Visit Joy City, a first-generation game company
CEO Cho Sung-won, interview after 3 years
“Disney game launch in the first half of next year
Developing 4X game with famous Japanese company
Freestyle’s next work will also be released
Challenging record-breaking performance with three new works
“We will also strive to enter the top 10 games in the United States.”
The new building is worth 100 billion won… It’s the same market cap
Seeing is worth seeing. It is better to see something once than to hear it a hundred times. In order to alleviate the information imbalance amidst the flood of fake news, a ‘fighter ant’ with 18 years and 4 months of stock investment experience directly visits listed companies. Review the company’s business status, meet with management, and resolve investors’ questions. ‘Battle ants’ is a word he usually uses to describe a situation in which he invests in stocks to win every time, based on the idea that ‘stocks are a battlefield.’ I am well aware that the pain of loss when investing in stocks is greater than that of anyone else, so I am writing this article today from the perspective of an individual investor.
“Three new games will be released next year. “As we target overseas users, we will enter the ‘US Top 10 Games’ and stand tall as a global game company.”
Jo Seong-won, CEO of Joy City (born in 1969), announced the following about next year’s business plan on the 29th of last month. He gave a media interview for the first time in about three years to improve the undervalued corporate value. It was held in a new building in Bundang, and all Joy City employees (about 300 people) will work there in December to improve game development capabilities and management efficiency. It is located at 25, Hwangsaeul-ro 258beon-gil, Bundang-gu, Seongnam-si, Gyeonggi-do (Joy City Tower, 5th floor underground ~ 12th floor above ground / total floor area of 4,814 pyeong), and the real estate value alone is said to be 100 billion won. One new building is equivalent to the market capitalization (105.4 billion won per day).
The new building is worth KRW 100 billion, equivalent to the market capitalization… Basketball game ‘Freestyle’ accumulated sales of KRW 700 billion
Joy City is a first-generation gaming company established in 1994 as a game software developer and supplier. Its representative work is the online basketball game ‘Freestyle’ (released in December 2004), which has 120 million global users and accumulated sales of 700 billion won. In Korea, where multiplayer online role-playing games (MMORPGs) are popular, he is active as a ‘national sports game representative’. It was listed on KOSDAQ on May 30, 2008.
In addition, the real-time 3D action mobile game ‘Gunship Battle: Total Warfare’ has 150 million cumulative global downloads, and the ‘God of Dice’ strategy simulation war game ‘Pirates of the Caribbean’ was selected as the 2016 Game of the Year on the Facebook and Apple App Stores. : We are targeting the global game market with various mobile games such as ‘Waves of War’.
CEO Seong-won Cho: “Challenge for record-high performance next year with three new works”
CEO Cho aims to achieve the highest performance ever with three new works next year. He said, “In the case of game companies, sales are highly volatile depending on the success of new games, and popularity tends to cool off quickly, but the games we create have an increased number of users over time, prolonging the product life cycle (PLC).” He added, “You can enjoy it for more than 10 years.” “There will be new works coming out,” he said.
The first new game to be released in the first half of next year is the casual war game ‘Disney Realm Breakers’. CEO Cho said, “It was developed by an affiliate and distributed by Joy City, and it was created using the IP (intellectual property rights) of Disney and Pixar.” He added, “It is a battle management game in which you collect and train heroes from Disney and Pixar and compete against each other.” and introduced. In particular, he was confident, “We soft-launched it in Central and South America and Southeast Asia, and the initial response was good, so it looks like sales of hundreds of billions of won are possible.” If the game is a success, Joy City can take a share of the distribution.
The second is ‘Project S’, which is being jointly developed with a famous Japanese company. Neither the release schedule (expected next fall) nor the name have been confirmed, but CEO Cho said, “We have high expectations for making it a large IP that global gamers will know.” In particular, it is being developed as a 4X game, one of the strategy games. 4X is an abbreviation for eXploration, eXpansion, eXploitation, and eXtermination. Last year, the size of the global mobile strategy (including 4X games) game market was approximately $10 billion.
In the case of MMORPGs, you develop one character, cooperate with other guild members in the game, and go to war. 4X games are games where you expand the power of buildings or soldiers in a territory, go to war, and test those strategies. It is a game that is highly preferred by users around the world, including the United States, Japan, Russia, and China.
Thirdly, Freestyle’s next work is coming out. We’ve put a lot of effort into it for three years, and it’s being developed for PC and console platforms and will be released at the end of next year. CEO Cho emphasized, “We are preparing with much better graphics and systems, and we have strengthened the story, so it will be an attractive game.” He added, “It will stand out in the rapidly growing console game market.” This year’s global console game market size is estimated at approximately $51.9 billion, which is reportedly 28% of the entire game market.
He said, “Because it is aimed at the global market and has popularity, sales can jump significantly,” and pledged, “We will exceed the 200 billion won sales recorded in 2021.” According to the Korea Game White Paper (Korea Creative Content Agency), the global game market sales are 239 trillion won and there are about 2.5 billion users. It is known that Korea has a 20 trillion won market, which is about 1/10th of the market, and 35 million people enjoy games.
When asked about the new growth engine, he answered, “I will focus on games.” He emphasized, “As the global game market is growing, we will focus our capabilities even more to become Joy City, which is strong in strategy games, E-sports, and subculture.” They are determined to continue making long-term hit games, such as ‘Pirates of the Caribbean: Tides of War’ with cumulative sales of 200 billion won, ‘Gunship Battle: Total Warfare’ with 120 billion won, and ‘Freestyle’ with 700 billion won.
Nevertheless, the stock price is going downhill due to the lack of new releases. According to the Korea Exchange on the 1st, the stock price fell 91.85% to 1,508 won compared to the previous high (11,850 won on December 29, 2021). At the time, it hit an all-time high due to good performance and a free capital increase, but it is losing interest from individual investors due to delays in the release of new products. If you had invested 100 million won at the previous high point, your balance would have shrunk to 8.15 million won. On the 15th of last month, it hit a 52-week low of 1,300 won.
When asked about measures to stimulate stock prices, CEO Cho said, “I think it is right for game stocks to reward shareholders with performance through growth rather than dividends,” and added, “Like Krafton, which stands out in the global market, we will do our best to increase overseas sales.” I answered. He purchased 52,173 shares of the company’s stock four times between August 6th and 9th. The amount was approximately 100 million won, and it was intended to stabilize the stock price and enhance shareholder value as part of responsible management. At the time, Kang Do-won (Chief Financial Officer) also announced that he had acquired 20,000 shares.
The total number of shares is 69,903,446, and parent company Endrim and one other person are the largest shareholders with a 34.1% stake. Foreign ownership is 1.48%, and distribution volume is around 65%. As of the third quarter, cash assets were 29.6 billion won and investment real estate was 66.2 billion won.
Performance has been stable for 5 years. From sales of 103.1 billion won and operating profit of 8.5 billion won in 2019, sales increased by 45.1% and 197.65%, respectively, in four years to 149.6 billion won and operating profit of 25.3 billion won last year. Joy City is an export game company with an overseas share of 70% (as of last year). Last year, the Freestyle series recorded 48 billion won in sales, 4X/War Simulation recorded 80 billion won, and other sales recorded 21.6 billion won. Due to the high proportion of sales from freestyle and 4X games, the company is diversifying its business portfolio with new games. Shinhan Investment & Securities forecasted sales of 143.5 billion won and operating profit of 10.8 billion won this year.
CEO Cho said, “It is important to create a game that works in the global market. If we enter the top 10 American games, it will not be difficult to achieve a market capitalization of 1 trillion won.” He then emphasized, “We will strive to hit a home run in the barren game market, starting with three new games.” In fact, ‘Freestyle’ and ‘Pirates of the Caribbean: Tides of War’ have established themselves as a stable source of income even after many years. In the future, we are dreaming of creating a global service platform ecosystem and creating a B2B (business-to-business) business with a big data-based decision-making system.
In fact, CEO Cho was far from games. He joined Daewoo’s finance team in 1996 and worked as an assistant manager, but entered the venture boom in 2000 due to the ‘Daewoo incident’. He worked in the investment division of Wilvis in 2000, and moved to the position of CEO of Endors (formerly a gaming company under Nexon) in 2006. But he didn’t just walk the flower path. It is said that in the mid-2000s, they took out apartment mortgage loans to pay their employees’ salaries. He served as head of Nexon Publishing Headquarters in 2011 and as head of Nexon Business Development Center in 2012.
We asked CEO Cho, who has been a CEO for 12 years since April 2013, for life advice. He advised, “If you always have a big goal and work hard to keep up with it, opportunities will come.” He added, “The gap in life between those who live with dreams and those who do not is enormous.” He continued, “Of course, life does not flow smoothly and there are always variables, but only those who prepare in this way can be fortunate enough to reap the fruits of success.”
Lastly, he raised his voice to investors, saying, “I would like to apologize in advance for the decline in the stock price,” and “I will reward you with record-breaking performance through three new works next year.” He then predicted, “If we become a global game company by developing games of various genres and introducing new technologies, our stock price will naturally rise upward.”
Kang Seok-oh, a researcher at Shinhan Investment & Securities, said, “Based on next year’s performance estimate, Joy City’s price-to-earnings ratio (PER) is about 15 times, which is not considered a burdensome multiple compared to conservative estimates for new works.” He added, “Although it is maintaining a surplus, it is necessary to foster AI (artificial intelligence). “With the urban fantasy RPG game ‘Starseed: Asnia Trigger’ (hereinafter referred to as Starseed) failing at the box office, multiple discounts within the industry will continue unless meaningful new releases emerge quickly,” he analyzed. He predicted sales of 154.6 billion won and operating profit of 12.3 billion won next year.
Meanwhile, ‘Starseed’, a character collection RPG (character development game) released last March, was distributed by Com2uS as a pretty girl survival project. Immersion was enhanced with a worldview based on subculture and post-apocalypse, and it was fun to grow dozens of characters realized with high-quality 3D graphics.
Jae-mo Lee, CEO of Growth Research, said in a phone call with a reporter on the 1st, “Cumulative overseas sales in the third quarter of this year are close to 70%,” and added, “The online sports game Freestyle series is generating stable operating profits, so performance stability stands out.” did it However, he advised, “Due to the nature of game stocks, stock prices move due to expectations of new releases, but it is important to note that the release schedules of ‘Disney Realm Breakers’ and ‘Freestyle Football 2’, which were expected to be released this year, have been delayed and investment sentiment in game stocks has frozen.” .
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