NCsoft Corporation Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

NCSOFT CORPORATION

Background:

NCsoft began its operations as a systems Integrator in 1997. Later on, the company took a department from I-net in 1998 and started developing Lineage that is known to be Korea’s first full online role-playing game. Gradually, the main focus of the company changed from systems integration business to online gaming business. After some time, the main business of the company becomes entirely transformed into a full game company. The CEO and the founder of the company are Taek-Jin Kim with a background of the developer. Before NCsoft, Kim worked at Hyundai Electronics and worked in research and development at the Hyundai electronic research center in Boston. The gaming industry has been classified into five major categories according to the hardware platform on which the game is played. These include arcade games, PC games, video games, mobile games and online games.

Introduction:

By the numbers shown in 2006, NCsoft has become Korea’s largest online gaming company. The company has a worldwide game membership of more than 60 million individuals. In addition to that, the company has 1600 staff members in Korea. It has five overseas incorporated companies and seven overseas companies' branches. By the end of 2006, profits of the company was found to be KRW 339 billion along with an aggregate value of listed stocks at KRW 1.1 trillion. Taek-Jin Kim founded the company in 1997.

Issues Identification:

It is a stated fact that NCsoft has contributed a lot in the Korean gaming market and encountered with numerous challenges and issues as well. By 2000, the market for personal computer games had declined by more than 30%. In addition to that, the game market for mobile has been declining as well and experienced a lower rate in terms of growth. Along with that, the global gaming industry has gone through with a declining trend in the year 2004. The prime reason that has been identified behind the reverse trend was the market and economic stagnation.

On the other hand, the Korean gaming industry has experienced high growth rates per annum in terms of revenue. By the end of 2006, NCsoft has become successful in achieving approximately 40% of its revenues from the global market. Initially, the company was able to enjoy the profits of being a first mover and a risk taker in the gaming industry. Nevertheless, the company was unable to enjoy profits as being a first mover because of the invention of new and advanced technologies. Along with that, it was a high level of diversification in terms of making a proposal for online gaming and various accounting procedures. As a result of this, the company has left with no other option than fighting in a market and reinvent new approaches to reach a global market to stay competitive.

In addition to that, the company was facing other major challenges and issues as well. People have built negative perception about the online gaming and found it addictive to the children. They further believed that it is also hazardous for the health of individuals as there are many individuals in Korea who have died because of online gaming addiction. These were the reasons that resulted in a negative perception about the online gaming industry. Other than that, the company was encountering with intense competition from the whole gaming world. Newer and advanced technologies have become a major threat to the company. In addition, the company needs to find ways to diversify their products according to the changing needs and demands of the customers from various parts of the world. In order to cope up with all the issues mentioned above, the management of the company needs to devise some strategies and devise appropriate strategies for the future of the company

Analysis:

To cope up with the issues and dilemmas mentioned above, the company needs to go beyond the simple structure of the game development and publishing. The key to that solution was to be found not simply developing a product called a game that people perceived as a mere entertainment, but in creating a new form of entertainment, life and culture that everyone in the world could share, enjoy and understand through the internet.

Reverse impact of globalization:

The period from 2000 to 2007 was considered a major hurdle for the company. After the recognition of lineage worldwide, the company started marketing its product overseas that includes Taiwan, Japan, China and the United States. The company was investing heavily in other parts of the world to acquire global competitiveness. The 2006 report reveals that in 2002, nearly 72% of the company revenue came from the Korean market; however, the figure reduced to 54% by the end of 2006. The decline was the major indicator that the company is concentrating more on the overseas market through its global penetration strategy.....................

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