Krafton Accelerates IPO... Will It Shake the 3N Dominance?

Expected Corporate Value to Exceed 30 Trillion Won After Listing
Last Year's Operating Performance Surpasses Netmarble
BattleGrounds: New State Surpasses 5 Million Pre-Registrations

[Asia Economy Reporter Kang Nahum] Krafton, the developer of the game ‘Battlegrounds,’ has officially entered its initial public offering (IPO) schedule. There are expectations that the listing on the Korea Exchange could shake up the existing top three game companies, represented by the 3N (NCSoft, Netmarble, Nexon). In particular, attention is focused on what steps Krafton will take to become a global company based on the abundant funds secured through the IPO.

◆Market value soaring to 30 trillion won at once= According to the Korea Exchange on the 9th, Krafton submitted its preliminary review application for listing on the Korea Exchange the day before. Krafton’s current over-the-counter market capitalization has already surpassed 20 trillion won, and there are forecasts that its corporate value could soar up to 30 trillion won after listing.

The biggest industry interest is whether Krafton can break the dominance of the 3N, which has formed the top three in the gaming industry so far. In terms of performance, Krafton has already reached a level that threatens the 3N. Krafton recorded an operating profit of 773.9 billion won last year, which is higher than Netmarble’s 272 billion won operating profit last year, and slightly below NCSoft’s 824.8 billion won.

The business outlook is also positive. Krafton’s new mobile title, ‘Battlegrounds: New State,’ surpassed 5 million pre-registrations. This is a record achieved in just one week on the Google Play single market without any separate marketing activities, relying solely on the game’s content. It once again proves the global popularity and anticipation for the Battlegrounds intellectual property (IP). Krafton plans to enhance the game’s completeness and strengthen its connection with fans through various activities including alpha tests before the official release of the new title.

◆Securing top talent is key= Krafton is making bold changes to secure competitive top talent. First, it plans to share organizational performance with its members and significantly improve the incentive system.

In addition to operating a ‘development incentive’ system that pays unlimited bonuses based on project performance, Krafton will newly establish an overall compensation system considering the characteristics of each business and organization. This includes differentiated incentives that reward members who contribute more to the organization’s performance.

Earlier in February, Krafton raised salaries by 20 million won for development positions and 15 million won for non-development positions, and last month, it paid a total of 30 billion won in incentives as rewards for last year’s performance.

Large-scale recruitment to secure top talent will also begin this month. While continuing recruitment by project or job category as before, Krafton will open new recruitment opportunities that allow participation in various company challenges. The company plans to establish a ‘Challengers Office,’ an organization where developers can apply for projects they want to join and directly form projects or teams, aiming to attract top talent from the recruitment stage.

◆Will it leap to become a global company?= Krafton recently strengthened its outside directors significantly with the goal of growing into a competitive global company. Kevin Lin, co-founder of Twitch; Lee Soo-kyung, head of P&G China business; Yeo Eun-jung, professor of business administration at Chung-Ang University; and Baek Yang-hee, co-founder of Rael, have newly joined Krafton’s board of outside directors.

In particular, founder Kevin Lin is expected to demonstrate expertise in creating visions and ideas for the gaming industry based on his experience at the world’s number one game streaming platform and deep understanding of the digital media industry.

Krafton continues to invest in new game lineups and business expansion. It is currently exploring entry into new markets and business areas such as the Indian market and deep learning. Krafton CEO Kim Chang-han said, “Since our founding, we have pursued the vision of becoming a prestigious production company and the goal of succeeding in the global market, positioning ourselves as a unique game company not found in Korea. This year, we will focus on creating an environment where both our members and the company can grow together through active investment in talent and challenges.”