Nexon on hunt to boost market share in games

Nexon, the Japan-based Korean maker of online games MapleStory and Combat Arms, is hunting for more deals to boost U.S. revenue after taking stakes in four companies and acquiring a fifth this year.

The company is looking to capture market share as North American consumers shift from dedicated consoles with packaged titles to free, online games, Chief Financial Officer Owen Mahoney said in an Oct. 25 telephone interview. The Tokyo-based company is seeking developers to add titles for Western audiences to lure online users who pay to add in-game items.

Nexon has partnered with Tencent Holdings, China’s largest Internet company, and is looking to boost North America sales that accounted for just 3.9 percent of its total in the second quarter. China generated 42 percent and Japan 26 percent of revenue in the same period.

“We’ve got a very active business development pipeline now” said Mahoney. “We are always on the lookout for smart, good developers, especially those in the West who have great art style, great physics and capability that is tuned and made for Western tastes.”

Last month, Nexon said it would make a cash equity investment in Shiver Entertainment founded by former Zynga Chief Operating Officer John Schappert. In September Nexon said it would buy Thingsoft, an online game development studio based in Seoul that helped develop the FIFA Online 1 title.

Revenue from free mobile and computer games surpassed annual sales of packaged titles in 2012, when including follow-on spending for in-game items, according to a December survey of U.S. gamers by Frank Magid Associates.

“The industry is clearly shifting to free-to-play,” said Mahoney. About 10 percent of Nexon’s users purchase items within the games, said Mahoney, a former vice president at Electronic Arts, the maker of Madden console games. “The remaining 90 percent are very important to us, they keep the game world very, very vibrant and fun to play in.”

In July, Nexon announced strategic investments in Redwood City, California-based Rumble Entertainment and Baltimore, Maryland-based SecretNewCo.

Rumble Entertainment, which operates the Ballistic and KingsRoad games, is headed by Greg Richardson, a former vice president at EA Partners. The free-to-play game developer is also backed by Google Ventures and Khosla Ventures.

SecretNewCo, develops social and strategy games, and is headed by Brian Reynolds, the former chief game designer at Zynga. Reynolds helped develop titles such as Rise of Nations and Civilization II.

Fifty-eight percent of North American developers are planning their next games for handsets and tablets, according to a survey by the Game Developers Conference in San Francisco in March. Bloomberg