Korea company sprinkles $130 million on SoCal’s “Cookie Jam” maker, SGN
Using $28 million in investment, former Myspace co-founder Chris DeWolfe has put together a successful little game company in Culver City with 200 employees and 500 million downloads of several casual-gaming hits such as “Cookie Jam” and “Book of Life.”
But DeWolfe wants SGN counted among the five biggest mobile gaming companies in the world. Now, he has $130 million in the bank to go on an expansion binge.
The big investment, announced Thursday, comes from South Korean game publisher Netmarble Games Corp.
“They have five of the top 10 games in Korea. They are a major force to be reckoned with, and we hope to take their learnings and apply them,” SGN Chief Executive DeWolfe said of Netmarble, which itself received more than $500 million in funding last year from Chinese gaming giant Tencent.
Around the world, mobile game developers seeing domestic success are now aiming to match it abroad. It has been neither easy nor cheap. But U.S. companies have continued to get capital from Asian companies, which benefit from bigger populations and thus more players and more revenue. Kabam, Glu Mobile and several other U.S. mobile game companies have accepted similar investments from Asia.
Netmarble and SGN will teach others how to customize games for their respective regions. That could include suggestions for design tweaks, help getting into local app stores, cross-promotion and introductions to marketing or licensing deals.
Even if the Western ambitions don’t pan out for Netmarble, as SGN’s largest shareholder the company is sure to enjoy the spoils of any SGN success in the colossal markets of South Korea, Japan and China.
“This is by no means a slam dunk, but the partnership gives the best chance of increasing our penetration into Asia,” DeWolfe said.
SGN also expects to spend on new offices and international marketing, especially in Asia. The company already has bases in San Francisco, San Diego and Buenos Aires.
DeWolfe wants to acquire small studios in what’s become a buyer’s market too. Gaming investments sunk 48% this year through June compared to last year’s first half, so for bigger companies with “strong [games], cashflows and balance sheets, it doesn’t get much better than this,” consulting firm Digi-Capital said this month.
SGN projects $280 million in sales this year and expects a profit before accounting for taxes and interest, DeWolfe said. If the company can string together consistent earnings over the next couple of years, SGN would become a good candidate to go public, he said.
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