"We don't want to just replicate successful games": Behind Krafton's acquisition of Tango Gameworks

South Korean publisher Krafton became the unlikely saviour of Japanese developer Tango Gameworks in August, following Microsoft's sudden decision to shutter the studio a few months earlier.

The integration of Tango Gameworks includes the acquisition of breakout hit Hi-Fi Rush, a BAFTA-winning rhythm action game that reached three million players. In an industry where layoffs and closures can sometimes feel like a daily occurrence, it's rare to see a studio brought back from the dead, and even rarer to see the same employees re-hired.

Tango Gameworks joins Krafton at a time when the company has a dozen other studios under its belt, including PUBG Studios, Bluehole Studio, RisingWings, Striking Distance Studios, Dreamotion, Unknown Worlds, 5minlab, Neon Giant, Krafton Montreal Studio, Vector North, Relu Games, and Flyway Games. And more investment is seemingly on the way.

That's according to Krafton head of corporate development Maria Park, who spoke to GamesIndustry.biz a couple of weeks after the announcement. As PUBG helped the battle royale genre break into the mainstream, Park explains how Krafton is diversifying its portfolio and not looking to carbon copy what's out there, sharing that in the last quarter alone, it's met 200 to 300 studios as part of its quest to invest in new developers.

The full conversation delves into how Krafton arrived at the purchase of Tango, the company's plans to expand into the Japanese market as well as the future of Hi-Fi Rush and whether a studio of its size is sustainable in today's volatile market.

The interview can be read below. Please note it has been edited for length and clarity.

What led Krafton to the acquisition of Tango Gameworks?

When we heard that Tango Gameworks was facing shutdown, our team immediately flew over to Tokyo. We recognised that Tango has this rich history of innovation and creativity, and the rarity of being a relatively small studio with a strong fandom. Initially, we weren't sure about whether their legacy of craftsmanship and creativity could continue – especially after the departure of founder Shinji Mikami. But our visit dispelled these worries…

It was so impressive to find that they're passionately working on their projects in such a calm manner. Almost everyone was in the office and they were showing around the projects they were working on. It was clear from their commitment and the quality of their work that Tango wasn't just built by one legendary developer but was a product of the combined efforts and talents of the entire team. So the collective spirit is what we believe will carry Tango forward. I'm very pleased to say that most of these talented individuals have joined Krafton as of August.

Just to pick up on that, it's been reported that approximately 50 out of 100 Tango employees will move over to Krafton – is that correct?

More than 50. When we started talking, there were about 90; among them, a few had already found new jobs. There's going to be around 70 to 80 joining us. We're also going to backfill some of the positions that are immediately in need. So the studio total will probably add up to around 90 to 100 towards the end of the year or the beginning of the next.

Given the closures we've seen around the industry in the past two years, why is it important, do you think, to salvage/rescue these teams and studios where possible?

Our strategic goal, especially [when] investing, is to foster innovation and share the larger successes. We aim to continuously innovate while supporting the broader game development community. Our key pillars are innovation, creativity, and scale-up. We've been primarily focusing on finding unique and innovative gameplay – this is our number one priority.

When we look at Tango, all the games they've released were unique in their own way. Their philosophy and craftsmanship have aligned with what we pursue. We had big fans of Hi-Fi Rush and other titles, and I knew they were working on Hi-Fi Rush 2 when we started talking. We thought we could carry on that legacy and offer more creative ways to keep the game updated.

Also, the opportunity to take over the IP from Microsoft. It's very unusual for them to sell the IP even in case of a studio shutdown. We spoke with Phil Spencer directly and we have their direct support. He has been incredibly accommodating to the needs of the Tango team. So securing the rights to this IP, we should be able to continue this successful series but also explore potential expansions and new creative directions.

Lastly, we have been looking into the Japanese market quite seriously since last year. It was hard to find small to medium-sized studios who are in pursuit of their own titles. A lot of them were work-for-hire studios. This was one of the rare opportunities.

"We have been looking into the Japanese market quite seriously since last year. It was hard to find small to medium-sized studios who are in pursuit of their own titles. This was one of the rare opportunities"

This is Krafton's "first significant investment in the Japanese video game market." Is the company hoping to expand further into the country?

So this will be our beginning. We're going to be cautious. They don't have to come from a AAA background. When we invest, we look for talented passionate teams with a strong creative vision and the potential to create unique gameplay experiences. There are some cases in Japan [where] we are in discussions, in addition to Tango.

We'll continue to pursue opportunities in the Japanese market for sure, but it's not like we'll be actively investing in [a high] number of studios over a short period. We'll be careful and also make sure that we find the right partners in the region. But yes, there'll be more to come for sure.

Is there anything you can tell me about the terms of the acquisition?

In terms of team integration, it's not a typical acquisition case. They've already shut down the studio. So we hired back everybody. It was more like a migration to Krafton from ZeniMax. So there wasn't an upfront acquisition cost in regards to the team transfer. But when it comes to IP acquisition, we are still in discussions with Microsoft.

Do you have an expected timeline when you're expecting the acquisition to be complete?

Most of the team has been onboarded as of early August, so we're good to go. In terms of the IP acquisition, Microsoft has informed us that they should be able to share the term sheet by next week. [Editor's note: The interview was conducted in the last week of August] We've been talking to them at least once or twice a week, so it's in progress.

Is Krafton looking at further acquisitions in Japan or other areas?

I wouldn't say we're only looking at Japan. We primarily focus on finding unique and innovative gameplay. It doesn't necessarily mean that the game has to be a new genre but it has to have core elements that are unique from existing gameplay experiences. We don't want to just replicate successful games.

Krafton believes that creativity is something that cannot be easily taught or trained. So this is something that we need to discover. That's why we're actively investing in other studios as well as we do our best internally to come up with new exciting projects. With this in mind, we are actively investing in new studios. Last quarter alone our corporate development team met 200 to 300 studios.

How much did Tango's latest release, Hi-Fi Rush, factor into the overall purchase?

That's one of the big accomplishments. I think that gave us confidence because the studio is not relying on the creativity of just Shinji Makami. New creatives are coming from younger developers and they were very successful in delivering something so unique.

We could tell that this is a studio capable of creating the full spectrum of different experiences. They have a couple of new projects in production, we looked at them, [and] they were very different from the previous titles.

Would you like to bring Hi-Fi Rush to further platforms, such as Nintendo Switch?

That's what the team really wants. I think [they] want to work on Hi-Fi Rush DLC [too] because they are dedicated to ensuring that Hi-Fi Rush 2 upholds high standards of quality. They don't want to rush the sequel but take the necessary time to refine the game and come up with a different experience.

You've just touched on that a little bit, but as part of the acquisition announcement, Krafton said it would continue developing the Hi-Fi Rush IP and explore future projects. Can you expand on this?

Yes, the team was working on Hi-Fi Rush 2 when we first met them. They want to make sure [it] surpasses the expectations of the existing fans. For instance, some of the feedback about Hi-Fi Rush was that some people felt it was [just] going through factories, so now they want to give a more open world type of experience. I don't think it's going to be completely open world, but a more dynamic environment [that] you play in. Also, having more advanced technology applied to the rhythm action so that it feels more synchronised.

Is the idea just to let the studio continue working on Hi-Fi Rush 2 under Krafton?

I think the build that we looked at was about six months old when we went to meet with them. At the moment, because the IP acquisition is in progress, it's been on hold because all the related assets and tools will be transferred to Krafton from Microsoft. But yes, we'll continue working on it for sure. Like I said, we won't really rush to the market just to deliver a sequel. We want to make sure that the sequel is actually at a quality level that surpasses the community's expectations.

What about Tango's other projects? Why did Krafton feel these games – Ghostwire: Tokyo, The Evil Within – help to justify the studio's acquisition?

We primarily focused on Hi-Fi Rush. It was more of a strategic decision. It would've been great to get all the IPs but the team was working on Hi-Fi Rush 2 and the others were working on anniversary content for The Evil Within. Knowing Microsoft's direction with the IP sale, we didn't want to push too far with this acquisition, so we primarily had Hi-Fi Rush under discussion because it would complicate the process and elongate the entire negotiation process.

"The collective spirit is what we believe will carry Tango forward"

So it's not all the IP?

No, just Hi-Fi Rush.

So are Ghostwire and The Evil Within staying with Microsoft?

Yes.

While all the console releases from Tango (minus The Evil Within 2) have been somewhat successful, none of them have managed to hit enormous sales milestones (ie. over five million copies sold). Do you think that is enough to sustain a game studio in today's market?

We've done the simulation and they should be self-sustainable. When we decided to integrate Tango into Krafton, we weren't expecting a huge commercial hit from the studio. We have huge respect for the studio's capacity to create new IPs. Krafton's mission is to scale up the creative.

Krafton has experience in making multiplayer and service-type games alongside expanding to different platforms. Tango primarily [makes] narrative-driven, single-player action-oriented games. With our expertise, we're hoping that we can bring Tango to larger markets or different platforms.

In one of the new projects under development, the team told us that they wanted to make a co-op online game. But they don't have experience making an online multiplayer game. [Krafton's] live-service expertise [can] help bring it to the next level. We're not expecting the team to have massive success on their own, but we're really going to help and leverage our resources to grow together.

What will success for Tango look like under Krafton?

We expect Tango to focus on developing unique and innovative games as they've done and keep up with that creativity and craftsmanship while continuing to create games that players can be proud of and thoroughly enjoy.

We're not going to be hands-on and tell them how it should be done. This team does best if they are given creative autonomy. Going forward we are going to give them an environment where they feel motivated and can continue making something fun and unique.