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Owen Mahoney has a unique view on global gaming. He’s a former Electronic Arts executive who landed a job first as chief financial officer of Asian gaming giant Nexon. Last year, he became its chief executive, which has its headquarters in Tokyo and big operations in South Korea. Thanks to its success with games such as Maple Story and Dungeon Fighter Online, the company has more than 4,656 employees (as of December) around the world.
But Nexon makes most of its money in markets such as China, South Korea, and Japan. It has grown big thanks to PC online games in those countries. Its revenues for the first quarter ended March 31 were $418 million, up 9 percent, with profits at $151 million. But the company is generating just a small amount of money from Western games and the mobile sector.
Mahoney wants to change that. He has been investing in game startups led by famous Western game makers such as John Schappert (formerly EA, Microsoft, and Zynga, now at Shiver Entertainment), Brian Reynolds and Tim Train (Big Huge Games), and Cliff Bleszinski (formerly Epic Games, now the founder of Boss Key Productions). And Nexon still has nearly a billion dollars in cash (almost $2 billion if you consider more of its assets), in case other good deals are out there.
Some of those deals are producing results. Big Huge Games has launched DomiNations on the mobile app stores, and the early results are promising. And today, the company is also launching the open beta of Dirty Bomb, a zany first-person shooter online game. Mahoney told us in an interview that his focus is on making quality games. Everybody says that. But we went into a deeper discussion on it, and we also delved into the larger forces in gaming that are shaping Nexon’s future.
Here’s an edited transcript of our interview.
GamesBeat: So, how have you been doing?
Owen Mahoney: We’re doing great. I’ve been traveling around the world a lot. I’ve been shuttling back and forth through Tokyo, Korea, and the U.S. We’ve had a lot going on in those regions. I’m heading to China, Taiwan, and Europe at end of this month. But it’s all going very well. As we said in our earnings call, we’re on the move. It’s all fine when you feel like you’re making forward progress.
GamesBeat: Your earnings report had some interesting directional information. It sounds like DomiNations is off to a good start.
Mahoney: We’re really happy with it so far. We’re happy with development partners. We’re happy with what we’ve been able to bring to the table. The thing we like about it, it’s very much down the center of what you and I have been talking about for a while, which is to combine what they’re good at and what we’re good at. Tim (Train) and the team over there have a lot of knowledge about how to make a terrific game. Nexon has a lot of knowledge about how to make a free-to-play game that can last and build over time. We can be a good publisher as well. Combine all that together and the outcome is good so far.
GamesBeat: I wrote a bit about it. I’ve been playing it the whole time. Now that it’s out, I do wonder what you mean by what Nexon has been able to add to the free-to-play style. Is there something that’s a bit more of your trademark in the game?
Mahoney: On a game of that style, there’s stuff we’ve already released and stuff that’s coming up. The core questions are, “Where is the game?” and “Is the game fun to play?” My feeling is, when I’m playing the game, I feel like I’m playing a real game. One of my personal favorite games of all time is Civilization, particularly Civ II and Civ V. The idea that you’re in a historical universe, playing and progressing your society over time, is something that needs to come out in a game, if it is a game.
One of the challenges people have had over time, especially in the West, is that you sometimes ask where the game is. I get that this is a place, a pastime, but I’m really asking where the game is. What I like about DomiNations, there’s actually a game there. When you do that, then you can decide over time, in very subtle ways, how you boost retention. There’s a thousand small things that go into that. Hitting that line is where the art lies. There are things we have out now and things we’re going to bring out over the coming months that help to boost that feeling. We think that’s how we should be judged.
GamesBeat: I feel like there’s a line the game is walking on free-to-play between making you wait enough so that you are tempted to go and spend money and speed things up, but also retaining you and keeping you playing as much as possible. That seems to be one of these delicate tunings that games like this have to go through.
Mahoney: That’s right. I play the game a lot with my son, who’s 11. I don’t give him money to buy stuff. We’ve been playing a lot since launch. He and I — among other people, although this still isn’t very scientific — are going through that right now.
The thing that’s interesting about this topic is, let’s go way back to how free-to-play was born. It was born in Korea at Nexon. The game was Quiz Quiz. It was a long time ago. It started as a subscription game that was essentially going down. The team there felt that since the game was going down anyway, why not make it free? That’s one way to see how things go. Then of course the monthly active user (MAU) numbers rocketed up, and they started to experiment with just putting some things in the game that you could buy for a very small amount of money, a dollar or two U.S., and seeing how people liked it. It was pure experimentation. That’s the spirit under which real free-to-play was born.
That said, it was a very different experience through which free-to-play came to the west, which was much more from the angle of, “Isn’t this an interesting monetization mechanism?” Those are different questions. One is born from the perspective of art. I’d argue that the people making Quiz Quiz really looked at their game as an art experiment there. Some people come to free-to-play very much from the side of looking for a monetization strategy. In order to figure out all this stuff, you have to view it from the perspective of art. You have to recognize that in the games business, we are in the art business. If you focus on making art, you’ll be able to come to conclusions that are healthy for your game and your players, and ultimately for your business over time.
That’s a big thing that’s being grappled with in the West. It’s also been a change within Nexon in the last year since the new team and I have come on board. We’ve gone back to our roots. Like other companies, at times we got pulled away from this perspective. It hurt us. But it’s certainly hurt the industry in a big way. The industry steered in a much different direction, one that hurt gameplay. I’m happy that as we experiment with this more and more, we’re doing the right thing by gamers. It feel like that, at least, because we’re all gamers ourselves.
It’s certainly a process. It’s easy to talk about in concept and it’s really hard to do in execution.
GamesBeat: I’ve seen DomiNations ounce around the charts in the top 100. How are we to interpret some of that movement at this stage, at least in terms of the top grossing chart? I don’t know if that directly relates to user acquisition spending that happens on the game.
Mahoney: The way I’d look at it, we intend to be publishing this game for a very long time. Whatever’s happening today or this week is relevant, but it’s not a core driver. What I care about is whether the game is something that’s going to be interesting to talk about in a year or two or three. That’s where we’re focused as a publisher.
GamesBeat: From what you know, then, it’s off to a good start? You see the potential in this game, that it could go on for a long time?
Mahoney: We see potential in this game. It’s part of a theme, or a couple of themes, that we’re focused on right now. One is on gameplay quality. Another is on partnering in which we bring something big to the table and our partner does as well. Third is about making sure that we have the right perspective, that we’re focused on building this over time in a way that benefits all parties. That’s been at the core of what we’ve been able to do in other markets. It’s been at the core of how Nexon was built over the last two decades.