Saturday, April 28, 2012

A Gamer on His Own Level

Online computer gaming (the kind that kids, not gamblers, play) has taken Asia by storm over the past decade. An acronym such as MMORPG (massively multiplayer online role playing game) may seem like a mouthful for most mortal humans, but it rolls easily off the tongue of most young Asian gamers. No one has benefited more from the trend than Kim Jung-Ju, also known as Jay Kim and the controlling shareholder of Nexon, who Forbes magazine lists as Korea’s third wealthiest person. His net worth is estimated at $4.3 billion. In a country dominated by a few huge business conglomerates such as Samsung and Hyundai that are controlled by second- or third-generation family ownership, Jay Kim’s scratch-to-riches story stands out as a singular achievement. There are other Korean internet entrepreneurs who have also made fortunes by creating companies such as NCsoft, Naver, Gmarket, Daum and others. But no one has done it with the control, savvy and personality cult that Jay Kim has managed to imbue through Nexon.

When I first met Jay Kim in 2002, Nexon was worth a mere $200 million or so. Though it was a pioneer in the burgeoning online gaming sector, its business presence was confined to Korea and an outpost in Japan and the US West Coast. What struck me more than anything about Jay back then was the clear long term vision he had for the business. He said he hoped to IPO the company in “10-20 years.” When asked why not sooner, he simply shrugged and said that he just wanted the company to build good games, and he was confident that the company would do so. Making a fast buck or achieving world domination were not top-of-mind to him back then.

But things changed steadily and inexorably over the ensuing years. His company’s growth exploded, particularly in China, where its games became some of the country’s most popular. With the company’s success, he received massive pressure from his employees to take the company public, eager as they were to cash in the fruits on their labors. Disney and Electronic Arts both approached him, and they and Nexon did multi-year dances to see whether they could buy out Jay Kim’s business. Ultimately, Jay did decide to IPO the company, feeling that he needed to do so in order to keep Nexon competitive on a global scale. He also made murmurings about the desire to relieve some of the burden off of his own shoulders by professionalizing ownership of the company. An IPO on the Tokyo Stock Exchange (not in Korea, the US or Hong Kong) was executed in 2011 in order to tap Japan’s large and stable domestic retail investor base. The IPO was Japan’s largest of 2011.

Rumors have surfaced this week that Nexon is now preparing a bid to buy out Electronic Arts, its former suitor. It is a delicious twist of fate, as the young padawan has become the master and the old men of the game universe have failed to keep up with the rapidly changing times.

Jay Kim’s detractors call him a boorish, selfish person who discards his former game developers and partners like so many used-up prepaid cards. In a conservative culture such as Korea's where upholding personal loyalties and relationships are considered de rigueur signs of good manners, his personal style is often frowned upon. However, I don’t think that Jay Kim much thinks what others care about him. If he did, he would not have risen out of the conformist masses so decisively to lay claim to such a lofty perch on top of Korea’s business community. He would not have set such a remarkable benchmark for entrepreneur success. And he would not have been able to have such a resounding impact on an industry which has become one of Korea’s best exports. In a word, Jay Kim has been a MetaMMORPGhosis. 

Details Here