[NX] [DeNA] Nexon Forms Global Alliance With DeNA

Nexon Co. Ltd. will continue its aggressive push into the mobile gaming space as the company formed an extensive global business alliance with DeNA (pronounced D-N-A), the global leader in mobile internet services. The companies will collaborate to launch future Nexon-developed titles on DeNA’s successful Mobage platform for both the Japanese and foreign markets. Nexon subsidiaries Nexon Korea and gloops plan to launch several new English-language mobile social games on Mobage as their primary platform in 2013.  Ten mobile social games will also be launched domestically in Japan on the Mobage platform in the same period.

“We are excited to build on our existing relationship with gloops and leverage DeNA’s deep expertise in developing and publishing international social games,” said Isao Moriyasu, CEO of DeNA. “Nexon has an impressive track record of delivering highly successful, world-class titles, and we are pleased that this alliance will enable us to offer Nexon games on the Mobage platform. We look forward to working with Nexon as we continue to bring new and exciting mobile social games to players around the world.”

“This alliance is a compelling next step in extending Nexon’s mobile strategy, which is also consistent with our vision of growing our presence in the expanding global mobile market,” said Seungwoo Choi, President and CEO of Nexon. “DeNA’s unique marketing expertise and capabilities, coupled with the scale and prominence of the Mobage platform, will accelerate Nexon’s ability to deliver best-in-class mobile gaming experiences to users worldwide and position the Company well for further growth in the mobile space.”

As of January 2013, DeNA currently operates out of 18 cities in 11 countries and regions including Japan, the United States, Canada, South Korea, the Netherlands, the United Kingdom, among other places.

 

[NX] Nexon Reports Third Quarter Financial Results

On November 8 2012 you may convert the monetary figures below from Japanese Yen (JPY) to United States Dollars (USD) by multiplying them by 0.0126.

Tokyo-based Nexon Co. Ltd. has released its financial results for the third quarter of 2012. The results showed that revenues were flat year-over-year (YoY), 3% below the forecast. Operating income was down 8% compared to last year but 8.5% above forecast for an operating margin of 41%. Details on Nexon’s momentous acquisition of Gloops and a strong portfolio and pipeline were also released.

47% of global revenue (JPY 11,414 million) came out of China with the region growing 31% YoY.
27% of global revenue (JPY 6,578 million) came out of Korea with the region declining 23% YoY.
13% of global revenue (JPY 3,231 million) came out of Japan with the region declining 7% YoY.
5% of global revenue (JPY 1,430 million) came out of North America with the region declining 21% YoY.
6% of global revenue (JPY 1,701 million) came out of Europe and other areas with the category declining 5% YoY.

This means that China was the only category of Nexon’s operations which saw improved revenue performance over last year. Overall Nexon saw revenues of JPY 24,256 million, flat against last year.

Global performance was obviously driven strongly by China with the two biggest growth drivers being Dungeon Fighter Online and Counter-Strike Online. The next game in the pipeline for launch in China is the award winning action game Cyphers.

Strong competition in the quarter quite harshly impacted Nexon’s performance in Korea, with revenues falling 23% YoY. The company’s key titles including Sudden Attack, MapleStory and Dungeon Fighter Online maintained leading positions in the market. It was stated that operations in Korea were more focused on user retention than monetization this quarter which may also have affected revenue. A solid and impressive pipeline is coming up for launch in Korea including Mabinogi 2, Dota 2, FIFA Online 3, Counter-Strike Online 2, Warface, Epic of the Three Kingdoms and more.

Japanese revenue declined some YoY, 7%. The company maintains a strong market share in the region and the upcoming launch of Dota 2 is expected to grow the existing PC business in the region. Nexon’s strategic acquisition of mobile developer Gloops has pushed total Japanese revenue to over 33% of global revenue with Nexon now being the world’s largest mobile game developer by revenue. Nexon is really targeting the mobile gaming market in Japan, the largest mobile game market in the world. Despite the fall in revenues, Nexon is positioned to return to double digit revenue growth in the region in coming quarters.

After the hacking and server issues that battered Nexon’s operations in North America late last year and early this year, the company is now focusing on new customer acquisition and retention to rebuild the userbase. The company has recognized that it has a lot of work to do if it is to return to the high levels of upward revenue momentum it had previously enjoyed in North America. Nexon America is now led by veterans responsible for building Nexon America as well as personnel from the development and live operations teams in Korea.

Other regions of Nexon operations saw revenue fall a bit, down 5% YoY. Looking at Europe specifically, however, revenues grew by all of 12%. The current focus of Nexon in Europe at this time is the continued expansion of the local team in the office in Luxembourg which was set up just over a year ago. The company is also focusing on the building of the infrastructure needed to service bigger games in the region.

Nexon’s acquisition of Gloops is truly a transformational move in the company’s history. This takeover will catapult the mobile gaming market from 3% of Nexon’s global revenue all the way up to 24%. Japan will also surge into the second largest revenue producing region, ahead of Korea but behind China, expecting to move from 13% of Nexon’s global revenue straight up to 33% of global revenue. The acquisition of Gloops has significantly diversified Nexon’s regional base. From available information, Nexon finds itself to be the world’s largest mobile game developer by revenue and it now has the largest percentage of revenue from mobile games of any major game publisher. Gloops’ recent game releases have been huge successes and its pipeline of upcoming games look set to drive growth in the region. Nexon is taking advantage of its currently globally popular intellectual property (IP) and combining this with Gloops’ world-class development on mobile to crate strong mobile franchises from Nexon’s global IP. The company is looking to use its live game development expertise to extend average user lifetimes of Gloops’ games and leverage Nexon’s substantial global footprint to expand Gloops’ operations outside of Japan.

Nexon’s overall payrate (the percentage of users opting to purchase optional in-game virtual items) was 9.6% this quarter, down from 10.3% last quarter but up from 9.3% YoY. Monthly active users across Nexon’s games was 78.8 million, up from 77.4 million in the second quarter but down from 87.3 million last year. Average revenue per paying user (ARPPU) was JPY 1,729, up from JPY 1,521 last quarter and JPY 1,486 last year.

With the acquisition of Gloops, Nexon has revised up its forecasts for both the third quarter of 2012 and the full year of 2012. Details can be see in the chart below.

[NX] Nexon Acquires Japanese Mobile Game Developer Gloops

Nexon Co. Ltd., the global giant in online games, has announced that it has acquired all outstanding common shares of Tokyo-based mobile games developer Gloops for US$468.4 million. The transaction was closed today as was unanimously supported by the boards of both companies.

Gloops is very well known in Japan for its mobile games such as Three Kingdoms Guild Battle and Japan Pro Baseball Card Battle. Last month the company announced a partnership with DeNA in order to work on an international expansion targeting North America and Europe. The company has plans to launch five titles in North America and Europe in 2012 and another five in 2013, and one title each on the Mobage platform in China and Korea.

“This acquisition significantly accelerates Nexon’s mobile strategy, giving us immediate exposure to Japan’s large and fast growing mobile market,” said Seungwoo Choi, President and Chief Executive Officer of Nexon, in a statement. “gloops has established itself as one of the premier mobile game developers in the world and a key player in one of our most important growth areas, with a robust portfolio of hit titles and a strong track record of driving market innovation. We look forward to leveraging gloops’ outstanding capabilities and scale to expand the Nexon game experience to users on mobile platforms worldwide.”

“We are thrilled to become a part of the Nexon family,” said Shinsuke Kawakata, President of gloops, in a statement. “Providing compelling games for mobile users has always been our passion, and we look forward to being a part of an even larger organization as we work to continue bringing new and exciting titles to a growing base of players around the world.”

Other recent Nexon acquisitions/investments included NCSoft, Gamania, JCE and NClipse.