Sat, May 24, 2003 page11

• Webzen shares boosted by Internet games

  MAD ABOUT `MU' An estimated 3.3 million people are devoted to the South Korean firm's online role-playing fantasy game -- and that's why investors love the company

  • BLOOMBERG
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  Shares in Webzen Inc, the maker of a popular monster-slaying Internet fantasy game, more than doubled in their trading debut as investors bet South Korean companies will take advantage of the popularity of online games.

  The shares rose to 71,600 won on the Kosdaq over-the-counter market at 12:23pm, from an offer price of 32,000 won. The first-time share offer drew 1,435 times more subscribers than stock available.

  The debut highlights the success of South Korea's online game industry, which won a 54 percent share of the US$533 million in subscriptions gamers paid in the Asia-Pacific last year, according to researcher International Data Corp.

  An estimated 3.3 million devotees of Webzen's "Mu" online role-playing fantasy game also explain why investors couldn't get enough of the shares.

  "This is probably the most addictive computer game I've ever played," said architect Baek Dong-ho, 32, who says he spends all his leisure time playing.

  "It makes you forget all your worries," he said.

  Webzen, whose initial public offering raised 4.6 billion won (US$3.8 million), attracted the biggest share subscription since the 2000 initial public offering of NCsoft Corp, South Korea's biggest online game company.

  NCsoft shares trade at 134,500 won, almost double their 70,000 won offer price in July 2000. They reached a record 252,000 won in April last year.

  Forecast Webzen's shares were forecast to rise up to 131,000 won, according to six analysts surveyed by Bloomberg News. The Kosdaq index is the third-worst performer this year of the world's biggest 62 indexes, according to the analysts.

  "Mu," South Korea's first three-dimensional fantasy game played over the Internet, is the three-year-old company's sole product. Players pay a 27,500 won (US$23) monthly fee to become dark knights, fairies, sorcerers or gladiators and hunt monsters in the continent of Mu.

  The game is challenging NCsoft's two-dimensional medieval fantasy "Lineage," South Korea's most popular online role-playing game.

  Webzen and NCsoft have both benefited from the rise in popularity of online gaming in South Korea since 1997, aided by the spread of high-speed Internet connections and cyber cafes.

  South Korea boasts the highest per capital use of high-speed, or broadband, Internet connections.

  "If `Lineage's' Shinhan star is fading, `Mu' is the rising sun," said Park Jun-kyun, an analyst at Good Morning Shinhan Securities Co.

  Park expects Webzen's shares to rise to 100,000 won, reflecting its promising earnings prospects.

  Webzen is run by a 32-year-old high school graduate, CEO Kim Nam-ju, and two partners in their 20s.

  "I've never dreamed of being famous or rich," Kim said, who owns 10 percent of Webzen. "All this attention is too much, but it makes me feel more responsible about making Webzen a leading game company in the world.

  Webzen's net income more than tripled to 7.7 billion won in the first three months of this year as it attracted more Mu subscribers. Operating profit more than doubled to 8.9 billion won and sales almost tripled 13 billion won.

  The company is also selling its game overseas and has signed licenses with Insrea in Taiwan and The 9.com in China. The company had 250,000 players in China last month and 200,000 in Taiwan in January. At home, it has 3.3 million subscribers with as many as 500,000 playing at the same time.

  "Webzen's `Mu' is enjoying a good response in Taiwan and China and that will help the company's profit," said Kim Myung Chan, an analyst at SK Securities Co, who expects the company's shares to rise to as much as 90,000 won.

  Besides China and Taiwan, Webzen is eyeing Thailand. It signed a preliminary agreement with New Age in Thailand to provide Mu. Kim expects about US$3 million in royalty revenue over two years once the companies sign a final contract.

  Still, Webzen faces intensifying competition from rivals.

  NCsoft and other game companies will release their own three-dimensional games at home and abroad in the third quarter.

  "Webzen has only one product and it needs to develop new revenue sources," said Hwang Seung-taek, an analyst at Hyundai Securities Co.

  "The market for three-dimensional games is intensifying by the day," Hwang said.

  Song Sun-jae, an analyst at Sejong Securities Co, said the company's growth may be limited from the fourth quarter because of its plan to introduce a new product only in early 2005.
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