Tencent, the Chinese IT giant, to acquire $88B USD Behemoth, Nexon of Korea
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The game industry has been heavily publicized as of late, with two names that keep cropping up being some of the biggest players in the field, Tencent and Nexon.
Known as the ‘father’ of the gaming industry in South Korea, Nexon CEO and NXC representative Kim Jung-Ju officially announced that he will put Nexon for sale on January 3, 2019.
Why did this leading company of the Korean gaming industry suddenly give up all their management rights and put the company on the market?
Recently, there has been a lot of criticism that the future of the domestic gaming industry is not bright due to the pessimistic attitude of the Korean government who would like to take more of a stronghold in the controlling of this particular industry. The aggressive regulations of the government in the past year have led to this decision of putting Nexon for sale being expedited, with the resulting unsupportive government attitude directly leading to the prosecution investigation of Nexon and its CEO.
According to the latest industry report, the acquisition is expected to completed for $12 billion, the largest deal in the Korean domestic M&A market, exceeding the previous biggest, Samsung Electronics’
If Nexon is sold over $12 billion, this is the largest big deal in the domestic M&A market, far exceeding Samsung Electronics’ M&A case with Harman worth about 79 billion USD in 2016, This is the one which will reshape the whole game industry.
These rumors have led people to start talking and raising concern about the game industry’s reliance on China, especially in the domestic market of Korea.
Tencent already has ties with Nexon having partnered on distribution rights for online beat ’em up title Dungeon Fighter Online in China.
An Expert of the industry mentioned, “Nexon has been the only game maker in the Korean domestic game industry to create and pursue the diversity.” Unlike Kim, who is a developer, If financial investors become a major shareholder in the future afterward, It will be difficult to maintain the mission of the company. “
Most of the experts of the industry forecast that after the acquisition, the whole management system will be reformed by the buyer, Tencent, and will face major re-structure.
Last year, Nexon reorganized its development organization into “seven studio systems” to encourage creative game development based on different philosophy and characteristic of each organization, and gave autonomous authority to each studio to establish and manage the project. New owners and management team, Tencent will not afford this autonomous system.
The one positive factor that we can consider is that the conversion arrangement which will be reportedly signed within three months will be based on the results of the Nexon and its labor union’s vote even if the project under development is canceled in order to resolve the job anxiety.
Last, February 6, Bae Su-chan, the chairman of the labor union, stressed the employment stability of the labor union at the headquarters in Seongnam city, Gyeonggi-do of Korea, “It is nonsense that terminating the ‘lease’ because of the changes of the ‘Landlord(Tencent)’ .”
It is the good news for us that one of the representative ICT companies in Korea, Nexon will be heading to the global stage with the support of China, one of the major countries who now have a big influence in the global society.
However, as some experts mentioned above, as the game industry has been going from strength to strength and attracting more attention, it is very important for Korea to maintain its market share and influence in the global game industry.
Unfortunately, the market share of Korea has gradually decreased and the ‘mood’ of the Korea game market is also on the decline.
If this behemoth $88billion USD game company is dismantled, it will have a negative impact on the domestic economy, and in addition if the restructuring is done on a large scale, not only do they face a long term struggle with the union, but also a large number of talented people of game industries will be scattered abroad, disappearing in Korea like the “endangered species”.
What kind of stances will the government take when this finally happens?
Why wouldn’t the government not think ahead of time and give a proactive motion about this situation?
You can also find this article on Redpulse.com
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