[Why&Next] Wemade to Be Acquired by Chinese Capital... Growing Concerns Over the Future of K-Games

Park Kwanho Sells Entire Stake to Chinese Buyer
Deal Valued at 920 Billion Won; Spotlight on "Mir" IP
Lack of Government Support Raises Concerns for K-Game Competitiveness

Wemade, a first-generation game developer in South Korea, is set to be acquired by Chinese capital. The acquiring entity is the investment platform Neopulse, which is 100% owned by Shensong Investment, a company with close ties to Alibaba. There are growing concerns that as Chinese capital gains more influence, the competitiveness of the domestic gaming industry will weaken. Many believe that it will be difficult for local companies to survive independently, as not only intellectual property (IP) but also development and operational know-how are being transferred to foreign investors.

According to the Financial Supervisory Service’s electronic disclosure system on July 1, Park Kwanho, the founder and chairman of the board at Wemade, has agreed to sell his entire stake (13,350,738 shares, representing a 39.33% ownership) for 920 billion won. Wemade was founded in 2000 by Park after he left Actoz Soft, where he was the lead developer for “The Legend of Mir.” The sale price per share is approximately 68,910 won, reflecting a management premium on top of the cash-generating power of Wemade’s flagship IP, “The Legend of Mir,” and the potential for new game development incorporating artificial intelligence (AI).

In a letter to employees, Chairman Park stated, “The era when the future of the company could be envisioned solely within the Korean market is over. The Mir IP is generating enormous value in China, and another major market—North America and Europe—is also waiting for us. We needed partners and resources to fully convert these two pillars into our own growth.”

The domestic game industry views Chairman Park’s stake sale as a loss from the perspective of the industry’s development. “The Legend of Mir” is distributed in China under the name “Hot-Blooded Legend” and is reported to generate annual revenue of as much as 4 trillion won. Although there was a legal dispute over unpaid royalties from China, the Supreme Court ruled at the end of last year that profits should be divided 80% to Wemade and 20% to Actoz Soft, and the settlement has been finalized. Earlier this year, the Chinese game company Kingnet also paid a settlement of 43 billion won. The news of the sale comes after a system was established to legally collect revenues from China, making the disappointment in the market even greater.

There is a high likelihood that Wemade will scale back its blockchain and play-to-earn (P2E) business. This is because the Chinese government has banned virtual asset trading and mining. Since Alibaba must also be wary of these regulations, it is highly likely that Wemade will be maintained as a “The Legend of Mir” IP management and AI game development company. Alternatively, only the blockchain technology could remain, and the business could be operated as a “consortium blockchain,” a form permitted by the Chinese government. A consortium blockchain is a blockchain network operated only by pre-approved institutions as nodes (servers). In fact, Wemade has already adapted to these regulations by launching Chinese versions of “Mir 4” and “Mir M” without integrating the Wemix coin blockchain system.

This is not the first time the management rights of a major listed Korean game company have been taken over by Chinese capital. Actoz Soft, also a homegrown game developer, was sold to China’s Shanda Games (now Shengqu Games) in 2004. In addition, Tencent has established significant influence as a major shareholder in several Korean game companies. As of the end of last year, it held stakes of 34.48% in Shift Up, 15.02% in Krafton, and 17.52% in Netmarble.

Industry insiders have pointed out that lack of government support has played a role. While authorities have announced plans to foster gaming as a national strategic industry—bringing together industry leaders and including them in overseas delegations—regulations such as production cost tax credits and the flexible operation of the 52-hour workweek, which the industry has requested, have yet to be addressed. One game company official commented, “As a first-generation founder who has built the company since the early days of mobile gaming in 2000, Park must have agonized over the decision to step down. This reflects the harsh reality that survival is increasingly difficult in the Korean gaming industry.”

This content was produced with the assistance of AI translation services.