By Park Jun-young WIRED Korea

Don’t put all your eggs in one basket. That is one of the maxims most heeded by Korean game publishers these days. They take over companies, launch entirely new services and extend their existing businesses into closely related areas.

The driving force behind the diversification of asset portfolios is not slow business in the gaming market. On the contrary, the market is growing fast, with the gaming industry’s turnover reaching 14.29 trillion won in 2018, up 8.2 percent from the previous year.

Diversification is instead driven by the pursuit of new growth engines. In other words, the game publishers are parlaying fast growth into branching out to new business areas.

After all, diversification is a byword for Korean companies aspiring to be business conglomerates, like Samsung, LG and SK. Hyundai had been one of the largest business groups in Korea until its affiliates, interlocked in family ownership, turned into standalone companies, such as Hyundai Motor Co. and Hyundai Heavy Industries, after its founder Chung Ju-yung’s death in 2001.

Netmarble, a leading game publisher, appears to have such an ambition. It wowed industrial analysts when it sunk 1.74 trillion won to purchase a controlling 25.08 percent stake in a home appliance rental company, Woongjin Coway, last month.

A Netmarble official says, “By taking over Woongjin Coway, a company having No. 1 spot in the home appliance rental market, we will apply the information technology and knowhow we have gained from our gaming business to Woongjin’s rental business to develop a smarthome (a home with appliances, lighting and devices that can be remotely controlled by the owner) rental economy.”

No matter what Netmarble may say about the acquisition, there is no denying that it is branching out into a new business that is not related to its own business line.

It was not the first time Netmarble did so. In 2018, it purchased a 25.71 percent stake in Big Hit Entertainment, the manager of boy band BTS, for 201.4 billion won. The purchase made Netmarble the second largest shareholder.

Diversification is also accelerating at HanbitSoft, a game publisher that already has a wide-ranging asset portfolio. It provides a service of aiding English-language studies on its Oh! English app and physical exercise services on its RunDay and FitDay apps as well as a blockchain-powered Bryllite gaming service.

Now, the company is focusing on drone-related businesses, which are being carried out by its subsidiary, HanbitDrone. As its CEO, Park Yang-gyu, says HanbitDrone is pushing to develop new drone solutions as well as running drone education programs and providing the central, provincial and municipal governments with drone solutions.

Park says, “We will go beyond simple solution sales. We are expanding our business to meet the demands for education, contents and solutions for specified uses.”

The company is also planning to use new 5G technology for drone services. For this purpose, it is working on high-end drones for aerial photos, those for industrial use and those by professional photographers.

Blockchain is another new technology that is being used to bolster existing gaming services or start new businesses.

It is a technology that prevents game data from being altered when they are placed on ledgers protected by this technology. In addition, gamers may put their in-game assets in hack-proof crypto-wallets.

Game developers find blockchain is a useful tool for them as well, as its data encryption protects the platform on which they develop games.

Mgame and Wemade are among the Korean game publishers trying to develop new growth engines using blockchain technology.

In May last year, Mgame opened EOS Royal, a game portal based on the cryptocurrency EOS-type platform for a global service of two games, and started to conduct research and development on the use of blockchain for new games.

One month later, it started to develop a blockchain app for its mobile Princess Maker and Ghost games in a partnership with Ground X, the blockchain subsidiary of Korea’s largest mobile platform, Kakao, with 50 million monthly users.

The Mgame CEO, Kwon Yi-yeong, says, “We will go into research and development on blockchain-based services, both game and non-game, as our future growth engines.”

Wemade Tree, a subsidiary of Wemade, has opened Wemix Network, a blockchain-based platform for game service, which provides token and item exchanges and digital asset storage as well as game playing. The company says the platform also supports the switch and transfer of data from chain to chain.

Kim Suk-hwan, CEO of Wemade Tree, says his company is aiming at securing a 1 million daily active user base by the end of this year.

“Each of the games we are planning to put on Wemix Network has had more than 10 million downloads on other platforms, which means their viability has proven in the market,” says Kim. “I can say with confidence that our blockchain project has the most powerful contents.”

Netmarble, HanbitSoft, Mgame and Wemade are among the leading Korean game publishers that have much in common. All of them are prosperous companies that are seeking to accelerate growth by diversifying their asset portfolios.

They find that they cannot afford to sit idle by and be content with business as usual when the Fourth Industrial Revolution is fast approaching.

In other words, they need to renovate themselves with new cutting-edge technologies and venture into new territories if they are to survive the radically changing business environment.

Kwon Young-sik, CEO of Netmarble, puts it succinctly when he says, “We decided to take over Woongjin Coway because we wanted to diversify (into a new area for growth), not because we believed growth is stunted in the game industry or there is an increasing uncertainty for its future.”

The above is a translation of Park Jun-young’s Korean-language article by Choi Nam-hyun, deputy editor in chief at WIRED Korea.