Sandbox Network pursues corporate restructuring to dig out of red

Sandbox Network, Inc. announced on Sunday that it will go through corporate restructuring and encourage employees to voluntarily resign, hit by continued operating losses. 

In line with the decision, the multi-channel network (MCN) company will fold its new businesses such as the e-sports arm Sandbox Gaming and sell the brand commerce division. 

The company will instead focus on content creation through its intellectual property, metaverse gaming, and cryptocurrency businesses. 

Founded in 2015 by Lee Pil-sung, a former strategic partnership manager at Google, Sandbox Network is one of the three largest MCNs in South Korea along with Treasure Hunter and DIA TV.

A number of renowned creators are part of the Sandbox Network and recorded $84.8 million in revenue last year. 

Amid fierce competition to garner the best talent, the company also spent a lot, such as giving all of its YouTube AdSense revenue to creators. 

Its operating loss increased from 7.2 billion won in 2020 to 12.1 billion won last year. 

FUTURE UNICORNS FOR SALE 

Sandbox is not alone in downsizing its business amid the economic downturn. 

Many future unicorns, startups valued at above 1 trillion won, have become available for merger and acquisitions this year.

Watcha, often referred to as Korea’s homegrown Netflix, became available for sale in July. 

Insurance startup Bomapp was essentially sold to its strategic investor AZ Financial Service last month. 

Some are even going as far as stopping their services altogether, such as online fashion platform Hiphoper and food information checking platform Umsun, to name just two. 

“It appears that the faster a startup grows, the faster its corporate value slides,” Bae Ki-hong, a partner at Strong Ventures wrote in a blog post. “Only those with a solid business model and a strong focus on clients will survive.”

Experts say the retrenchment mode in startup investment due to the economic downturn is a worldwide trend.

Write to Lan Heo at why@hankyung.com
Jee Abbey Lee edited this article.