S.Korean game producers chase NFTs in real-money boost for players and firms

Com2uS Holdings

25/11/2021 06:00

* Korean game makers embrace NFT trend, bring real money
into play
    * Gaming firms' shares surge as investors bet on bigger
profits
    * Regulators ban NFT games in S.Korea on gambling concerns 

    By Joori Roh
    SEOUL, Nov 25 (Reuters) - South Korea's mobile and online
game producers are luring players with services using
non-fungible tokens (NFTs), jumping on a trend the firms see as
the future of the sector and sparking a sharp rally in their
shares in recent weeks.
    An NFT https://www.reuters.com/technology/what-are-nfts-2021-11-17
 is a digital asset that encompasses everything from images,
videos to text, whose ownership record is tracked on the
blockchain and is usually bought with cryptocurrencies.
    In the gaming world, the various characters, weapons,
vehicles and other items that players make use of to accomplish
their particular tasks can be NFTs. 
    The advantage is that these NFTs can be traded for digital
money, namely cryptocurrencies.
    However, South Korean regulators have banned NFT-applied
games in the country on concerns these new services could fuel
gambling addiction among teens and the very young. For now,
these games are accessible only offshore.
    "It's not the blockchain technology that we are banning," an
official at South Korea's Game Rating And Administration
Committee told Reuters on condition of anonymity as she wasn't
authorised to speak with the media.
    "What we are saying 'no' to is the application of NFT that
can be connected to real assets," the official said.  
    That didn't stop South Korean game maker Wemade Co Ltd
 112040.KQ  from going ahead with the global release of its
NFT-applied game, MIR4, in late August.  
    The game has attracted more than 1.3 million players
overseas, sending the firm's share price skyrocketing more than
600% since the launch. Its market value has also shot by over 11
times to 6.6 trillion won ($5.55 billion) to during the same
period.
    Across the world, the popularity of NFT games is also
catching on rapidly.
    Axie Infinity, an NFT game developed by a Vietnamese unicorn
Sky Mavis, has attracted 1.8 million players worldwide,
generating $33 million in daily transactions as of August,
according to the company.
    In Wemade's MIR4 game, at present, players can only make
money by mining 'Dark Steel' – the main game resource which
helps boost the strength of weapons and characters – that can
eventually be converted into a listed-cryptocurrency WEMIX.
    Trading of items – weapons, outfits and pieces of jewellery
– obtained through gameplay and characters will soon be
available through the company's platform XDRACO https://xdraco.com,
 An Young, the head of Wemade's public relations team, told
Reuters.
    Another NFT-applied game 'Rise of Stars' is set for release
next year, An said.
    WEMIX has been trading in a $17.50 to $21.64 range over the
past 24 hours, compared with $0.21 at the start of the year,
according to CoinMarketCap.
       
    GAME CHANGER?
    Despite the local regulatory hurdle, other South Korean game
developers are also looking to cash in on the NFT boom. 
    Earlier this month, NCSoft Corp  036570.KS  said it is
readying release of a game that includes NFT and blockchain
elements next year. Its shares jumped to the daily limit of 30%
on Nov. 11 when the firm made the announcement. 
    Krafton Inc  259960.KS , the maker of the blockbuster
"PlayerUnknown's Battlegrounds", also soared by as much as 22%
since Nov. 11 after the company said it is reviewing the
integration of NFTs into games.
    KOSDAQ-listed Gamevil Inc  063080.KQ  and its affiliate
Com2uS Corp  078340.KQ  rallied sharply earlier in November.
    Analysts say the NFT trend is a step change for the gaming
industry and is likely to boost their profits. 
    "Winning used to be the main goal of playing games ... but
with the integration of NFT and cryptocurrency, it became more
than just winning - a method to earn money," said Lee Sang-hun,
an analyst at Hi Investment & Securities.
    "That, eventually, would give an opportunity on re-ratings
of valuation for gaming companies, along with an upward curve in
stocks' movement."
    
($1 = 1,189.8000 won)

 (Reporting by Joori Roh, Additional reporting by Phuong Nguyen;
Editing by Vidya Ranganathan & Shri Navaratnam)
 ((joori.roh@thomsonreuters.com; +82 2 6936 1493;))