이 기사는 2021년 11월 16일 08시09분 thebell에 표출된 기사입니다

South Korea’s leading game developer NCSoft will actively pursue mergers and acquisitions (M&A) deals in a move to enter the North American market through its North American subsidiary NCWest.

“It is true that we have been inactive in M&As so far,” said Hong Won-jun, NCSoft's chief financial officer, said at an earnings call on Thursday. He added that the company is reviewing a number of companies in the global market.

It is notable that NCSoft has selected its North American subsidiary NCWest to lead its M&A strategy. “We see NCWest as a very important stepping stone in our current M&A strategy.”

Established in 2012, NCWest is led by Yoon Song-yee, chief strategy officer and president of NCSoft. The company, which has recorded a loss over the past six years, has tried to enter the global market for nearly nine years.

Hong said that its possible targets include game, intellectual property, contents, and platform companies. NCSoft is operating an internal organization dedicated to M&As and investments in a bid to carry out deals in earnest.

NCSoft has been unusually inactive among game companies in pursuing M&As. The latest deal carried out by the gaming firm is an acquisition of global gaming company Electronic Arts (EA) in 2015. The deal, which was jointly carried out with Nexon, fell through as the two game companies failed to reach an agreement. Since then, NCSoft has been making equity investments in artificial intelligence, web novel, and entertainment sectors, instead of pursuing outright M&As.

NCSoft has changed its strategy since Hong joined the company last month. Prior to NCSoft, he served as Head of Investment Banking division of UBS Securities Korea. Before his career at UBS, he worked at Centaurus Capital in London and Morgan Stanley Asia (Hong Kong). Industry insiders had expected NCSoft to actively pursue M&As, with Hong joining the company.

Meanwhile, NCSoft is seeking global expansion through its newly released “Lineage W.” Its heavy reliance on the domestic market of 70-80% has been one of its major risks. Revenue from royalties from the intellectual property of the Lineage decreased by 12% in the third quarter, which led to a 7% decrease in NCSoft’s revenue.

NCSoft has enough funds to carry out M&A deals. It has cash reserves of more than 2 trillion won ($1.7 billion), with almost zero debts, as its net income sharply increased thanks to booming gaming industry last year.

NCSoft also announced its plan to enter the non-fungible tokens (NFT) business. Hong said at the earnings call that the company will create its own cryptocurrency available for its NFT-based, massively multiplayer online role-playing games and apply the play-to-earn game model to its games. It is important to target the global market as the play-to-earn game model is banned in the domestic market.

Hong said the company is trying to secure its partner not only by carrying out M&As but also by acquiring a minority stake in a company if there is an opportunity to create new users and new business model. (Reporting by Won-ji Hwang)