Tag: Tencent

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.

Blade & Soul is coming to China with Girls’ Generation

Tencent, the publisher for Blade & Soul in China, has announced on the 15th that Korea’s Girls’ Generation(aka SNSD) will promote Blade & Soul in China.  Tencent will promote Blade & Soul with Girls’ Generation’s young image under the catch phrase: “Looking for your Soul.”

Tencent believes that Girls’ Generation characters suit the concept of Blade & Soul because the nine of the members are fashion icons among the youth in China with unique personalities.

The game’s test schedules for China has also been revealed.  The test phase will start on the 29th of October, and Tencent promises that there will be no CBT account reset, which ultimately means that players that participate in the CBT will be able to continue playing their test phase characters when the game launches to the public.  The game has been greatly improved for the Chinese release.

NCsoft had previously mentioned during the 2nd quarter of the financial conference that Blade & Soul China will have greater amount of content than before, in order to avoid having lack of content issues that they experienced in Korea.

SNSD

NCsoft focuses on Chinese market and mobile games in 2013

According to NCsoft 3rd quarter 2012 earnings report, the earnings were increased with the releases of Blade & Soul, Guild Wars 2. Lineage, the oldest game of the company, generated the incredible amount of revenue more than the revenue from Linage 2 and Aion.

The total revenue during the term is 188.2 billion Korean Won (About US$173 million), which 23% was increased compared to the last year same period.

The primary goal for the year 2013 for NCsoft is the successful launching of Guild War 2 and Blade & Soul to China and other Asian countries. Blade & Soul for China will be F2P unlike Korea and heavily localized for China as well. NCsoft chose different publishers for both games – Tencent for Blade & Soul, Kongzhong for Guild War 2 – because Tencent has too many MMORPGs to launch this year include Archeage.

NCsoft will focus on mobile game market as well since the company declared the year 2013 as the first year to enter into the mobile game market. Ncsoft is developing Linage: The second Moon for mobile with GREE and various mobile games will be come from Ntreev, a subsidiary company.

For the western online game market, Wild Star from Carbine Studios is coming.

Smilegate, working directly with Tencent

Smilegate, the developer of Crossfire, joined user meeting in China with Tencent and without Neowiz Games.

It reflects that Smilegate has decided to say farewell to Neowiz and work directly with Tencent. The publishing contract with Neowiz for China will be expired at the summer of the next year. Crossfire set the new CCU record in China with over 400 million and turned over US$893 million in 2011 for China only.

Smilegate and Neowiz Games filed lawsuits against each other. Neowiz Games claimed they have the trademark right and Smilegate filed a lawsuit for reclaiming.

And Neowiz Games filed a lawsuit to prohibit Smilegate to publish the game to third companies without Neowiz Games because Neowiz Games also participated in developing the game. Neowiz claimed that they developed DB technology for the game solely Smilegate requested Neowiz Games to define the DB program in detail.

All injunctions both companies applied have been accepted to the court. We are all waiting for the decision from the court.