Reports are surfacing that Tencent, the largest gaming publisher on the planet, will be teaming with NetMarble in a bid to purchase the largest South Korean game company on the planet, Nexon.
On February 7th, 2019 Reuters reported that NetMarble and Tencent are looking to bid on Nexon. They note that the founder of Nexon, Kim Jung-ju, is selling 98.64% stake in the company, and that several companies and business investors are looking to pick up Nexon.
InvenGlobal reported back on January 29th, 2019 that it looked like Kakao was going to be one of the front-runners for taking over Nexon, but that may no longer be the case.
The thing is, Tencent already has a stakes in both companies. For NetMarble, Tencent has a 17.66% stake in the company, while they have the second largest controlling interest in Kakao at 6.7%.
So even if NetMarble or Kakao takes over Nexon, they would still have the tentacles of Tencent running through their business veins.
According to The Korea Times, Tencent is the real threat in the bidding wars, as they have an interest in taking over Nexon, which would mean that they would not only be the biggest publisher in China, but also control the largest publisher in South Korea, gaining them control over properties like MapleStory 2, Dungeon Fighter Online, Vindictus, Sudden Attack, FIFA Online and Combat Arms to name a few.
In the article they quoted Ahn Jae-min, an analyst from NH Investment & Securities, who told them…
“Whether it is Kakao or Netmarble, Tencent can indirectly take control of Nexon,”
This led to fears from the South Korean side of the business sector, with Hwang Sung-ik, the president of the Korea Mobile Game Association, telling the Korea Times that this could have a serious impact on the South Korean game sector…
“I cannot speak conclusively as nothing has been decided yet but it is reported that Tencent is likely to have bigger influence in the industry. The move could damage the local game industry as there could be serious issues such as labor restructuring,”
“If the talk becomes a reality, Korean game firms may be pressured to import more games produced by Chinese firms or other overseas firms. Then, companies will consequently downsize their workforce, which is a move that can spoil the industry,”
This would definitely pose a serious problem for South Korea, who has already had a tumultuous time in the gaming industry after the government began cracking down on the sector back at the end of the aughts, which set behind many of their firms due to tightened regulations, forcing various businesses to either relocate to China or focus their business on Chinese consumers.
If Tencent did take over Nexon and actually did begin forcing more Chinese games onto the South Korean market, or forcing South Korean workers out of the sector in place of Chinese workers, then it’s easy to see how devastating that could be to the market.
Of course, all of that is just speculation, much like how there’s ample fears about Epic Games gathering data from consumers and allowing Tencent to shuffle it back to the Chinese government due to Tencent having a large stake in Epic. However, Epic Games founder, Tim Sweeney, has denied those rumors.
Nevertheless, some South Korean officials seem to be as reluctant and apprehensive about Tencent’s potential bid for Nexon as Western gamers are of the mega-corporation. One official, who did not want to be identified publicly, told the Korea Times…
“While the local game industry has been heavily relying on Chinese game market and Chinese game firms, Tencent is possibly posing a threat to the industry,
If Tencent does manage to take over Nexon, the company would have a controlling interest in almost every major game publisher out there.
(Thanks for the news tip Otsix Gamex)