Nexon's Daniel Kim

Nexon has organically grown and also we've grown through mergers and acquisitions over the last five or six years, we've acquired a lot of companies. We're looking at investing in two companies in the West as well, we've just acquired BoomBang in Spain - it's doing virtual worlds online that are doing really well. Through our Nexon Initiative programme we found a company in Poland that's a really fascinating development studio that has some great ideas.

There're a lot of different levels in which we're engaging with developers in Europe, the US and other parts of the world. I think we've really focused on Korea as our development hub just because that market is so competitive and to be honest, further developed than any other part of the world. We have the most amount of technology, the most amount of experience in terms of operating these types of experiences. Games that engage people for a long time and really drive community and connection.

That's been changing with a lot of interest from companies wanting to work with us and develop these micro-transaction game services. It's been exciting to get that reaction but we've been pretty selective about who we choose to work with because as much as there's a lot of enthusiasm about this type of game development, there hasn't been a lot of companies that have actually done it successfully.

Experience and willingness to learn very quickly are important to us, but we're certainly open to a lot of either investment or acquisition with many other companies that are all over the place. There's constant deal discussions going on but we're very prudent about making commitments to long-term partnerships.

The types of companies and the resources that we're looking for might not be in direct competition to the ones that are important to Zynga, but development resources are development resources. The market certainly has been going through a bit of inflation in the recent months and it's a healthy thing for the game industry so far.

Again, we're not looking for a short-term flip on any investments or acquisitions, we're looking for long-term partnerships, in the same way we would develop a long term partnership with our users. That's the mantra and the way we operate. We're careful to make sure there's a really good cultural fit.

I don't really see that as a big hurdle for us because we also have something very unique to offer - 16 years of concentrating on this market, this genre, this business that companies are excited to absorb and learn from. We believe these new companies will also bring some fresh ideas to the table also, and we're excited about working with this new talent all over the world.

Certainly, we know some companies are very profitable and doing well. Others may not be up to their valuation. Time will tell. Especially on the social side, it's a newly emerging market and people haven't quite figured it out. There's a little bit of hype going on.

But certainly, the idea of these companies getting great valuation is testament to the idea of micro-transactions as the dominant business model that everybody believes is going to be the way of the future in terms of how games are serviced. We've seen that happen in Asia as we switched over from subs to micro-transactions, the 30 games that we publish and operate around the world are based on the same business model.

And we've successfully transitioned the design of the games to fit the business model really well. We have over ten years of experience and ten years of mistakes - trial and error and figuring out what works in the market and what doesn't. What's common about the type of experience that people are looking and willing to pay for, what's not going to ruin the experience for the majority of people who aren't going to pay to play the games. All those things combined have put us in a position that allows us to take advantage of new markets and new platforms that are emerging in different parts of the worlds. As far as valuations are concerned, time will tell.

Yes. Although nine out of ten games in Asia are probably based on micro-transactions, Blizzard has had phenomenal success with a subscription model. It's not necessarily this or that, both can co-exist. It's about which model and what kind of experience are people looking for? That determines how you design the game.

For us it's a long tail kind of game where we have a couple of years of time once people start playing a game for us to convince them to see value in the cash items side. It's really a hard business because we have to earn it, we can't fool them into spending money up front. We're not like the movie business were they sell in the first month and then pull it out the theatres. That sounds very familiar to the console business model.

We're like a TV show that has to live on and on, like The Simpsons or CSI. The worlds first graphic MMO that we developed, called Kingdom of the Winds, is still in service after 15 years. It still maintains a very healthy set of numbers in terms of revenues and engagement. We really see these games more as constantly evolving series of experiences.