SEOUL: For years, Chinese investment in South Korea’s gaming industry followed a familiar formula.
Chinese technology giants provided capital, secured publishing partnerships and accumulated minority stakes in leading game makers, while South Korean founders of each game developer retained management control. This pattern, however, recently took a turn that put stakeholders on notice.
Wemade, a South Korean game developer best known for its massively multiplayer online role-playing game, or MMORPG, franchise the Legend of Mir – announced on June 30 that its founder Park Kwan-ho had agreed to sell his entire 39.33% stake in the firm to NeoPulse, a South Korean subsidiary of Hong Kong-based investment company Shengsong Investment in a deal worth about 920 billion won.
According to Wemade, NeoPulse has close ties with Alibaba and China’s major gaming companies.
Once the transaction is completed in October, NeoPulse will become Wemade’s largest shareholder with a 40.25% stake, marking the first case in which a China-linked investor has taken management control of a listed South Korean game company since Actoz Soft was taken over by then-Shanda Games, which has changed its name to Shengqu Games, in 2004. Some gaming industry stakeholders point out that the Wemade buyout could be the start of a new trend for Tencent, which already holds minority stakes in South Korea’s major game companies.
Tencent, a Chinese multinational technology-to-entertainment conglomerate also known as the world’s largest video game publisher, held a 14.4% stake in Krafton, a 34.48% stake in Shift Up and an 18.38% in Netmarble through its investment arms as the second-largest shareholder of the three South Korean firms at the end of the first quarter this year.
As Krafton chair and founder Chang Byung-gyu owns a 15.6% stake, Tencent trails him by just about 1.2 percentage points in ownership of the game developer with its megahit battle royale-shooter PUBG: Battlegrounds. — The Korea Herald/ANN
