PUBG creator Krafton shares the future vision & expansion plans ahead of IPO

Krafton Inc., the Korean gaming startup behind superhit mobile game PlayerUnknown’s Battlegrounds (PUBG), announced its aggressive expansion plans and strategy at a press conference ahead of its listing on the domestic stock market KOSPI. On July 26th, Krafton Co., Ltd. CEO Chang-Han Kim, shared the company’s future growth strategy and vision, emphasizing that it is engaged in game development as its main business.

Krafton team also talked about being reborn as a global technology company by entering new businesses such as deep learning and entertainment through active investment. CEO Chang-Han Kim said, “Games are the most powerful media, and we will allow fans to experience various pleasures centered on games. We will present the possibility of expansion, and through listing on the KOSPI, we will further solidify our position as an unrivaled global game company.

Focus on sustainability and scalability of ‘Battleground’, a global mega IP that has succeeded in both East and West

Games are the most powerful media of this era and actively invest in developing new games and securing new IPs.

Expected public offering price range from 400,000 won to 498,000 won, listing early next month after forecasting demand by July 27th of this month.

(LtoR) Krafton Chairman Jang Byung-gyu, CEO Kim Chang-han, and CFO Bae Dong-geun. — (RtoL) Krafton Chairman Jang Byung-gyu, CEO Kim Chang-han, and CFO Bae Dong-geun.

Sustaining the global success of ‘Battlegrounds.’

Krafton’s PUBG, launched in 2017, is one of the world’s best-selling games and is the only game to top the charts in the US and China markets simultaneously. It is the highest-selling PC game ever sold globally, selling more than 75 million copies (including PC and console). In particular, ‘Battleground Mobile’ recorded 1 billion cumulative downloads worldwide, excluding China as of March this year.

It has grown rapidly in India and the Middle East and established itself as a ‘national game.’ In the Indian market, it ranked No. 1 in sales for game apps in 2020, and the cumulative number of downloads has exceeded 270 million. In the Middle East and North Africa region, it ranked first in sales in 15 out of 16 countries, and recorded 250 million downloads, or 50% of the total population. In particular, ‘BATTLEGROUND MOBILE INDIA,’ which Krafton is serving directly in India, is popular. It has surpassed 34 million cumulative users, 16 million daily users, and 2.4 million maximum concurrent users within a week of its launch in early July of this year. Given the potential of emerging markets with a low average age group and large economies, the company’s future sales growth is more promising.

PUBG Universe, new IPs and business

Krafton continues to use PUBG, a powerful global IP, for new games. ‘BATTLEGROUND: NEW STATE,’ which is scheduled to be released within this year, is a mobile game developed by PUBG Studios based on PUBG and has 25 million pre-registrations without any marketing in all regions (based on Google Play) worldwide except for China, India, and Vietnam. It has proven its competitiveness in content bypassing the name. The alpha test was successfully conducted in the US in June, and it drew favorable reviews and great expectations from the alpha test participants. ‘PUBG: NEW STATE’ is expected to become a new level of open-world mobile battle royale game that goes beyond the graphic limitations of existing mobile games.

Krafton introduced ‘PUBG Universe’ as a new strategy for accelerating IP convergence in the content industry. ‘PUBG Universe’ is a project that expands the powerful IP created through games into various entertainment areas and plans to maximize the potential by reproducing the PUBG story with the theme of ‘survival’ through media, platforms, and contents. To this end, they announced that they would recruit world-renowned producer Adi Shankar to carry out the PUBG animation project.

“We are also developing new games that share the PUBG Universe. The next-generation survival horror game ‘The Callisto Protocol’ is scheduled to be released in 2022, including ‘Battleground: NEW STATE,’ which is scheduled to be released this year, and ‘COWBOY,’ an open-world survival game project name,” said CEO Chang-Han Kim as he emphasized that the startup will actively seek out new global mega IPs by utilizing Lee Young-do’s fantasy novel ‘Birds Drinking Tears’ and expanding it to various media along with game production.

In addition, he said that Krafton would focus on deep learning to provide a more enhanced interactive experience by focusing on four technology areas: Language Model,Open Domain Conversation, Voice and Text Conversion, Character Movement Generation.

Krafton Public Offering expectations

The amount of Krafton’s public offering is up to 4.3 trillion won or $3.73 billion (based on the top of the desired offering price). The funds that flowed into the company through the public offering will be mainly used for M&A and investment in the global content and platform market, expanding global business areas, developing original IP and new games, R&D investment to strengthen future technologies such as AI and deep learning.

The total number of public offering shares is 8,654,230, and the desired offering price per share is 400,000 won to 498,000 won ($400-$500). Demand forecasting for investment institutions will be conducted for two weeks from July 14th to July 27th. Based on the final IPO price confirmed through this, subscriptions will be made for general investors on the 2nd and 3rd of next month, and it is scheduled to be listed on the KOSPI market in early August. Mirae Asset Securities is the lead organizer of the listing, and the co-organizers are Credit Suisse Seoul Branch, NH Investment & Securities, Citigroup Global Market Securities, and JP Morgan, and Samsung Securities will participate as the underwriter.

Krafton’s consolidated performance last year was 1.67 trillion won or $1.4 billion in sales, 773.9 billion won or $670 million in operating profit, and 556.3 billion won or $481 million in net profit. Compared to the same period last year, sales increased by 53.6%, while operating profit and net profit increased by 115.4% and 99.5% respectively. The consolidated performance in the first quarter of this year was recorded as 461 billion won in sales, 227.2 billion won or $196 million in operating profit and 194 billion won or $168 million in net profit, and the operating profit margin was 49.3%, showing a high level of profitability in the same industry. In particular, more than 94% (439 billion won or $380 million) of the company’s sales are generated abroad, solidifying its position as a global company.

Also Read,