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Netmarble Games has grown to nearly $1 billion in sales. That’s a long way from its humble beginnings in 2000, when Jun-Hyuk Bang started the South Korean game company. He had only $88,000 and eight employees in the beginning. They built an online game publishing business that mushroomed over time.
Bang introduced free-to-play games such as Catch Mind and Nova 1492, as well as a voucher-based payment system. Bang left the company in 2006 for health reasons, but he returned in June 2011. Bang then turned the company’s focus to mobile games. Within five years, that bet paid off. Revenues grew to $948 million last year. At the end of 2014, Netmarble received $500 million from Chinese social media and game company Tencent.
Now the company is itching to expand into the West. Netmarble invested in Los Angeles-based casual mobile game company SGN, creator of Cookie Jam, last year. And it also launched the successful mobile role-playing game Marvel: Future Fight, now available in 149 countries. It has hits such as Seven Knights and Everybody’s Marble. And all of the company’s 3,000 employees are owners of the company. The company is preparing for an initial public offering, and it has 20 development studios.
Here’s an edited transcript of our interview.
Three top investment pros open up about what it takes to get your video game funded.
GamesBeat: Can you tell me about the beginnings of the company and how you grew in the early days?
Junhyuk Bang: Back in 1998 and 1999, I was involved in an internet movie business and a satellite internet service provider. The technology wasn’t really there for either of those. They were too far ahead of the times. I knew the importance of good quality content, but I didn’t want to end up in a business where we had to invest a lot in infrastructure.
Around 2000 was the exact time when high-speed internet was spreading all over the country in Korea. I turned toward online gaming, because I thought that would make a great synergy with the growth of broadband. I saw potential for growth there. That’s why I started Netmarble in 2000.
GamesBeat: I haven’t been to Korea, but I do know you have some of the best internet access in the world. How has that helped you move ahead as a company? Do you see different behavior from consumers when they have that kind of fast connection?
Bang: Nowadays we have YouTube, which is one of the largest video sharing sites in the world, but Korea had a similar system before YouTube even existed. We had similar social networking services long before Facebook. Developments in the internet industry have hit Korea well before their global equivalents.
Korea was one of the first countries to introduce online gaming to the world, but the size of the market, as you probably know, wasn’t very large. Companies from the U.S. and China, the big markets, that reached success on a global level had a more highlighted position. They got more attention than Korean companies. But with our great infrastructure and internet speed, we were able to do more experimental and creative development in gaming. The IT industry in general was able to build up a competitive edge.
The IT infrastructure in Korea has given a lot of internet companies and venture companies in Korea the opportunity to develop and act more creatively, find more innovation. That’s been very beneficial for us as a country. A lot of companies from China and the U.S. are benchmarking according to what’s going on in Korea. Korea is often used as a test market for new products and new releases.
GamesBeat: Some game companies in China have grown to massive size, 1,000 to 2,000 employees, making games exclusively for their domestic market. By contrast, in Finland, they make a game and Finnish people are maybe five percent of their audience. They have to think internationally from the very beginning. Is that also true of Korean companies? Do you have to go outside your own country to find enough of a market, and is that helpful for you in some ways?
Bang: Yes, that’s the case for Netmarble as well. We have to go more global to succeed and expand. But the difference here is, when the Finnish company releases something, they’re oriented more toward the western market from the beginning. They’re more accepted in the western world. It’s easier for them to approach the U.S. and European markets. For a Korean company, we have differences in language and culture to overcome if we want to succeed in the U.S. That’s a challenge we’re dealing with right now.
We’ve had games like Seven Knights and Marvel Future Fight introduced in the U.S. market. We’ve learned a lot and we’ve seen the market come to accept those games. In the future, we plan to introduce more U.S.-specific games and builds to players here. We hope to see better results in this market that way.
You could look at a game as a technical product, but it’s also a very cultural product. If there’s a cultural difference in a market where you’re trying to introduce a game, that’s a big issue. It’s often hard for a game from an unfamiliar cultural background to find players. In the past two or three years, we’ve picked up more learnings and understandings about other cultures, including the United States. We’re getting better at working in this market with some experience under our belts.
GamesBeat: When did you really begin to move from the Asian market toward the west, trying to become a global company?
Bang: I see the starting point as being when we made our big investment in SGN last year. Also, when we started up Marvel Future Fight, which was a game based on western IP. This was our first move into the western market and the global market generally. We’re also servicing Seven Knights in the United States right now, and un the second half of the year we expect to release two more big titles in the U.S. If you look at last year as the beginning, this year is when we start to challenge the global market. In 2017 we plan to become one of the more popular game companies in the U.S.
For Marvel Future Fight, compared to last year, this year has been much better. Seven Knights is at a similar level as well. Those two games are both doing better. We’ve had a lot of opportunities to learn and understand the U.S. market over the last year. We understand the player base better than we used to. I hope this all combines to help us introduce more popular games in the market.
GamesBeat: Western gamers have a history of enjoying games imported from Asia. Do you feel like you have to change the kinds of games you make, or use western IP like with Marvel Future Fight, to directly appeal to a western audience?
Bang: It can work both ways. We have games like Marvel Future Fight, which is aimed directly at U.S. players. With this game, we’ve found out that casual players are developing into more hardcore players. More players are enjoying these kinds of RPGs. With Seven Knights, we’ve also found that there are players who enjoy Asian-style games and graphics.
Given the design of Seven Knights, in the past I don’t know if it would reach the same level of success. But now things have changed. We’re seeing a slow shift. Gamers see the difference in graphics not as a cultural thing, but just a different style, a matter of personal taste. In the end, though, if we want to have more success in the United States, I think it’s right to go toward more mainstream U.S. players and the trends they’re following. That’s definitely on our minds.
GamesBeat: What’s the right mix of making your own games for the west, investing in more core game companies, and investing in casual game companies like SGN?
Bang: Netmarble itself is very strong in the RPG genre. That’s something we take very seriously in our services in the United States. In the near future, we plan to introduce a more simple RPG, something that can reach a broader range of casual American players. We also plan to add some more U.S.-centric graphics.
As far as investments and acquisitions, we feel like there are genres where we aren’t very strong. SGN was one of those cases. That’s what we’re looking at. We want to partner with companies in areas where they’re strong and we aren’t as strong.
GamesBeat: I know that Aeria Games has grown to 300 people in Berlin. Their main business is translating games from Asia and bringing them to the west, sometimes extensively reworked. I wonder if you’ve considered using western companies who specialize in localization, or do you prefer to handle that yourself?
Bang: Netmarble is a company that not only develops games, but also publishes its own games. Companies like the one you mentioned may present a good opportunity. It’s something we could consider in the future. But in our experience up to now, we feel that changing up the language and the graphics isn’t necessarily the key to success in other markets and other cultures. You have to change everything around, including UI (user interface) and UX (user experience), in order to reach players.
In the past, there were fewer mobile games trying to reach mobile players. Now the balance has changed, with the supply of games outstripping the number of players there are to follow them. Now it’s a matter of players choosing what they want to play, and it’s very hard to get chosen. What’s important nowadays, above all, is to make top quality games and optimize for each region and each country.
One think I’ve found is that U.S. players spend maybe half as much time as Asian players do on playing games. They tend to spend a much shorter time per session. It’s important to speed up the growth pace of something like an RPG. We also have to make the UI very simple and streamlined, so you can do things much more quickly. It’s important to balance a game according to the tastes of each country. To optimize something completely for the U.S. market, it takes a minimum of six months of redevelopment. We’re in the process of making that effort to be more optimized for the U.S.
GamesBeat: When Kabam took their Marvel game to China, they had to convert it into something more like a pay-to-win game. They had to add more of the VIP systems that Chinese gamers like. It sounded like they had to turn it into a very different game. That’s very expensive to do, but do you think it’s a necessity at this point?
Bang: When it comes to China, I understand that kind of thing came about because a lot of RPGs started out as web games, and then they were converted over to mobile. That kind of system existed in the web game ecosystem, so it was an obvious choice. But systems like that don’t really work in other regions.
Talking about the United States and bringing our RPGs there, we want to make them easier and simpler to play. In our experiences with games like Marvel Future Fight and Seven Knights, U.S. players need a bit more time to develop into hardcore RPG gamers. That’s why we’re planning to introduce a more casual RPG, something anyone can play without too many barriers to entry.
One thing we’ll pursue in our RPGs — whether you spend money or not, there isn’t going to be a big difference. If you spend money you can have an easier time playing the game. You might be aided a bit more up front. But even if you don’t purchase anything, if you spend time to get to where everyone else is, you’ll be at the same level with the same stuff. We want to make a fair game, a fair system, regardless of in-app purchases.
GamesBeat: What else should we know about Netmarble’s strategy going forward?
Bang: Netmarble has had a lot of success in Korea and southeast Asia. We’re one of the leaders there. In Japan we’ve had a lot of success recently as well with Seven Knights. We’ve cracked the top 10 there. Now it’s time for us to turn our focus to the U.S. market. We feel we’ve learned what we need to know to challenge the market and succeed. We’ll be aggressive when it comes to investment and acquisitions. We hope that with some of the new games we’re introducing, we’ll build more interest and be able to bring more fun RPG experiences to U.S. players.
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