Here in North America and also in western Europe, one of 2013's significant stories in the free to play space took place back in February when Webzen acquired sister companies Gala-Net and Gala Networks, now re-named Webzen West and Webzen Dublin respectively. The Korea-based publisher thereby substantially increased its presence in these two markets by gaining control of the gPotato portals. In doing so, it also became the regional operator of a mixed bag of titles, with Allods Online being arguably the most prominent.
This deal obviously fit the trend of rising Asian investment in this hemisphere. However, it was at least somewhat unexpected because Webzen already had its own global service up and running for Continent of the Ninth Seal (C9), ArchLord et al. Approaching a year later, I had still seen and heard very little in terms of how the purchase came about. To try to satisfy my continuing curiosity, I recently took it upon myself to make a direct inquiry as to why it happened to how it's working out and what lies ahead.
From Webzen's head office in Seoul, CEO Tony Kim told me that by 2012, the company felt its global service was nearing the limits of its potential to reach the western audience. Both the obvious courses of action, acquisition and creating direct operations, were considered. The former included looking at other candidates, although it's understandable that he did not name them.
According to Kim, Webzen's global service had been more successful in regions such as as South America and parts of Asia. So, the gPotatoes were a good fit. Key aspects of their appeal included “long-term online game operating experience in NA/EU, excellent manpower that was rich in experience and a substantial player base.” In addition, many of Gala-Net's American staff were already familiar with the game development process in Asia. He also said that the increasingly competitive nature of the F2P market was a factor. While he didn't elaborate, it's easy enough to guess that this helped bring down the asking price.
Fast forwarding 10 months, Tony Kim seems pretty satisfied with the progress that has been made in two key areas, economy of scale and synergy. “Our goal was to take on the competition by benefiting from gPotato’s experience and overall success in local markets, acquire its member base and merge operations with Webzen’s. Synergy between the two companies has proven to be invariably positive since we reviewed the opportunity of an acquisition.”
In a related area some publishers have been known to gloss over completely, he concedes that “the acquisition was not that simple. Merging companies is already a difficult task, and bringing three offices together has proven to be even more of a challenge. Other than working in different time zones, overcoming differences in language and company culture has become a pretty big obstacle.” For what it's worth, based on my experience with a number of Asian companies, these hurdles are more substantial than they might seem.
Still, Kim expresses confidence that these matters will be fully addressed over time, citing the western staff's familiarity with the gaming culture in Asia plus the ability to acknowledge the differences through a shared vision for success. “Webzen Dublin's and Webzen West’s workforces and service marketing know-how have turned out to be huge assets to our global business structure. We also believe that our business experience in Korea and other parts of Asia will have a positive effect on operations in NA/EU.”
In addition to seeking such behind the scenes-type information, I was also very interested to ask how the acquisition has affected and will continue to impact North American and European players. Unsurprisingly, Kim tells us we can expect to see more titles from Webzen's portfolio of IPs. It's quite possible some will be mobile releases.
ArchLord 2, which launched domestically in October and is doing “fairly well” there, seems set to be the next key offering. Noting that it features music by Gears of War composer Chris Velasco, Kim doesn't give a date other than 2014, but does say “we plan to introduce it to the Americas and Europe after we make some changes and localize it for each region.” We're all very aware that western versions can differ pretty widely in terms of how well they're adapted from the originals. Although the proof of the pudding is always in the eating, we can certainly hope that Webzen's still quite new US and European offices and staff will have a positive impact in this regard.
Farther out, the company is continuing to work on MU2 “as well as many other online PC games that will eventually be provided through global game service.” It is also looking to establish itself as a global developer and publisher. This won't be an easy goal to achieve, but if Webzen manages to do so, it seems likely that we'll look back at the acquisition of Gala-Net and Gala Networks as the first significant step in the process.
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