade has not served the sport trade that properly within the U.S. You get quite a lot of confusion when earnings come out.

Mahoney: I believe there’s plenty of reality to that. Part of the issue the video games trade has, or perhaps extra basic by way of explaining what we’re about — one of many causes I speak a lot about this basic shift is as a result of, A, it’s completely taking place, however B, it doesn’t appear to be we discuss it that a lot within the trade. Guys, the get together is over right here within the video video games enterprise, and particularly in on-line video games. It’s clearly the middle of the leisure trade, each by the numbers and by every part else you’re seeing. Let’s inform that story, as a result of that’s vital.

We generally tend to revert, as people, to what our historical past has been, and want it was like no matter it was earlier than. But there’s clearly a basic shift happening within the leisure trade. It’s not simply within the information enterprise. It’s not simply within the linear leisure enterprise. It’s throughout the entire leisure enterprise. And but once I speak to people who’re traders in our inventory once we do highway exhibits, or once we speak to portfolio managers — these are among the most subtle, considerate individuals on this planet once you discuss enterprise fashions and so forth. They usually relate to me their frustration at probably not understanding what drives the sport enterprise. They have a tough time discerning the large developments in order that they’ll inform an funding thesis.

I’ll give an instance. This was not lengthy after the IPO. I used to be CFO of Nexon. One portfolio supervisor we met in Hong Kong threw up her palms and mentioned, “I’m just confused, because I thought it was based on — all online games were going to Facebook. Facebook was clearly the future of online games. Now you’re telling me something different.” This would have been in 2012. I mentioned, “No, Facebook is not going to control the online portion of the games industry in any way.” She mentioned, “But I’ve heard nothing but that.”

People don’t do not forget that very properly, however lots of people thought that on the time. We’ve talked about VR and esports as these massive drivers, and portfolio managers and funding analysts and so forth suppose these issues find yourself being the motive force, as a result of it appears to be like extra like a film, or extra like our sense of what video games are. If you’re not a gamer, you’ve got a tough time understanding what actually drives utilization. That’s exhausting for an investor to get their head round generally. As an trade we will do a greater job of lighting up what the actual drivers are.

Above: Owen Mahoney, CEO of Nexon, with Dean Takahashi at GamesBeat Summit in 2016.

Image Credit: Michael O’Donnell/VentureBeat

GamesBeat: I suppose the highest query you get is, “What will you do with that $5 billion in cash?”

Mahoney: We do get that query. I believe no one actually is aware of what the world holds within the coming months and years. Everyone’s very frightened about that. I personally anticipate much more turmoil than calm. It’s an excellent time to have an all-weather steadiness sheet. With central banks doing every part they’ll to prop up costs within the fairness markets, it looks like perhaps an unpopular opinion, however I don’t suppose we’re out of the woods economically in any respect.

As excited as I’m for on-line video games and digital worlds, I’m deeply frightened about what’s happening in the actual financial system. Eventually, that may find yourself in a state of affairs that might be very robust for lots of oldsters. It already is. It’s already fairly profound. In that state of affairs, you need to have the ability to defend your online business, defend your workers, defend your means to ship your online business in your clients. Having a comparatively massive steadiness sheet is vital. Also, the power to maneuver shortly when alternatives come round is vital. That’s how we take into consideration our steadiness sheet.

GamesBeat: I did write concerning the Nexon studio [in Orange County, California] closing. I questioned if there was any higher clarification for what occurred there.

Mahoney: We’ve made quite a lot of adjustments across the group worldwide to deal with the 4 themes we’ve been speaking about: absolutely on-line multiplayer video games, a number of platforms giving a number of entry factors or home windows into the digital world, leveraging our substantial IP portfolio, and making selective investments once we see a great, distinctive IP.

Those 4 issues are fairly simple in idea, however they’re exhausting to execute on. One of the toughest issues about executing is ensuring that we — with a purpose to say sure to some issues, just a few massive initiatives, just a few massive concepts, we’ve to say no to plenty of different good initiatives and concepts that don’t fairly hit that choose few of the very best. We felt the necessity to focus our sources. That’s how we got here to that call.

Above: Nexon’s cellular Dungeon & Fighter sport.

Image Credit: Nexon

GamesBeat: How is the growth into the west going? What are you studying about how to try this proper?

Mahoney: We spent plenty of effort and time on these different three quadrants that we talked about. Our focus is totally on that higher right-hand quadrant of deeply immersive on-line video games and digital worlds. We’re targeted on that. That’s as true within the west, if no more so, as it’s wherever else on this planet. There’s an enormous alternative there.

Pixelberry has been doing properly. We’ve been proud of them. MapleStory was up 171% yr over yr and has been doing properly within the west. The subsequent massive beat we’ve developing, although, is the primary sport from Embark. I do know you’re acquainted with that group and what they’re about. I want I might discuss it extra, however we’ve to let the advertising and marketing people drive that dialog and the timing of that dialog. We anticipate to be speaking about it rather a lot by the tip of the yr.

What they’re engaged on could be very thrilling. We suppose it’s going to alter plenty of issues. We’re very excited concerning the west, and we’re very invested within the west.

GamesBeat: At our convention, you talked rather a lot about uncertainty. 1 / 4 later, do you see extra reassurances? Do we all know extra about what’s taking place on this planet total, and what the affect is on leisure and the conduct of gamers?

Mahoney: I don’t suppose we all know something extra. I’m most likely extra pessimistic than I used to be 1 / 4 in the past concerning the broader world. But that’s simply me. I learn the identical information that you simply do. I interpret the identical set of occasions that you simply do.

To go one step extra exact, within the leisure trade — we’ve already talked about this secular shift that we’re seeing within the leisure trade. It’s not usually talked about, but it surely’s clearly taking place. To make a fast cease there, once more, who was the king of all media on January 1 this yr? It was clearly Disney. Clearly. Bob Iger goes to go down as probably the greatest CEOs in media historical past. Maybe the very best ever, together with Walt Disney himself. He’s fairly an astounding function mannequin for anyone within the leisure trade, aside from the video games trade. They’ve achieved every part simply superbly below his management.

That was on January 1. What’s left of their enterprise in the present day? It’s in horrible form. Cruise ships. Theme parks. Sports, which is basically primarily based on dwell occasions. Movie theaters. Even producing motion pictures is horrible. You can’t do live-action proper now. Their enterprise is in shambles. And they’re additionally topic to this secular shift we had been speaking about earlier, to digital theme parks. That’s clearly what’s happening, and that’s competitors for them.

That’s the broader leisure trade. In the video games trade, clearly issues are terrific. I applaud extra corporations going out on a inventive limb and attempting to do one thing completely different than simply doing the identical previous factor, aping each other. That’s perhaps 90% of what occurs within the video games trade total, however there are some actually inventive groups on the market doing new and various things. By specializing in making the pie larger, the pie will get larger. By not over-obsessing about market share, we make the pie larger.

As [Wedbush analyst] Michael Pachter and I had been speaking about final quarter, it’s simple to be destructive concerning the broader financial system, the broader world by which we’re working. There’s going to be winners and losers. But video video games, and notably immersive on-line video games, are very a lot within the winner class. The massive know-how and media platforms are attempting to determine tips on how to make a greater transition into video video games as a result of linear leisure is tough to do proper now.

GamesBeat: I noticed that unionization is going on at Nexon. There was a point out of the place labor prices are larger due to worker raises. Can you discuss that? You’re one of many only a few sport corporations with a union now.

Mahoney: It’s one thing that’s been taking place in Korea for a short time. What we’ve to do, what any firm has to do, is present a compelling alternative to get the very best workers. If we try this, properly then we’ll have completely satisfied workers. We have a really clear imaginative and prescient, and to have the ability to ship on that, you must have gifted workers, gifted individuals. You must work exhausting to get these gifted individuals. That’s what we’re engaged on.

GamesBeat: How are you feeling about Q2 total?

Mahoney: About our enterprise, I really feel superb. We’re coming off a terrific quarter. We beat the excessive finish of our steerage. We’re up 20% yr over yr. We’re having a terrific Q3. We gave steerage to develop Q3 by greater than 50%. At the excessive finish I believe we’re at 65% or so on a relentless foreign money foundation.

We’re on the eve of launching Dungeon Fighter Mobile, and as I mentioned, we’ve had greater than 60 million pre-registrations for that sport. Dungeon Fighter in the present day is without doubt one of the largest online game franchises of all time by way of life-to-date income. That’s on PC alone. We don’t fairly know what the Call of Duty numbers or the Grand Theft Auto numbers are by way of worldwide life-to-date, however we’re both one, two, or three in that class. Most individuals within the west don’t perceive that, as a result of it’s actually a China/Korea/Asia phenomenon. But it’s an enormous hit.

We’re now about to launch the cellular model of that, which has a complete addressable market of someplace round 10X. There’s plenty of pleasure among the many consumer base for that. We gained’t know, for a really very long time, the way it will pan out. We know the early returns, however we measure these items in years and many years. But we expect we’re in a terrific place for the long run and the place we expect the long run goes. We really feel fairly good proper now.

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