The MMO Investor #3 - A look at Webzen
This week on the MMO Investor we look at Webzen - a South Korean developer and publisher of free to play MMORPGs world-wide. They're definitely a lesser known company compared to Nexon, which we looked at last week, but they're still pretty big! How big? Well, as of August 22, 2015, they were worth ~$800 million and they generated ~$61 million in revenues in 2014. These numbers are all publicly available because the company trades on the KOSDAQ (Korean Stock Exchange) under the ticker 069080:KS. These figures are pretty surprising, as from a Western perspective, Webzen hasn't had any hit games since... well... Mu Online? I know Mu Online is popular, but I never knew how popular until I dug into Webzen's financials.
Apparently Mu Online is kind of a big deal. The game generated a whopping 83% of Webzen's revenues for the first half of 2015. Revenues between games for the first half of 2014 was much more evenly split, but the overall revenue numbers were MUCH smaller. Webzen made more money in the first half of 2015 than all of 2014! What happened in the first half of 2015 that boosted sales so much for the Mu Online franchise? A quick look at Webzen's Korean website reveals that the mobile version of Mu Online, called Mu Origin, is the reason for the dramatic spike in sales. It's amazing how much impact a single mobile game can have on a company. In fact, since the launch of Mu Origin, Webzen's stock more than tripled! Take a look:
Okay, so we get it. Mu Online is the main revenue driver for Webzen. The fact that Metin 2 still generates substantial revenues for the company is interesting. You'd think newer games would drive earnings, but it looks like the older and more established games are where the money's at. This isn't exclsuive to Webzen either. As we reported earlier, NCSoft makes more revenue from the original Lineage than Wildstar, Lineage 2, Aion, and Guild Wars 2 combined. Another interesting tidbit from Webzen's latest earnings report is that the company actually makes a decent chunk of their earnings outside of South Korea. So I guess Archlord 2, Flyff, and Rappelz make some money for the company (revenue for these games aren't broken down individually).
Unfortunately Webzen doesn't break down sales by region, but rather categorizes everything into "Overseas" or "Domestic". I suspect Western markets make up only a tiny fraction of the company's overseas numbers. China and other parts of Asia are likely much more profitable for Webzen than the U.S. or Europe. Despite its age, Mu Online is a wildly successful game. Mobile games are also only getting bigger and bigger. Think of it this way: the mobile version of Mu Online will likely generate more money for Webzen than all their games combined last year.
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