Netmarble founder Bang Jun-Hyuk
South Korea’s largest mobile-gaming company, Netmarble, likes to compare its founder, Bang Jun-Hyuk, with Steve Jobs. It’s a tale the Korean press has also taken a liking to. Both men left tech companies they started (for health reasons in Bang’s case) and then those companies nearly tanked. Each was brought back into the fold and engineered a striking revival.
The comparison is debatable but Netmarble’s success is unambiguous. Today Bang sits atop a gaming juggernaut. His company’s Marvel Future Fight, an action-packed role-playing game with superheroes such as Iron Man and Captain America, has been downloaded more than 50 million times since its April 2015 debut and has cracked the top ten in app charts in 118 countries, including the U.S. and U.K. Last year Netmarble ranked No.8 in app sales worldwide, according to App Annie, a firm that tracks the iOS and Google Play markets.
This has the Seoul-based outfit enjoying a 39% surge in revenue for the first 9 months of the year, to $896 million, and a 10% leap in operating profits, to $152 million. Annual revenue for 2015 totaled $949 million and net income soared to $149 million, up 300% from the same time a year ago. In South Korea’s overall online-gaming market, Netmarble is now the second-biggest player, supplanting NCSoft and behind only long-time incumbent Nexon. With his 32% stake in the company, Bang, 47, breaks into the billionaire ranks for the first time, with a current net worth that FORBES ASIA estimates at $1 billion.
One of Netmarble’s most popular games, Marvel Future Fight.
All this appears to be giving Bang, a high school dropout not fluent in English, the confidence to tread into unfamiliar territory. In June he flew to Los Angeles for the annual E3 Gaming Expo, where he explored the latest gaming trends to prep for expanding to the West. He had dinner with Chris DeWolfe, co-founder of MySpace and chief executive of Los Angeles-based mobile-gaming outfit Jam City (formerly SGN Games), which is now majority-owned by Netmarble after a $130 million investment last year.
The Jam City deal appears to be just the beginning of Bang’s ambitions. He’s applied to take his company public on the Korea Stock Exchange early next year. He tells FORBES ASIA that the capital he raises will be used to invest in mobile-gaming companies that cater primarily to the U.S. market, diversifying Netmarble’s portfolio to include genres such as casual and social casino games. The South Korean press estimates that Netmarble could be valued at as high as $8.5 billion; Bang won’t comment on that figure. Netmarble estimates that Bang will retain at least 24% of the company after it lists–down from his current 32%–but declines to comment on how much will be offered to the public when it debuts.
South Korea’s wealthiest gaming entrepreneurs boast degrees in computer science or software engineering from prestigious universities, except for Bang. He’s an outlier who never went to college; instead, he grew up poor in an outlying part of Seoul and never got past the 11th grade. He was turned off by the country’s rigid system of memorizing material for the sake of test scores. [“I dropped out because I] wanted to study more in-depth the things [I] was interested in,” he recalls. He developed an interest in film and started his first business—an online-movie service—in the late ’90s. But the country’s Internet service was primitive and connection speeds were slow, so he was forced to fold the business after just two years. He took away a valuable lesson, however: “Even though it didn’t work out, I learned that owning good content [would] power us in the future.”
Bang shifted his focus to gaming. Online-gaming was beginning to flourish on the heels of a massive government upgrade of South Korea’s Internet infrastructure. Responding to the 1997-98 Asian financial crisis, the government began focusing on information technology to bolster the country’s ailing economy. So with eight employees and $88,000 pooled from investors, he started Netmarble in 2000, catering primarily to women and teenagers with casual games.
Three years later, to finance expansion, he entered into an unusual deal with a film-publishing company called Planus Entertainment. If Netmarble wasn’t able to reap $4.4 million in net profits by the end of the year, Bang would hand over a part of his 49% stake in the company; if it succeeded, Planus would give 30% of the exceeding profits to Netmarble. Bang got to work and quickly applied Planus’ publishing model to his gaming business, taking what was then an unorthodox approach and began handling the marketing, distribution, publicity and other services for games developed by other companies. Netmarble also became one of the pioneers in introducing the free-to-play model, in which transactions to improve the players’ performance—such as buying better weapons–take place during the game. When the year was over, the company had raked in nearly $14 million in net profits. Shortly afterward it bought out Planus – a turning point lauded by the local press as “a shrimp swallows a whale.”
That got the attention of one of South Korea’s largest conglomerates, CJ Group, once part of the sprawling Samsung empire before it split off during the ‘90s. Bang met with CJ Chairman Lee Jay-Hyun in 2004 and agreed to a merger, changing Netmarble’s name to CJ Internet Company. “At first I wasn’t interested [in a deal] but I [realized] it would [provide] a good opportunity to expand the business,” says Bang. “I also thought it could benefit employees.” Indeed it did. “When we moved into one of the best buildings in Korea and changed our name to CJ Internet, a lot of our employees started to get married,” he says in jest.
Bang secured a deal to provide services for South Korea’s hottest shooter game, Nexon’s Sudden Attack. He also made a key move: He entered the nascent mobile market. But such hectic growth came at a price. In 2006 he decided to call it quits, due to unspecified health issues, leaving full control to CJ. “I hardly took any rest… I was really tired and stressed.”
He took a five-year hiatus from gaming and dabbled with stocks as a passive investor. Bang won’t go into the details of those gap years but says the thought of starting another gaming company lingered. He wouldn’t have to look far. “Three years into my recovery, I was actually preparing [to start] a new gaming business but CJ asked me to come back because it was in so much trouble.”
Most of the 32 games that were either published or developed by the company from 2007 through 2011 “did not meet expectations,” according to Netmarble. A CEO with no gaming background was at the helm and the company was slow to adopt new trends. It also lost the rights to publish Nexon’s Sudden Attack, which accounted for a third of its revenue.
Back in charge, Bang shifted the company’s focus to smartphones, moving away from the saturated personal computer market. He saw the rapid adoption of smartphones in the country and thought, “this is going to be a new culture for everyone. It’s going to be more than just a phone.” Today, South Korea’s smartphone penetration rate is at a staggering 88%, the highest in the world, according to Pew Research.
In 2014 China’s largest Internet company, Tencent, paid $500 million for a 28% stake to expand its mobile-entertainment content (it now holds just more than 25% as its third-largest shareholder; CJ subsidiary CJ E&M owns 31%; rival NCSoft holds 10%). Now, with virtually all of his revenue coming from the app market, Bang says mobile is “the only thing on [my] mind right now.”
But competition is mounting. In the app world, where the games category tops the list for worldwide revenue and downloads, maturity rates for mobile games are faster than ever. The estimated average time to maturity for new games dropped 60% last year, compared with only a year earlier–from nearly 50 weeks to just more than 17–according to App Annie. Only three years ago it was 10 times longer. “With a timeframe of roughly four months after launch until downloads start to dry up, fast development cycles and continued innovation are necessary to see success,” says App Annie “As fast as big publishers can release new games, there is a constant stream of new publishers launching games that are becoming hits, creating market fragmentation.”
It’s a hurdle Bang aims to overcome with his listing. “We want to grow into a major player in the market… and make aggressive investments in global companies to [secure] new game developments,” he says. “We want to [go beyond] the success we had in Asia and [take on] the U.S. If you’re successful in the U.S. the influence reaches the entire Western world.”