Krafton establishing metaverse joint venture with Naver Z

Naver Z's Zepeto [ZEPETO]

Krafton is establishing a joint venture with Naver Z, the operator of the Zepeto metaverse, to develop a metaverse for user-generated content (UGC), the company said on Wednesday.

UGC refers to digital content that online users create and post on the internet, namely YouTube videos and Wiki texts.

The investment volume and release date of the new service have not been decided yet, a Krafton spokesperson said.

The new metaverse will allow users to create their own non-fungible tokens (NFT) that can be owned and traded with each other.

Typical NFT platforms only allow for the production of tokens by certain individuals, such as artists, or only distribute NFTs that the company has made, in the case of games.

Krafton will commit to the venture expertise in generating three-dimensional graphics and focus on developing a tool for users to make their own NFTs. Naver Z will market the service globally, as it has done with Zepeto, and manage it.

Naver Z is 88.99 percent owned by Naver, 4.5 percent HYBE, 1.3 percent YG Entertainment, 1.9 percent YG Investment and 3.2 percent JYP Entertainment.

The joint venture is a part of an agreement that the two companies have signed for joint efforts related to the so-called Web 3.0 race, which will include new digital businesses such as metaverse, NFTs and blockchain.

Web 3.0 is the idea of a decentralized internet that provides more personalized services based on the blockchain and digital tokens. Fused with the metaverse, individuals can connect to a virtual world and carry out everyday activities as they do in real life.

"We will start a creator-oriented economy with Naver Z's experience in managing Zepeto and Krafton's advanced technologies," Krafton said in a statement.

Krafton has been accelerating its move into the NFT race.

Earlier this week, the company announced it invested 8 billion won ($6.7 million) to in two digital art subsidiaries of Seoul Auction to jointly develop avatars that can be owned and sold in the online world.

Of the 8 billion won, 3 billion won will go to Seoul Auction Blue and 5 billion won to XXBLUE, Seoul Auction Blue's subsidiary operating XXBLUE, a non-fungible token (NFT) trading system. Krafton will get a 5 percent stake in Seoul Auction Blue and 11 percent of XXBLUE.

Gaming and metaverse-related companies have been struggling in recent months due to weak user and investor sentiment and growing skepticism about the offerings. Krafton listed last year with an IPO price of 488,000 won. It is now trading at 298,000.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]