Game Marketing Tips, Analysis, and News

Tuesday, July 12, 2011

Korean Juggernaut Nexon Readies IPO

If you thought Zynga's IPO was big news, what would you say about an even bigger social gaming company going public? South Korea's Nexon is going to file somewhere in Asia, not on Nasdaq or NYSE, but it's still huge. The company is 17 years old, and pioneered the free-to-play business model that's been revolutionizing the gaming industry. (What have they done? Maplestory is one of their biggest hits...) They have over 1 billion registered customers, and in 2010 their revenue was $643 million, or just a bit more than Zynga's. Their revenue has been growing 30% a year for the past five years, so in 2011 they are expected to take in over a billion dollars. Their margins are actually better than Zynga's since they don't have to hand 30% to Facebook; reports are that they have 50% margins, which is amazing.

Nexon hasn't made much of an inroad into the US, mostly because our broadband is so pathetic compared to South Korea. Now the US is finally developing enough households that can handle the graphics that Nexon wants to toss their way. Along with Tencent and Perfect World, we're finally seeing some of the Asian companies making serious inroads into the US market. It's going to be a marketing battle with old-line publishers like EA struggling to be a player in these new areas, and Zynga (which will be flush with cash from the IPO) working to maintain and grow its position.

We're going to see more and more sophisticated games being offered for free or very low prices, which is going to really wallop the traditional business (which, by the way, looks like it's going have another month of sales declines; numbers get released Thursday). Yet the gaming business overall continues to grow... the changes are happening fast.

1 comment:

  1. Excellent stuff, I love the free bandwagon.

    I could never imagine them turning maplestory f2p, people just buy waaaay too much on that game.