Case Overview:
NCsoft Corporation was developed by Taek-Jin Kim as a systems integrator in 1997. After some time, the company acquired a division from another Information Technology Company named as I-net. In 1998, it started one of Korea’s first online game known as “Lineage”. The games became famous as Korea’s first role playing game and gained instant popularity. After a while, the company has shifted its focus from integration of systems towards online games. After some years, NCsoft went through a huge transformation process and changed its business entirely from systems integration to online gaming. As of November 2006, NCsoft was Korea’s largest online gaming company with a worldwide game membership of 60 million people, 1600 members in Korea, five overseas incorporated companies, seven overseas company branches and a revenue of KRW 339 billion by the end of 2006. The founder of the company himself was a developer and worked at Hyundai Electronics in the department of research and development. In addition to this, the gaming industry can be categorized into five parts that are video games, arcade games, Pc games, online and mobile games.
The case has described the impact of NCsoft Corporation towards the game industry in Korea. During the development of the company, the online gaming industry was facing various issues and challenges. By 2000, the market for online gaming in Korea was on a declining phase with more than 30%. Along with this, game market for mobile was facing difficulty as well and earning profits and revenues have become much difficult than before. The overall economy in the country was stagnant but still, NCsoft was successful in making slow, but steady growth and the market as well struggled and maintained an annual growth rate of 50%.
After that, the company was successful in earning 43% of its profits outside Korea. In addition to this, the company also enjoyed an advantage of first mover in the gaming industry, with an increase and advancement in technology, diversification and development of new models has been emerged that is forcing NCsoft to rethink about the strategies that was successful once.
SWOT Analysis:
Strengths:
NCsoft is known to be a market leader in the Korean gaming market with a good brand recognition. The basic strength of the company lies under its large user base. In addition to this, the company has expertise in game maintenance and operation. Moreover, the company has smart and intelligent game development team. The company has able to achieve high royalty in comparison with its customers. Moreover, the company has strong proficiency in maintenance capability and game operation. Last but not the least, the company has intelligent and sharp level game development team.
Weaknesses:
The main focus of NCsoft is on MMORPG market and thus the company lacks in terms of product portfolio that is known to be the major weakness of the company. In addition to this, the overall market share of the company in the Korean market is declining more than 30%.
Opportunities:
Despite the fact that the overall market share of the company is on a declining, the company has made enhancement in its developers and labor forces that in turn will help the company in retaining its competitive position in the market. Another opportunity for NCsoft is the global expansion. There is an enormous expansion in the overall online game market on a global scale. In addition to this, another category of games especially the casual games is providing enormous opportunity for growth.
Threats:
One of the major threats NCsoft is facing is the direct and indirect competition from various wired and wireless gaming companies from all over the world. With the increasing trend of globalization, the threat of competition has been intensified as well. Furthermore, there is a very high probability that the efficiency of the company might decrease with respect to the rapid increase in labor.
Case Questions
The case pointed out various issues and disputations that the company was facing in 2007. NCsoft is known to be a leader in online gaming industry in Korea and has a great potential in terms of future growth. However, the company is facing several issues pointed in the case that needs to be resolved to stay competitive. These issues include maintaining position in the market, pursuing.....................
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