Merger Synergy
Gamevil and Com2us, which fiercely competed with each other in the Korean mobile gaming market over the last 15 years, are actively seeking to create synergy in line with their merger.
Following the purchase of Com2us by Gamevil last year, the two firms have been cooperating with each other, as shown by the release of their new combined platform HIVE. After struggling in the market due to the huge success of KakaoTalk's gaming platform, the two companies were recently able to recover their market share. Hence, much attention is being paid to whether or not this kind of partnership can maximize synergy.
According to industry sources on June 26, the success or failure of HIVE, a new mobile gaming platform showcased by Gamevil and Com2us, is drawing a lot of attention.
The appellation “HIVE” originates from a hive that symbolizes a large number of customers and networks. As a combined platform of Gamevil's Hub and Gamevil's Circle, it is aimed at creating a place in which people around the world who enjoy games made by the two companies can interact with each other. Through HIVE, both firms are cooperating with each other in membership functions such as log-in, SNS, and communities. It also has system management like security and statistics, and updates. Finally, it also takes care of the management of games related to banners, announcements, push, and inquires. They are also conducting marketing campaigns together. The new platform was first used for Gamevil's new game, called “Kritika: Chaos Unleased,” which entered closed beta testing on June 25. The platform is going to be applied in all the games released by both companies in the future.
Compared to online games, mobile games take less time and money to make, but the popularity life cycle is shorter. Therefore, it is essential to mobile game developers to make a new game while their successful games are popular. In addition, it is necessary to launch a marketing campaign directed towards users of the popular game aimed at linking it with a new game.
The combination of both firms' platforms can strengthen this kind of marketing strategy and the management of users. Moreover, it is possible to lessen their heavy dependence on mobile messaging platforms like KakaoTalk, Line, and WeChat, which collect separate fees for the launch of mobile games.
The two mobile game developers pioneered the mobile gaming industry by supplying their games through feature phones around 2000. Com2us achieved the industry's first record of 10 billion won (US$9.88 million) in sales, succeeding in its listing on the KOSDAQ market afterwards. Gamevil followed suit.
The reason for their unexpected partnership lies in the fact that KakaoTalk's gaming service became extremely popular in the nation. As a result, the competitiveness of the two firms was considerably weakened. On the other hand, start-ups like Sundaytoz, PATI Games, and Devsisters exceeded the market share of two former dominant players in the market by rapidly expanding their games through KakaoTalk's gaming platform. Gamevil and Com2us' superior development capabilities and distribution expertise were no match for the tremendous popularity of mobile games created by those start-ups, helped by the social media craze.
However, Gamevil's Dragon Blaze became a smash hit in the local market this year. In addition, the success of Com2us games - Ace Fishing: Wild Catch and Summoners War: Sky Arena - in the global market is widely acknowledged to have attributed to the firm's rebirth. Nevertheless, their competitive advantage in the market is widely regarded as the driving force behind their success, rather than synergy created by the combination of two platforms, given that both companies were already working to develop those games prior to the M&A deal.
An industry source remarked, “Gamevil and Com2us have achieved success in the global market, without relying on users of mobile messaging platforms like KakaoTalk and Line.” The source added, “The industry is paying attention to whether or not the new platform can create synergy at home and abroad.”
The two gaming companies achieved remarkable growth once again, but Com2us is more successful. Com2us is reportedly earning more than 500 million won (US$494,310) per day with Ace Fishing and Summoners. The company's market cap approaches 600 billion won (US$593.0 million), ahead of Gamevil with a 510 billion won (US$503 million) market cap.
The construction of the new combined platform is expected to create a win-win situation. Com2us achieved gains from the evaluation of the new equity method, owing to the recent improved performance of Com2us.