Rewriting Korea’s game industry
The year was 1998, and the game was “Lineage.” Honored with superlatives such as “legendary genre-maker” and “grandfather of Korean MMORPG [massively multiplayer online role-playing games],” Lineage is often cited as one of the titles that helped the Korean gaming industry gain its prowess.
The laudatory hyperbole is backed up by the records Lineage has acquired over the years - it had the first 300,000 simultaneous log-ins for an online game, garnered 1 million users in just 15 months of service and became the first Korean cultural content provider to earn 1 trillion won ($865.7 million) in accumulated revenue in 2007.
That sort of staying power is also emblematic of the firm that launched it - NCsoft. NCsoft, the nation’s No. 1 game developer and publisher of online games, is one of the most-cited examples of venture firm success in Korea.
Although NCsoft has become a giant among Kospi stocks with a market cap that hovered near 5 trillion won as of yesterday, it was once just a tiny startup company.
Begun with just 13 employees by founder and CEO Kim Taek-jin in March of 1997, what was first a software firm quickly trained its focus on online games after Lineage became popular in the domestic market.
From that triumph, NCsoft ventured into foreign markets in 2000. It established NC Interactive in the United States and began service for Lineage in Taiwan, where the game paralyzed the countries’ networks at one point. Since then, the company’s history has been a hectic march of game releases, the establishment of subsidiaries, records broken and recognition.
It now oversees well-received titles such as “Lineage II,” “Guild Wars,” “Aion” and “City of Heroes/Villains” as well as 13 subsidiaries and 3,300 employees worldwide. In the first three quarters of this year, the company reported 387.2 billion won in sales and more than 135 billion won in net profit.
A crowd cheers at the NCsoft booth at Gamescom, a major trade show for interactive games and entertainment. NCsoft has expanded its presence in the West, more than doubling its revenue in 2009. Provided by the company
Among NCsoft’s 13 subsidiaries, eight are overseas units. In particular, NCsoft West covers the U.S. and European gaming industry, after having merged various operations scattered across the western market in September 2008. It has its headquarters in Seattle, with the European business overseen by a branch in Britain.
Through NCsoft West, all of the firm’s major titles are available in either the U.S. or Europe. The two markets brought in revenues of roughly 69.4 billion won and 48 billion won, respectively, last year. Sales records show that the company’s position in the Western market is in flux, as U.S. market revenue in 2009 was a 57.5 percent increase from 2008, while in Europe, 2009’s sales have more than doubled from 2008.
Meanwhile, the company has set its sights on attractive markets in the booming Asian gaming industry as well, establishing five subsidiaries in three countries - NC Taiwan, NC Japan, NCsoft Japan, NCsoft China and NC True.
NCsoft has performed well in Japan and Taiwan, with sales in Japan leaping from 49.3 billion won in 2008 to 88.1 billion won in 2009. In Taiwan, sales jumped from 12.1 billion won to 23.3 billion won in the same period.
Since April of 2009, when its Guild Wars franchise exceeded 6 million units sold worldwide and Aion was launched in China, NCsoft’s share price has ascended steadily.
Despite a dip in market performance early this month, expert opinion remains firmly devoted to NCsoft.
“Although a sense of uncertainty coupled with rumors that circulated after this year’s [local game expo] G-Star have resulted in lackluster share prices as of late, these issues will probably have very little negative impact on actual profits,” said Lee Jong-won, an analyst at E-Trade Securities.
“The launching of Nshop, a standing shop for its important MMOPRG titles leading to the expansion of pay elements [...] the strong likelihood of a contract with a Chinese publisher for the local rights to the company’s titles as well as plans for a large-scale update for Lineage II in the first half of 2011 all serve as positive ingredients.”
Kim Taek-jin, the founder of NCsoft, has a story recognizable in successful entrepreneurs across the globe.
For starters, he began early. While studying at Seoul National University, he helped found HanmeSoft in 1989 and co-created the first Korean-language word processing program. He then moved to Hyundai Electronics, where he was the lead developer of Korea’s first online Internet service. Five years later, while pursuing a doctorate in computer engineering, he established NCsoft after seeing the potential of online gaming. And he still has a strong vision for the company’s future.
“NCsoft is still in the process of moving toward its goals,” he said in a recent interview. “I’m still running a venture company [...] There is a standard of a game that we want to reach, and we want to do it right, but we’re still in the process of learning. I want to keep moving until we complete the game that we seek to make.”
Lee Jae-ho, vice president and chief financial officer of NCsoft and CEO of NCsoft West, has been with NCsoft since 2004. He worked at the United Nations, Opentide and Samsung Securities.
Yoon Song-yee, vice president and chief strategy officer of NCsoft, comes from a much-reported background as the youngest female director at domestic telecommunications giant SK Telecom. Yoon has been married to NCsoft founder Kim since 2007. She has been described as a “genius,” receiving her doctorate from MIT in the United States at the age of 24. Having joined NCsoft in November 2008, she has been credited with creating the stable internal structure key to its recent financial success.
By Lee Jung-yoon [joyce@joongang.co.kr]
with the Korea JoongAng Daily
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