More Vulnerable Partnership
NCsoft blocked Nexon's attempt to intervene in the management of the company by forging a partnership with Netmarble Games. However, an increasing number of people are worrying about the partnership, owing to uncertainty about whether or not the hastily-made partnership will pay off. Furthermore, some people are raising the possibility that NCsoft will be threatened by Netmarble in management rights.
According to industry sources on Feb. 22, the industry is paying attention to the partnership between NCsoft and Netmarble in the future and the dynamics of Nexon, Tencent, and CJ E&M, which are major shareholders of the two companies. What is noticeable is that Tencent is close to dominating the corporate governance of major gaming companies in the nation.
A source familiar with the matter said, “NCsoft CEO Kim Taek-jin chose its partnership with Netmarble to resolve the management crisis and soft-land its gaming business. Considering two companies' different corporate cultures and the hastily-made nature of the partnership, there are increasing concerns about the business partnership.” The source added, “There is also the possibility that NCsoft will be vulnerable to threats from Netmarble over management rights in the long term.”
Prior to a paid-in capital increase, major shareholders of Netmarble were Chairman Bang Joon-hyuk (35.88 percent), CJ E&M (34.81 percent), and Tencent (28 percent). Although NCsoft became the fourth largest shareholder of Netmarble, it cannot have an influence on the company's management. Before Netmarble's purchase of an ownership stake in NCsoft, major shareholders of NCsoft were composed of Nexon (15.08 percent), CEO Kim Take-jin (9.9 percent), and the National Pension Service (6.8 percent). The amount of an ownership stake in NCsoft bought by Netmarble this time is equivalent to what is owned by NCsoft's CEO. An industry source said, “Netmarble Chairman and Tencent could seize NCsoft's management rights in an easier manner than Nexon owing to this partnership.”
In other words, NCsoft escaped from the immediate crisis, but the gaming company will be exposed to bigger risks if major shareholders of Netmarble change their minds. Tencent is a major shareholder of Daum Kakao, 4:33 Creative Lab, and PATI Games. Owing to the alliance of NCsoft and Netmarble, the Chinese Internet giant will be able to exert its influence on Nexon and Ncsoft both.