Owen Mahoney joined Nexon in 2010 as CFO, and he oversaw its preliminary public providing in 2011. He has led the corporate as president and CEO since 2014. Beneath his management, Nexon delivered constant development in income and working earnings and probably the most strong pipeline within the firm’s historical past.
So why is he stepping down? Nexon introduced on November 11 that Mahoney will step down in March 2024 and get replaced by Junghun Lee, head of Nexon Korea and a board member.
Regardless of the actual fact Mahoney was a Westerner answerable for an organization with its headquarters in Japan and far of its growth employees in South Korea, Mahoney had a stellar document whereas working the corporate that’s recognized for Dungeon & Fighter, MapleStory, Kart Rider on the PC and up to date cell hits like Dungeon&Fighter Cell, MapleStory M, Blue Archive and Dave the Diver. Throughout the latest quarter, MapleStory grew 46% in comparison with a 12 months in the past.
Beginning subsequent March, Mahoney will stand for re-election to Nexon’s board and function senior advisor. Each Lee and Mahoney will serve of their present roles till the succession is formally accredited. It will likely be attention-grabbing to see the place this firm, valued at $2 billion within the inventory market, goes subsequent.
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Right here’s an edited transcript of our interview.
GamesBeat: Thanks for doing this interview. I used to be stunned to see you made this resolution. I’m wondering why you probably did that presently?
Mahoney: Effectively, personally for me, it’s simply been an excellent run. And an extremely gratifying 10 years as CEO. I joined Nexon 13 years in the past as CFO. After which I turned CEO 10 years in the past. A public firm CEO’s tenure is normally someplace round six years. Ten years is a really very long time to be CEO. And it’s been a really gratifying run from a private perspective. From knowledgeable perspective, the true query about timing and CEO succession is known as a matter about the long run. It’s about longevity of returns for shareholders, which is a company governance matter.
And we’re very critical about long-term returns for our shareholders who’re very critical, due to this fact about company governance. You see a variety of corporations discuss sport about company governance, however when it comes proper right down to it, they actually have a wrestle with the subject of CEO succession. And we’ve seen some nice corporations actually locate this matter, and it’s been not nice for shareholders. From our perspective, we wish to be very critical about this. However you don’t simply get up in the future and say, ‘Okay, we’re going to switch to the following era.’ It’s important to have an excellent bench of unbelievable individuals in place. And so it begins with having an excellent bench.
And I’d, respectfully submit that within the on-line video games enterprise, Nexon has obtained probably the greatest, if not the most effective govt groups on the planet of any on-line video games firm. The second massive part of all of it is about timing. And, the query is, when do you wish to do a generational change? And also you don’t wish to do it if you’re in your heels as an organization. That makes a transition very, very tough. And also you’re doing no favors for the following era. You wish to do it when issues are going nice. In our case, we simply had a completely phenomenal quarter. We gave steering for our seventh consecutive quarter of double-digit, year-over-year development with no main new product launches, main new product launches.
After which we’ve obtained the most effective pipeline in our historical past, arguably probably the greatest pipelines in the entire video games trade. The Finals was simply an unimaginable beta, and we expect it factors to a really, very robust pipeline. After which there’s far more within the pipeline after that coming from Embark and different elements of Nexon studios globally. So we’re in nice form. We’re firing on all cylinders. And so now’s a unbelievable time to be doing it. Once more it’s not that frequent to do it the best way that we’re doing it, however we expect that any firm critical about shareholder returns and company governance would do it, takes this strategy.
GamesBeat: You’re going out whilst you’re up to the mark.
Mahoney: That’s one approach to put it. The opposite approach to put it’s establishing the following era for achievement somewhat than setting them up for challenges. And and once more, should you’re a long-term shareholder, you care rather a lot about these items. And so I feel now could be a really, superb time for transition to a subsequent era, for certain.
GamesBeat: Have you ever additionally discovered what you wish to do subsequent?
Mahoney: The brief reply is, to begin with, I’m staying on the board as administrators. And I’ll proceed to be an advisor for the corporate. General, I feel that the video games trade is an underachiever for what it may very well be. And we’ve confirmed out just a few issues round themes that you just and I’ve talked about for the final decade Dean. We’ve confirmed these issues out at Nexon, and we expect that this quarter is a living proof of proving these out. That’s, in our reside digital world’s longevity, we simply grew MapleStory 46% 12 months over 12 months, globally.
And that’s for a sport, a reside digital world, that’s 20 years previous. That not solely has by no means been performed within the video video games trade. That’s simply astounding. And no one thought that was potential 10 years in the past. No one thought it was potential at any level in historical past, mainly. And it’s larger than ever, and it’s stronger than ever. In order that was level No. 1. Level No. 2 is we simply launched, or we’re within the means of introducing, what we expect is without doubt one of the greatest and most necessary mental properties to hit our trade in a while. And that’s very exhausting to do. And we’re speaking about The Finals right here. However it’s not nearly The Finals in a single sport. It’s about the best way we’ve gone about it.
Which is, we expect that we will deliver nice new triple-A IP into the world with out having to have a thousand individuals within the growth workforce. This isn’t a subject about price financial savings. This can be a matter about getting sport builders nearer to the event course of. For those who’re a sport developer and it’s a must to handle a workforce of 500 individuals or a thousand individuals, you’re not likely a inventive skilled. You’re an HR supervisor. And that’s not what you bought within the video games enterprise for. And so by constructing some software program instruments, and bringing a greater workflow and an accredited set of software program instruments to the fore, you possibly can then get sport builders to be sport builders once more.
And we expect that’s actually necessary. And you may nonetheless have a triple-A sport. So this complete idea of throwing our bodies on the drawback has created a scenario in our trade that basically makes it tough to be inventive and to deliver blue ocean new concepts to the trade, and to prospects. So the scenario within the trade proper now could be that prospects are very understandably sad as a result of they see a variety of the identical product. And it’s not as differentiated. Sport builders are sad as a result of they’re working very exhausting, basically doing manufacturing unit work. And large groups are constructing artwork by hand. That may very well be performed far more effectively and successfully.
After all, buyers who’re our bosses are sad as a result of individuals like me must, within the conventional sport enterprise, give the inexperienced mild 100 million {dollars} to $200 million initiatives, which have enormous downsides. In order that causes individuals to be much more conservative somewhat than exit and seek for the blue ocean. And so from every of these views, it’s unhealthy. And we expect it’s crucial to vary that scenario within the video games trade. So getting again to your query, I feel the trade has rather a lot that it might probably nonetheless develop in lots of new and other ways. And I hope there’s much more that we will do within the trade.
GamesBeat: It’s blended time within the trade, a tricky time when it comes to numerous layoffs. Individuals is likely to be in search of some reassurance right here. Are they seeing the entire image? I’m wondering should you may deal with the large image?
Mahoney: Whenever you discuss individuals, do you imply staff or buyers?
GamesBeat: The information we’ve got is that there’s been a variety of layoffs of individuals and we don’t know what the large image is.
Mahoney: Oh, I see. Effectively, look, it’s too early to declare victory with the best way that we’re doing video games. However I feel it’ll work. And if it does, we’ll show that you are able to do one thing completely different. And also you may bear in mind we made a presentation again in 2019 at an investor convention, and we stated, ‘Look, if current trends continue, triple-A game development is rapidly blowing through a hundred million dollars in development spend for a game, plus call it another hundred million dollars in marketing spend. And it’s going to hit 200, 300, 400 in a short time. And that is one thing that Raph Koster has identified over time. I feel there’s a graphic in his ebook that was about this. That is unsustainable. This development line is totally unsustainable.
And I feel we’re beginning to stumble upon this drawback proper now. If, as a CEO of a publicly held firm, I make a $200 million wager. And I blow it then and I blow it a second time, there might be an extended line of people that name for my head. So what do I do because the CEO of a publicly held firm? I wouldn’t do it. My pure inclination could be to decrease the danger. And what does decrease the danger imply? Which means you make darn certain you’ve obtained lots of people engaged on a sport, that they’re constructing a sport that you just assume is, if it does something, it’s not going to fail miserably. It’s not going to be a stomach flop. And since in any other case you’re going to look dumb.
Shareholders might be calling on your head since you wasted their cash. And it’s their hard-earned cash, and their reputations are on the road as effectively. So what will we get? We basically get the identical sport 12 months after 12 months, and prospects don’t like that. We’ve managed to prove, as an trade — I’m not being crucial of any particular firm or something like that — however as an trade, it’s an issue as a result of we’ve obtained a variety of pink ocean merchandise. And I feel we’re seeing a few of that proper now with Murderers Row finish of 12 months product launches. And when these don’t work out, there are usually layoffs, and the layoffs occur in very giant numbers as a result of these groups are very massive.
And we expect that isn’t a mannequin that’s going to work, and we don’t wish to be in that enterprise. That is going again a number of years in my tenure. We checked out our enterprise and we stated, ‘Look, we have these live virtual world games like MapleStory and Dungeon & Fighter and several others. And they go up and down a little bit, quarter by quarter, but they essentially grow very consistently over a period of years or decades. That gives us enormous stability. We don’t have to interchange previous misplaced income with new income. We will construct on prime of one another. We will construct after which after we do new sport growth, we needs to be going farther out with one thing that’s new and completely different and wacky and unusual, as a result of that’s going to offer us a extra probability of a blue ocean alternative, which means much less competitors.
So our merchandise find yourself wanting much less like different merchandise if we do our jobs effectively. And that has been a core a part of what we do with new growth. The second a part of new growth is somewhat than throwing our bodies on the drawback and making an attempt to get the final pixel on the web page, or the final polygon, we deliver software program to bear. As a substitute of placing individuals on it — hiring extra tons of of individuals — we use software program to resolve a few of these sport growth issues. And because of this, we’ve got a a lot smaller growth workforce. Now the workforce that made The Finals is below 100 individuals. And it’s a triple-A sport.
And that’s a revolution. And if we try this effectively, we’re going to have the ability to take extra bets which might be farther on the market, somewhat than much less. So it doesn’t imply that we’ve got to make use of much less individuals. It simply implies that we’re in a position to put them to more practical use. And by the best way, it’s not about the entire concept of getting price financial savings so you might have a smaller workforce somewhat than a large workforce. You possibly can have a 100 individual workforce as a substitute of a thousand individual workforce. Isn’t that nice? It’s not even actually about that. What it’s actually about is getting sport builders nearer to the event course of as a result of sport growth at its core is a extremely iterative course of.
And it’s normally artists and creators standing in entrance of a whiteboard, arguing about new inventive concepts. Throwing out issues that don’t work, making an attempt one thing new, saying, ‘Hey, wouldn’t it’s cool if we did this?’ And iterating time and again. And so to try this, you possibly can’t try this with a solid of hundreds or a solid of tons of. You possibly can solely try this with a smaller group. That’s why we expect small groups being more practical is a really, very massive deal. And the excellent news is there’s a variety of software program coming at us from round you, from outdoors the trade. What we actually must do is leverage these instruments far more successfully.
GamesBeat: Do you are concerned although that these groups may additionally take simply endlessly to complete their video games, the smaller ones?
Mahoney: Effectively, that’s at all times an issue. However that’s an issue with massive groups too. It’s simply far more damaging with massive groups. I’d respectfully submit that artists get within the enterprise in the end to ship merchandise. And so people who find themselves very, critical about making nice new merchandise wish to ship it. They wish to have a giant fan base. And they also desire a reside product out on the planet.
GamesBeat: Yeah. And I suppose AI goes to kind of issue into how one can make corporations or groups extra environment friendly sooner or later?
Mahoney: AI is definitely one of many software program developments that we’ve spent a variety of effort and time on over time, going again about 5 years or so. You’ve lined this in nice depth [about how the rest of the game industry has moved into] esports and VR and the metaverse.
GamesBeat: Even blockchain.
Mahoney: Yeah. All these issues. And we actually kind of steered clear a variety of that, what we actually put our effort and time into is AI. And different associated software program instruments that aren’t AI, however make us much more environment friendly and much more efficient at creating video games. A whole lot of what the trade places our bodies onto are issues that may be solved with software program. And what we discovered very early on that AI was — that is going again to 2017 or so — that we noticed quick returns on our AI and machine studying investments in our reside sport operations. The extra we did, the extra we discovered that it actually labored.
After which we began in our Embark Studios beginning to experiment rather a lot with new sport growth. And it labored there as effectively. It’s not at all times LLMs. That’s very new. However the returns [on early AI investments] are very, superb. And once more, the entire idea shouldn’t be about AI particularly. It’s about utilizing software program the place beforehand we had to make use of individuals. And by doing so, we get sport builders, the inventive individuals within the trade, a lot nearer to the event course of.
GamesBeat: And do you’re feeling just like the payoff from AI remains to be come, like perhaps nonetheless far into the longer term? Or is it truly already very near paying off?
Mahoney: No, I undoubtedly assume it’s already occurring. I imply, it definitely has been occurring for a while. I’ve used this instance earlier than publicly the place simply in matchmaking, inside about 17 sec seconds of you taking part in the coaching stage on an FPS, we will begin to determine fairly shortly how one can rank you.
And it’s not nearly skill, it’s about matching you with the optimum group of individuals. They could be extra expert or much less expert than you, however your gameplay model matches very effectively. There’s an optimization perform in any given liquidity pool of individuals which might be within the sport at that second. And that’s the kind of factor we may rent 1,000,000 individuals and we wouldn’t have the ability to create that kind of end result.
However we will do it with machine studying in a short time on the fly in actual time. And it has a direct impression on retention and naturally retention leads instantly to income. And I give that instance about life sport operations and after we used to speak about this, individuals’s eyes rolled, it’s nonetheless not the sexiest a part of AI, but it surely’s right here at present and we use it. And we use it in MapleStory and different video games that we reside in at present.
GamesBeat: What about the primary concern that folks concern proper now — that it’s going to remove jobs?
Mahoney: Effectively there’s at all times going to be a concern of that, for certain. And that’s a vital matter. However I’d respectfully submit that the people who find themselves sport builders and who’re sport artists obtained into the video games enterprise as a result of they wish to make video games. They wish to be inventive. They usually love the artwork type. And video games are an artwork type, a wonderful artwork type. It’s my private favourite by far in comparison with portray or music or motion pictures or nice novels or what have you ever.
And but, what does our trade ask them to do? Once more, they find yourself working amongst tons of of different builders portray digital leaves below digital timber in Photoshop. They get handled like manufacturing unit staff. It’s a entice. They’re not being requested to be their greatest inventive selves. So, I feel sport builders who’re nice, actually inventive individuals, don’t wish to be doing low finish manufacturing unit work. They wish to be inventive. They usually wish to create nice video games that blow individuals’s minds. I see the delight of the sport builders that I work with — as a result of they can try this. They’re in a position to work with a small workforce to construct one thing actually nice.
I can’t consider higher work to be doing that, that you just wish to be doing. And I feel our trade might be a lot larger and due to this fact make use of many extra individuals if we will deliver higher video games to market. Video games which might be completely different and extra attention-grabbing. And that’s not simply discuss. We’ve seen it occur time and again. Consider all of the individuals who didn’t was FPS gamers who got here in to play Fortnite. Take into consideration the those who Minecraft introduced in. Return to Zynga after they did their IPO. They made an excellent level [about making blue ocean games].
I believed it was very eloquent after they stated we consider players as a sure kind of a sure age, a sure gender, and so forth, however everyone’s a gamer. Possibly they play Sudoku, perhaps they play chess, perhaps they play golf or tennis or what have you ever. I feel that the trade pie will be a lot, a lot larger if we deliver a greater diversity of creativity in video games to the trade. So going again to builders, if we will unleash developer creativity, we’re going to have a a lot larger trade, which suggests we’re going to be using much more individuals general. That’s my take.
GamesBeat: Are there some closing ideas you might have about issues like how Nexon is known. And something extra about, say, achievements or frustrations?
Mahoney: Effectively, my reply to your query is that they’re all kind of wrapped into one. I imply, for 12 or 13 years I’ve been working very exhausting with the workforce to clarify what Nexon is all about. And for many of that point, individuals have had a very exhausting time understanding which you can have a reside digital world final and develop indefinitely.
That was one thing that was closely misunderstood. Individuals simply didn’t consider it for a really very long time. I feel a variety of what you and others wrote in regards to the Metaverse opened individuals’s eyes {that a} sport expertise isn’t a disc that you just purchase or a product that you just obtain that has a pure product lifecycle that goes up and that goes down. It’s truly a spot that you just go to.
And also you may hold going again to that place for a really, very very long time as a result of it’s so entertaining. And since the builders hold making new issues to return to. And that from a enterprise perspective, that may final for a lot of, a few years. Individuals have a, particularly buyers have a very exhausting time understanding that. So when the No. 1 query I’ve gotten throughout my whole tenure is, ‘Okay, when are Maple Story and Dungeon Fighter and these other massive franchises going down? Congratulations on their longevity, but when do they start going down?’ As a result of that’s what everyone’s psychological mannequin of the product lifecycle is. We have now confirmed time and again that they really can proceed to get larger and larger if we do our job effectively.
In consequence, our enterprise may double inside just a few years with out ever including a single new product launch. The second massive factor that we’ve sat and firmly believed is that we will construct a brand new franchise that doesn’t look something like [an existing] style, however that appears very completely different from different issues which might be on the market. And by doing so, by not being like different issues that exist already out out there, that we will deliver recent video games out and the players will actually admire that. And this final quarter was actually, I feel it illustrated each factors very well. Oh, by the best way, we will additionally do it with out having to rent tons of of individuals.
We will do it with a a lot smaller workforce that may be far more inventive and far more nimble. So all these issues I feel are actually necessary. They usually’re necessary for, once more, addressing three very understandably annoyed teams. I’m a sport participant, and as a buyer, I’m annoyed. I’d wish to see extra innovation in our trade. I feel that might be, that might be actually nice. As an worker, I feel staff wish to be nearer to the event course of and be nearer to being inventive, somewhat than what the trade has requested them to do largely, which is to be form of, once more, manufacturing unit staff or HR managers for these very, very giant groups.
And buyers have been understandably very involved about these very giant growth spends. To do one thing, to, to stroll proper into the withering crossfire of a pink ocean to combine my metaphors just a little bit like, they don’t need us to make pink ocean merchandise as a result of they normally don’t have escape outcomes. And so all three teams have been annoyed. And I feel we’ve actually gone a great distance. It’s been an uphill battle for certain, however we’ve gone an extended approach to present a brand new method of going about addressing our trade to the profit hopefully of those completely different constituents. All of them are crucial.
GamesBeat: Attention-grabbing. So hopefully you’re going to get a while to do some enjoyable issues.
Mahoney: Yeah. We’ll see. I hope so. I hope so.
GamesBeat: Your automotive has amazingly good web too.
Mahoney: Effectively, I’m in Korea proper now. It’s like one large WiFi land. It’s truly been working off my cell phone too.
GamesBeat: Wow. Congratulations on an excellent run. We’ll have an interest to see the place you wind up, whether or not touring the world or different issues.
Mahoney: Good to speak to you, Dean.
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