Bloomberg News

Nexon, Electronic Arts Said to Discuss Game, Not Buyout

May 03, 2012

Nexon Co. (3659), the Tokyo-based pioneer of free-to-play computer games, is in talks to distribute Electronics Arts Inc.’s next “FIFA Online” title in Asia, rather than to buy the U.S. company, three people with knowledge of the matter said.

Electronic Arts, based in Redwood City, California, is considering using Nexon’s online servers and developers in Asia, particularly South Korea, for the game, said one of the people, who sought anonymity because the matter is private. The goal would be to apply Nexon’s expertise in persuading players to spend real money on virtual items such as team jerseys and player-experience points, the person said.

The sides aren’t discussing a merger, according to the people. Electronic Arts (EA:US) surged 6.1 percent on April 26 after Maeil Business in South Korea reported Nexon was seeking to acquire the second-largest U.S. video-game publisher. A partnership for the unannounced FIFA title, Electronic Arts’ most popular sports franchise worldwide, could come as early as June, one of the people said.

Owen Mahoney, chief financial officer for Nexon Global, declined to comment, as did David Tinson, a spokesman for EA Sports.

“We’re extremely pleased with how Korean fans have embraced ‘EA Sports: FIFA Online 2,’” Electronic Arts said in an e-mailed statement.

Nexon, the largest free-to-play game company operating in Korea, would give Electronic Arts a bigger partner in the market. The company hosts millions of players daily and tailors games to different markets and languages, and is working to expand in Japan and China, two countries Electronic Arts has targeted for growth.

Neowiz Deal

In Korea, the game is currently distributed by South Korea’s Neowiz Games Corp. (095660), which signed a deal with Electronic Arts in 2006. The relationship with Neowiz isn’t exclusive, one of the people said. Electronic Arts and its affiliates have a 14.7 percent stake in Neowiz, according to data compiled by Bloomberg.

Electronic Arts fell 0.8 percent to $15.75 at 10:04 a.m. in New York trading (EA:US). The shares have declined 23 percent this year before today. Neowiz added 4.5 percent to 26,900 at the close in Seoul. Japanese markets, where Nexon trades, were closed because of a holiday.

In some markets, Electronic Arts, the maker of “Madden NFL” and “The Sims,” has struggled with “FIFA Online.

The company published an updated version as ‘‘EA Sports: FIFA Online’’ in the U.S. and Europe in 2010, then shut down online play in March 2011 without saying why.

In China, Electronic Arts ended an exclusive agreement with local publisher The 9 Ltd. in late 2010, and shut down the game in the country last year.

Nexon Sales

Nexon, which began business in December 1994 in South Korea, went public on the Tokyo Stock Exchange in December, in a $1.2 billion offering that was the largest of the year in Japan. The company’s 2011 sales were nearly double those of Neowiz.

Nexon gets about 90 percent of sales from games that run on personal computers, and is seeking to expand on tablets and mobile phones. Through December, the company had 80 million active users who spend an average of about $17 a month on virtual goods.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net


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