Krafton eyes mega M&A, PUBG franchise deals: Krafton chair

Krafton Inc., South Korea’s gaming behemoth, is gearing up for the second chapter of its business through “mega” M&A deals and franchises of its global mega-hit PlayerUnknown’s Battlegrounds (PUBG) intellectual property this year, said its chief.

“This year will be marked as the beginning of business diversification,” Chang Byung-gyu, chairman of Krafton’s board of directors, said in a press conference on Wednesday of last week.

“We will seek mega M&A deal(s) this year ... We are looking into candidates not only in the gaming sector but also in the entertainment and software sectors.”

He added that the company is set to spend more than its $45 million investment in the Indian web novel platform Pratilipi in 2021.

Less than a week after Chang’s press conference, Krafton announced on Monday that it will invest 760 billion won ($570 million), mostly to be poured into games, this year. As of the end of last year, it invested in about 20 external game production studios.

SECOND ROUND WITH PUBG IP FRANCHISE

As part of its business diversification, Krafton also plans to franchise the IP of PUBG, its global best-selling game boasting the unbroken record of garnering 3.25 million concurrent users since January 2018, Chang said.

Game franchises are a series of one or more related videogame titles, including sequels, that can be developed in multiple genres by different studios for use on multiple platforms, including PCs, consoles and mobile devices.

The Walt Disney Company is making huge profits from its Marvel IP franchise, recreated into dozens of movies by different production companies.

If Krafton succeeds in its PUBG franchise, it will be the first Korean game franchise IP.

Outside of Korea, Activision Blizzard Inc., the US video game holding company, is only a handful of gaming companies owning successful game franchise IPs, such as Call of Duty.

“We need to build a franchise where the system produces games, not a certain developer, to ensure the game lasts for 20 to 30 years,” said Chang. “We will seek to work with external studios to produce diverse franchises with the PUBG IP.”

“We will make PUBG franchises available everywhere around the globe like at McDonald's,” Chang added.

The game industry expects Krafton will succeed in the PUBG IP business, considering the game’s popularity across the world.

According to Visual Capitalist, PUBG: Battlegrounds was the world’s fifth bestselling game in history, higher than Mario Kart, Super Mario Bros. and Pokemon Red/Green/ Blue/ Yellow.

The Korean game also was the second most played game by concurrent players as of Tuesday, according to Steam.

AI BEFORE BLOCKCHAIN AND METAVERSE

But he was cautious about the adoption of blockchain and metaverse technologies in the video game ecosystem for now.

“It is reasonable to see Bitcoin and Ethereum as cryptocurrencies but I think it is still early to replace hard currencies with them,” said Chang.

He also thinks it will take time until the metaverse plays a major role in the content business, saying that related devices featuring metaverse content, devices like Apple Vision Pro, must be advanced more for mass market use.

“It is still early for a content company to invest in the metaverse,” said Chang.

Krafton chairman was more enthusiastic about artificial intelligence, expecting AI will be more powerful in creating fun or new services than improving productivity.  

Krafton plans to apply AI technology in generating avatars for its new game InZoi, a life simulator with similarities to the beloved The Sims. The game introduces its players to a virtual world where they control avatars, named ZOIs, akin to The Sims' characters.

The game will debut this year.

STRONG CONFIDENCE IN INDIA

Chang reiterated his strong expectations for the Indian market, where the Korean gaming company is seeking to expand its presence with localized titles that can entice interest from Indian gamers.

Last month, it signed a deal with Korean game developer DevSisters Corp. to publish its mobile game Cookie Run in the South Asian country.

“India is expected to deliver strong growth for the next five to 10 years, almost matching China’s rapid growth,” said Chang. “People in India are expected to be able to appreciate leisure time as the country develops like Korea.”

He projected that Indian information technology (IT) talent will join the Indian gaming industry, paving the way for the solid long-term growth of the country’s gaming sector.

Chang has been pinning high hopes on India since he visited India in 2017 as the chair of the Korean government’s industrial innovation committee.

Krafton has invested some 200 billion won in 11 companies in India, including the country’s top sports firm and a game streaming platform, since 2021.

It plans to introduce more customized games for the world’s most populous country.

The Korean game giant plans to spend $150 million there over the next two to three years.

Krafton made a triumphant return to India, one of the fastest-growing mobile game markets in Asia, last year.

Write to Ju-Hyun Lee at 2juhyun@hankyung.com

Sookyung Seo edited this article.