Tag: cj e&m

What Tencent Let CJ Games, Netmarble, and Bang Do

JoonHyuk Bang returned to Netmarble as its largest shareholder for the first time in 10 years. He has received investments totaling up to $500M from Tencent, and has managed to use this to merge Netmarble into CJ Games.

Just what kind of progress has been made so far, and what kind of future can we expect from this big surge of change? We have organized the situation with Bang , Tencent, CJ Games, and the merged CJ Netmarble(assumed).

  • Advisor JoonHyuk Bang Reclaims Netmarble with Tencent Investments
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JoonHyuk Bang

CJ E&M’s advisor JoonHyuk Bang drew out Tencent’s investments of $500M.  Among those, he used about $330M on the acquisition of shares of Netmarble, MediaWeb, N2Play, and YJM Entertainment.

As one of the most common methods in transfer of management rights, acquisition of shares represents the selling of the shares from within the company.  Simply spoken, Bang used $330M out of the investment in order to purchase the shares and the right of management of all 4 companies.

 

  • CJ Games Escapes from the Subsidiary Law with the Change in the Largest Shareholder Position

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In actuality, it is easier to say that CJ E&M has handed the full management rights of CJ Netmarble to Bang.  Before Tencent’s investment, CJ E&M had 51.4% (100,000 shares) and Bang had 48.2% (96,393 shares) of CJ Games’s shares. However, CJ E&M has sold 3,564 of its shares and added 83 shares to Bang to bring Bang just above the line for the largest shareholder position.

The reason behind their decision for the transfer of shares is to resolve their sub-sub-subsidiary’s ‘shares holdings’ issue.  According to the Fair Trade Act, a sub-subsidiary can establish its another subsidiary only when it holds 100% of its subsidieary’s(sub-sub-subsidiary) shares. As CJ Games is already a sub-subsidiary of CJ(CJ E&M is the subsidiary of CJ), it must hold 100% of the shares of CJ Games Lab, AniPark, etc.

However, with Bang becoming its largest shareholder, it was able to rid itself of the limitations put on by the FTA.

 

  • Is CJ Netmarble Worth $1.9 Billion?

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Tencent has invested a total of $500M to CJ Games. With this investment, Tencent received 75,289 of CJ Games’s shares, equaling up to 28% of the total shares. Calculating this in reverse results in the conclusion that Tencent regards the value of entire CJ Games to be around $1.9B.

While it is difficult to do a simple comparison due to the fact that up-pricing of the shares is so common in the case of foreign investments, the $2B value exceeds that of both NHN Entertainment (around $1.4B) and CJ E&M (around $1.1B). This signifies Tencent’s high evaluation of CJ Games.

 

  • CJ E&M Lowers Its Risks with Gaming and Profits

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With the transfer of shares, CJ E&M takes another step away from the gaming industry. Since it, however, still holds 35.86% of the shares of CJ Games, it is still within the boundary of taking profits from the industry while lowring any risk.

Back in 2004, CJ E&M purchased 18% of Netmarble’s shares from Bang at $75M.  Considering the current 35.86% of CJ Game shares that CJ E&M possesses along with Tencent’s recent investment, it results around $650M.

Plus it also has received $330M from CJ Games in the process of separating Netmarble and the other related 3 companies, resulting $1B in total. In conclusion, CJ E&M has profited 10 folds in just 10 years.

 

  • So What Now for CJ Netmarble?

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JoonHyuk Bang was the leading force behind the current Netmarble’s mobile business.  CJ E&M’s decision to make the change from online gaming to mobile gaming was also his decision. With Bang as the largest shareholder and without the regulation by the FTA, a more progressive action in the mobile gaming business is expected in the future.

Even with the $330M expense spent in merging of the companies, there are still $170M left.  CJ Netmarble has more than enough funding to begin their new era of investments. For Tencent, it can enjoy the privilege of being able to take Netmarble’s games to the Chinese market in priority.

As Bang has commented in the press conference, this recent investment and business changes ultimately allows CJ Netmarble to make its progress into the global market.

Tecent Invested $500M in CJ Games, Becoming 3rd Largest Shareholders

20140326153754_1858CJ E&M announced that China’s Tencent invests a total of $500M(533 billion won) in CJ Games on the 26th.  With this investment, Tencent has become 3rd largest shareholders of CJ Games.

CJ Games, a subsidiary company of CJ E&M, is a large scale development holidng company possessing  AniPark, Seed9Games, and Blue Pepper with game lineups such as <Everybody ChaChaCha>, <Dice Venture>, <Taiming Monsters>.

The recent investment was completed with Tencent’s purchase of 28% of CJ Games stocks.  CJ E&M has sold its shares to Tencent, and in consequence has moved down from its previous position as the largest shareholder to the second largest shareholder.  CJ E&M’s advisor JoonHyuk Bang now holds the position as the largest shareholder.

“It was in order to combine the game development and publishing business and to enhance the competitiveness of the gaming industry,” explained CJ E&M on this investment. CJ Games plans to utilize the newly acquired funding to merge with CJ E&M’s gaming branch Netmarble.

There are two main things that CJ E&M has gained from the sale of CJ Games shares.  First, CJ E&M has finally rid itself of the issue regarding the Monopoly Regulation and Fair Trade Act (hereinafter the FTA.) With the limitations set upon by the provision of the share rate control of sub-sub-subsidiary company, the FTA, newly amended in 2013, requires the parent company to either separate or completely acquire shares in its subsidiaries. CJ E&M had been riddled with the rumors of selling CJ Games after a rupture of investment from STIC Investment last year.

However, with CJ E&M stepping down from the largest shareholder position, the previous limitations of the FTA has now been lifted.  In fact, CJ Games was able to acquire Netmarble thanks to Tencent’s investment. With its separation from CJ E&M, it has now improved its competitiveness in the industry by combining the previously separated development and the business capabilities.

The tie between CJ Games and CJ E&M is still tight though, because Bang now sits as CJ Games’s largest shareholder while still being CJ E&M’s second largest shareholder.

Second of the two is that CJ E&M has now begun its official globalization in China with this deal. Tencent has already started the licensing of CJ E&M’s <Dice Venture>, <Everybody PawPawPaw>, and more for China in January.

This new deal appears to be the groundwork for strengthening the relationship of the two companies. Tencent possesses the ‘WeChat’ platform, a mobile messenger app that rivals the scale of Korea’s most influential mobile app KakaoTalk.

Six of Top 10 Android games from Korea

Korea and Japan dominate Android Market. 6 of TOP 10 games for Andorid are from Korea. Based on Google Play Revenue ranking, Korea and Japan are selected as the fastest growing countries. Especially, 95% the total revenue at Google Play Store in Korea comes from games category.
Puzzle & Dragons from Gungho Online was #1 on February while Cha Cha Cha of CJ E&M took 2nd, Windrunner of Wemade was 3rd. Among 6 Korean Android games, 4 of them have been published through KAKAO Talk.
However, no Korean mobile games have been listed on iOS top 10 games. The reason why Korean mobile games are strong at Android market could be founded on the domestic mobile environment. Android occupied 80% of Korean mobile market with the world most famous Android mobile phone manufacture – Samsung.

 

Korean companies at E3 2012

Which Korean online game companies will be appeared at E3 2012? Nexon, Wemade, CJ E&M, Eastsoft, Bluehole Studio will be there.

Nexon brings ‘Dungeon&Fighters Live’ for Xbox360 at E3 and will be held media showcase on the 6th of June. ‘Dungeon&Fighters Live’ is similar to its online game version, but supports 720p for TV. It supports single play as well as party play through Xbox Live.

Wemade Entertainment will announce 8 mobile games – ‘Choas&Defense’, ‘Goblin Mobile’, ‘Friend Fighter’, ‘Pet Island’, ‘Hero Square’, ‘Rhythm Scandal’, and ‘Project Q’ for the first time.

CJ E&M will introduce various online games includes ‘S2 Online’, ‘Bloody Hunter’, and a Roleplaying Shooting ‘Hounds’, MMORPG ‘Monarch’. Eastsoft will bring ‘Cabal 2’, which ended CBT last November. Bluehole Studio will have a booth for ‘Tera’, while Maiet Entertainment will show ‘Raiderz‘ at Perfectworld booth.

The Battle of Online Baseball Games

CJ E&M, NCsoft and Nexon will compete in baseball game genre.

Nexon declares developing an online baseball game based on the real world first. Nexon also showed its aggressive move toward baseball genre by announcing the online baseball game development plan with 2K Sports in May, 2011 and starting to sponsor one of Korean professional baseball teams – Lotte Giants.

NCsoft made a contract with EA to publish ‘MVP Baseball Online’. The game is developed by EA Korea Seoul Studio. Because NCsoft found 9th professional baseball team ‘NC Dinosaur’, the company is known to give wholehearted support to its baseball game.

CJ E&M also revealed ‘MAGU The Real’, a baseball game by Unreal Engine 3. The game emphasizes its reality by adopting the real data from Korean professional baseball league.

The interesting issue is that a rival, ‘MLB 2K’ and ‘MVP Baseball’, will compete with each other again in Korea. Since 2K Sports acquired exclusive MLB license in 2006, ‘MVP Baseball’ has not released the latest version since 2005. However the exclusive contract is expired in 2012, ‘MVP Baseball’ could get MLB license as well.

NC Dinosaur is a team based on Changwon regionally, while Lotte Giants, which is sponsored by Nexon, is based on Busan. Two teams are doomed to become a rival since Changwon and Busan is very close. We expect that it is not far away two biggest online game companies in Korea will fight each other at baseball stadiums.

We cannot under estimate CJ E&M’s ‘MAGU The Real’ because CJ E&M is the current leader in Korean online baseball game market with ‘MaguMagu’.

‘MAGU The Real’ is expected to be available in late 2012, while ‘2K Baseball Online’ is scheduled for 2013. There is nothing to be known about ‘MVP Baseball Online’ releasing schedule. We expect it to be available 2013 as well.

Common things among 3 different online baseball games are that they all emphasize its reality as well as all of them will be likely to have KBO(Korean Baseball Organization) license.