Ncsoft Case Analysis

NCsoft case write-up

Table of Contents

Executive Summary 3

Case Overview 4

Case Questions 6

Case Summary 17

Executive Summary

Founded in March 2007, NCsoft started as a systems integration company pivoting to an online game business due to fierce competition in the IT industry. NCsoft quickly became a major player in the online gaming business with its products focused towards the behavior and preferences of its local users and the fact that players could connect online from anywhere, anytime. Various obstacles like maintaining its top position in the gaming industry led NCsoft to expand to previously uninhabited markets by joint ventures and acquisitions. The other major obstacle NCsoft had to face was the threat of substitution by any other entertainment activity by creating games which showcased the human touch element appealing to the users. Finally, NCsoft had to continuously innovate its product offering portfolio to the preferences of an ‘in need to grow’ customer base. In addition, NCsoft had to deal with the negative prejudice surrounding the gaming industry via a set of targeted social and cultural activities. Going forward, NCsoft needs to further its globalization strategy by evaluating a cost-benefit analysis including market size, growth potential, red tape hurdles in setting up a local business, and most importantly internet penetration.

Case Overview

NCsoft was immensely successful in capturing a majority of the Korean market through its most popular game “Lineage” at first, but had to diversify its global strategy by diversifying its product portfolio on a regular basis. Lineage fist became available to users in September 1998, and the number of simultaneously connect users grew to 300,000 by December 2001. Two years after Lineage, NCsoft was listed on the KOSDAQ, and with the capital raised started expanding overseas.

The case suggests that in the presence of a declining PC/Arcade games industry, NCsoft was able to tap in to customers with its real life depicting gameplays. But this boon also served as a bane for NCsoft because it had to develop a global expansionary strategy through an aggressive acquisition approach and innovate using a self-developing algorithm to match the needs of its users. In 1998, they took over I-net’s department focused on development which formed the backbone of their first game Lineage. Internationally, NCsoft saw Taiwan as a gateway to China in addition to the Japanese and American gaming market. This was an opportunity NCsoft leveraged to learn about the IP rights in international markets. In 2002, 72% of its overall revenue was from