[Market Insight] "Investing in Game Startups with Global Competitiveness"

Sangho Park, Executive Director at Atinum Investment Interview
"Mobile Platform in Final Stage... Limitations of Relying Solely on Domestic Market"
"Startups Must Develop Overseas Publishing Capabilities"

"Games are the 'global one language.' It is easier to find and invest in better startups compared to other sectors. The fact that Korea is the 4th largest market in the world is also a major advantage."

Atinum Investment operates its 860 billion KRW 'mega fund,' formed last year, under a sector representative system. At the end of the same year, to strengthen the game and content sector, they made a bold move by recruiting Executive Director Park Sang-ho, formerly of Korea Investment Partners. Recently, in an interview at Atinum Investment’s office in Gangnam-gu, Seoul, Executive Director Park diagnosed that the mobile game platform has reached its late stage and emphasized the importance of 'overseas investment.'

Sangho Park, Executive Director at Atinum Investment. Photo by Daehyun Kim kdh@

"Mobile Platform in Final Stage... Utilizing Overseas Investment Strategy"

Executive Director Park’s first workplace was NHN. Through discovering and publishing games, he met various game startups and became attracted to venture investment work. Since 2012, he moved to Korea Investment Partners as a professional reviewer, handling investments in the game sector.

Venture capital (VC) investment in games became active from the mid-2010s. Executive Director Park explained, "In the past, during the PC game era, there were many project financing (PF)-style investments like in movies. This was because total revenue could be estimated based on the price of a single game CD." He added, "However, with the introduction of smartphones, the mobile game market was activated. Free to play became the norm. While accessing games became free, private equity-style investments developed by removing sales limits through items, etc."

Executive Director Park evaluated that the smartphone game platform has reached its final stage. He said, "The mobile game market has somewhat frozen in investment over the past two years following the COVID-19 endemic (periodic epidemic)." He pointed out, "Due to privacy protection issues, targeted advertising has become difficult, increasing the cost to attract a single user to a game." He also noted, "A phenomenon appearing in the late stage of platforms is being reproduced. Games using popular webtoons and characters, i.e., intellectual property (IP), are overflowing," adding, "using familiar IP lowers user acquisition costs."

As a core investment strategy, he cited 'expanding overseas proportion.' He explained, "Finland, the empire of mobile games, has a population of only 5.5 million. Korea has a large domestic market, so there is a risk of falling into the trap of focusing only on the domestic market." He analyzed, "The game and content sector is easier to invest overseas compared to other sectors. Because the Korean game market is large, there is also a big advantage when importing overseas games."

He also mentioned that game mergers and acquisitions (M&A) are a recent industry trend. Executive Director Park said, "Even large game companies cannot always create hit games. They have to buy successful games from other companies. Globally, there are more than 100 M&A cases reported annually. Since it is a market worth over 200 trillion KRW, networking among global VCs is also strong."

"Investing in Startups with Global Service Capabilities"

Accordingly, startup investment also uses 'overseas competitiveness' as a main criterion. Executive Director Park said, "The conditions are whether they self-publish, have definite overseas experience, and can perform performance marketing well." He emphasized, "Unlike PC and console games, mobile games require efficient 'live operations' such as updates even after release. The amount of live operation experience is also important."

Atinum Investment made a follow-up investment this year in 'Monday Off,' a hyper-casual game publisher. They also participated as the lead investor in the Series A round in 2022. Executive Director Park said about Monday Off, "They are a rare young team in Korea with global service capabilities," adding, "The early performance indicators for their upcoming new work are quite good."

They also invested in 'VAGames.' 'Outerplane,' created in the subculture genre (fandom-type game), recently started official service in Japan after publishing.

Markets attracting attention include ▲Turkey ▲Finland ▲Israel ▲Cyprus. He said, "Turkey is fundamentally the best country at making puzzle and match games. Local personnel are good at developing puzzle maps, and operational efficiency is good in terms of labor costs." He evaluated, "We continue to pay attention to Finland, traditionally the empire of mobile games. It is home to 'Rovio,' which created Angry Birds, and 'Supercell,' which made Clash of Clans, making it a well-established system region."

Additionally, Executive Director Park said, "Infrastructure included in the game value chain is also an investment target. The 'in-game audio advertising' market, which promotes products through sound instead of banner ads that interrupt games, is growing, so we are looking into related ad tech companies." He added, "We will also expand investments not only in game content but also in entertainment such as webtoons and virtual YouTubers. We will secure personnel for this as well."