Interview: NCsoft's TJ Kim builds an online giant [Part One]
The charismatic head of Korean massively multiplayer gaming firm NCsoft discusses his hugely bullish forecast for the global growth of online gaming - which he believes will change the face not only of gaming, but of the Internet.
Tack Jin Kim, the founder, president and CEO of Korean massively multiplayer giant NCsoft, is a surprisingly little-known figure in the videogames industry. Much like that of the South Korean games industry which his company dominates, his startling success story hasn't spread far beyond the borders of the country - at least, not yet.
However, all the signs are that TJ, as he is referred to, will soon be a more commonly heard name in the global industry - as will that of NCsoft itself. With major operations in North America, Europe and across the Asia-Pacific markets, a growing product line with marked success in the West as well as in the huge Asian markets, and an increasing focus on massively multiplayer and online gaming from across the industry, NCsoft is poised to be a major player in a fast-growing market which some predict could eventually eclipse the traditional gaming market in revenues.
While the games industry may not have noticed TJ Kim's achievements with NCsoft until titles like Guild Wars and City of Heroes began riding high in the PC charts, the business community has recognised the success of the firm and its boyish, charismatic CEO for much longer. Business Week named him a "Star of Asia" in the Entrepreneurs category in 2001, and selected him as one of the 25 most influential people in the e-business world; the World Economic Forum made him into one of its 18 "Asian leading members" in 2002, and at the beginning of this year, he was appointed a member of the Forum of Young Global Leaders.
GamesIndustry.biz spoke with TJ Kim in Seoul about the firm's recent success, its global expansion - and its ambitions in what he sees as being one of the biggest growth markets in the world in the coming years.
Here we present the first part of our interview with TJ Kim. Check back on Monday for further insights into the thinking of the man behind the world's most successful online games company, and watch out next week for a number of additional features exploring the astonishingly well-developed South Korean games market - a market which looks set to become the "new Japan" for videogames as online gaming continues to gather pace around the world.
Q: GamesIndustry.biz: Can you tell us a bit about how NCsoft got started, back in 1997?
Tack Jin Kim: Before starting NCsoft in 1997, I had worked in Hyundai Electronics. I worked in Hyundai developing an Internet portal site, at that time - but our team had trouble with continuing the development of the portal site in that company, which is why I created NCsoft, by myself. At the time, I believed that the Internet should be an entertainment network, not an information network. That's why I made NCsoft as an online game company, because I started as a developer on the Internet side and I wanted to make online games, not console or PC games.
Q: Lineage was your first successful product; how did the idea of this game come about?
That idea came from my university days; when I was a schoolboy, I always played the Nethack game. That's a text-based Unix game. I loved that, and my dream was to make a game based on that sort of virtual world - so when I encountered the Internet, I was very excited, because this could be a reality! That's why I created a company to make online games.
Q: The Korean government refers to NCsoft as a role-model for the whole Korean games industry; how do you feel about being labelled as such?
Right, right... A quick story. In 1989, I was head of development on the Korean word processor, called Hangul. That was the most popular word processor at the time - it got 90 per cent market share in Korea. I think that's the origin of venture companies in Korea.
After that, I joined the Internet business, and after that I tried to create a games industry in Korea. That's why [the Government] says such things about NCsoft... But in Korea, there are many young people to devote himself or herself to make his or her dream come true. I think the future of the Korean industry is very bright because of that.
Q: NCsoft has operations around the world - in Asia, North America and in Europe - but more than half of your revenues still come from the Korean market. How do you see the relationship between those territories, in revenue terms, changing in the coming years?
Our target is to make NCsoft into a true global company. As you know, the population of Korea is very small, and the size of the industry is small because of this. That's the main reason for Korean companies to go to a broader market.
When Korean people are educated, from young children, we believe that we should aim for outside Korea, not just inside Korea - so when I made NCsoft, one of my dreams was to make a company for the global market, not just for the Korean market. When I created Lineage, the first thing I did was to move the game into foreign countries - the first foreign country was Taiwan.
At the time, NCsoft was not big. It was a very small company. But even at that, we moved into the USA; Richard and Robert Garriott joined NCsoft about five years ago. We went to the USA, Taiwan and other Asian countries at that time - and right now, we have development offices in several countries. We have three development studios in the USA, four studios in Korea, one studio in Beijing, and we want to set up in other countries, including Europe.
I believe that in three years, NCsoft will have a development studio in every country where we publish our games - and in that studio, the developers will develop online games specially focused on that market. Globally is the only way for NCsoft to survive in this market.
Q: NCsoft publishes the most popular game titles here in South Korea; do you think there's a lot of room for growth for the company here in your home territory, or do you need to focus abroad for that?
I think we should do both. As you know, every year new titles come into this market and some titles get market share - so NCsoft needs to make and create new titles every year. Also, for NCsoft, the foreign market and worldwide market is very important. We do our best to develop both together.
Q: Do you think there's a lot of room to actually grow revenues here in Korea?
Yes, I think so.
Q: When you set up NCsoft in North America, you created a very local company, with a strong emphasis on the importance of regional content; how is your strategy in Europe going to differ from what you did in America?
That's a big question for me! [laughs] Our belief is that the gaming world has no big differences, like the offline world does. Gaming has the same story. I believe that gamers around the world have the same common senses and follow the same trends, enjoying the same kind of titles.
As I understand it, in Europe the most popular games are Japanese games and American games. I believe that gamers around the world have the same experience of games; that's why there is no big difference between the two continents.
Even with Lineage I and Lineage II, we made a fantasy world - a fantasy world that came from the middle European world. We are very accustomed to European culture, and we try to make our understanding of European culture deeper and deeper. We are now looking and trying to find developers in Europe itself. I hope that finally, NCsoft will make games for Europeans in European countries.
Q: Logistically, do you think Europe will be a much more difficult market than the United States?
I'm very proud of our European NCsoft team. They do a great job, and I'm very satisfied with their job, so... Okay! [laughs]
Dirk Metzger, NCsoft Europe: I think the big difference with Europe is that you have different countries that speak different languages - so you have the logistics of localisation. Also, for example in Germany, they really like real-time strategy games... There is a kind of leaning towards certain genres in certain territories. The titles kind-of fluctuate between how they perform in each country, but Europe as a whole, I think, balances that out.
Q: For now, what's the most important region for NCsoft to develop?
I think every country is important to NCsoft. We don't have a special country that we're focusing on today. Every online game player is important to NCsoft. That's why our developers suffer from supporting many languages right now!
NCsoft is now starting to develop Lineage III, and I believe that next month the Lineage III team will go to some important place in Europe to develop their ideas, so that it will be a great product. That's one way for us to develop our games. Lineage III will be developed in Korea, but we are going to other countries to make the world enjoyable for worldwide game players.
Q: A lot of Korean games, to western eyes at least, look very similar - many of them like clones of Lineage. Where do you see the future in terms of content? What's NCsoft's mission in this respect?
When I see Lineage-like products, I think that's, well, honouring NCsoft - something like that! We are pleased to give other developers some impact, some impressions to help make their games better or more fun.
However, online games are changing very dramatically right now. NCsoft started as a company making fantasy online games - but we have launched City of Heroes, as a hero online game, and we are now developing space-themed games, military sci-fi games, FPS online games, things like that... So, NCsoft is developing many genres within online games. This year, we'll also launch some casual games for the more casual online gamers.
As for the other companies in online gaming, if they make a bigger variety of styles of games, that's very welcome.
Q: At the moment, your business is entirely focused on the PC platform - are you going to expand onto mobile devices, handhelds and home consoles in the near future?
Yes, I think so. That's a very big question for NCsoft. We believe that mobile Internet will be the next wave for the Internet, even in the games industry. We want to find the right way to survive in the mobile Internet environment - that's the main research topic for us at the moment.
We also know that the console market is much, much bigger than the PC market, from a worldwide point of view - so we'll try to move into the console market. But at this time, I can't say when, or what titles, are ready right now.
Q: Are you actively developing for consoles at the moment, or still just researching the field?
There's active development going on, right now.
Q: Xbox Live is the most developed console online service - are you talking to Microsoft about putting your content on that service?
At this time, it's very hard for me to answer that question. NCsoft keeps talking with Microsoft and Sony about getting into the console market.
However, my personal belief is that the PC is superior to consoles, because the technology is always being enhanced. When the console comes into the market, for three or four years there is no technical advance. That's a big problem.
I think competition is improved by gaming. As you know, people don't need faster CPUs for using a word processor or a spreadsheet program - they want more powerful computers for enjoying games. Gaming helps the IT industry improve for the future.
However, the console has this great weakness to the improvement of other technology. That's a big, big problem. The PC is an open market, an open architecture - so everybody can get into the market. Online itself changes rapidly, so I think PCs have a big strength in adapting to that situation. We're working on consoles too, but NCsoft will be making more great PC online games.
Q: How big do you think NCsoft will become? You closed last year with around 250 million Euro in revenue; the top publisher, EA, had 3 billion Euro, and several others had between 1 billion and 1.5 billion Euro. Do you envisage NCsoft growing to that kind of size?
When I started NCsoft, everybody asked me why I wasn't building NCsoft as an information company, like Microsoft or Yahoo! or Google, something like that; but my belief is that something people really want to have is something entertaining. I believe that the future of the Internet is on the entertaining side, not just on the information side. That's my belief.
The number of game players worldwide right now is very small. The total number of Lineage and Lineage II players, even World of Warcraft players, is not big. It's not large. That's my thinking; and the number of game players on consoles is also not big. That's my thinking right now.
I think that the number of Internet users, before the Web arrived, was not big. It was very small compared to the number after the Web. Like that, in the games industry, I think we are at the front of the arrival of something new, which will make normal people enjoy gaming.
I think in the near future, in three years, a real gaming era will arrive in the online market. So... Who knows? I don't know. [smiles]
Q: Is that five times, ten times the number of players now?
I'm not sure NCsoft can do it, but I believe that gaming companies will be bigger than Google. Far more people want to enjoy the Internet, not just searching it.
Q: Do you think your competitors are properly poised to exploit online? Are the large American companies, for example, not focused enough on it?
I think this year has a very special meaning. I think that from this year, many big games companies will think seriously about changing their position towards online gaming. Many Japanese companies are starting to make online game products right now, and even in America, companies are starting to make big titles. A few years down the line, there will be a big battle in the online gaming market.
Q: As it becomes more popular, should retailers be afraid of online gaming, or is there a business model which will allow them to share in the success of online games?
I think the retail market has a chance to earn money together with online publishers. As you know, when NCsoft publishes online games in America we publish our games using the traditional retailers for distribution of boxed games. We sell our games online too, but our price online is the same as the retailer's.
From the user's point of view, when they buy the online games over the Internet it is very convenient - but they cannot get the box, or any real materials. If the user buys the box in a retail shop, they can get other things. So, I think there's still a way for retailers and online game publishers to work together.
Q: There is a big trend for non-physical distribution, though - could we reach a point in a few years where there is no boxed product in stores?
We still think that there are some things that can not be sold through the online systems - such as souvenirs, statues from the game, or merchandise like that. We think that those kind of things are really important to online games. There will always be something that can be provided to users through offline markets.
Q: One of the markets in which you operate in Asia is China, through NC Sina. It's a huge potential market, but recently the Chinese government has moved to restrict access to massively multiplayer games in that region. Is that a concern for you?
Each country has its own culture, and each country has its own story for that society. I think that kind of thing in China, is up to China itself. But I believe that the Chinese government and the Chinese people want to have more great gaming in their society - that's my belief.
Tack Jin Kim is president and CEO of NCsoft Corporation. Interview by Rob Fahey.
Check back on Monday for the second half of this interview, and watch out for more in-depth coverage of the South Korean market in the coming week.
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