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Titanfall F2P An Experiment

Nexon-SJULY 31, 2015 • This week Nexon Co., Ltd. announced that it had entered into a development and publishing agreement with Electronic Arts Inc. to create a free-to-play online version of Titanfall for Asia. Nexon will be cooperating with Titanfall’s developer, Respawn Entertainment, in making the new F2P game. Titanfall has sold more than 8 million units worldwide for the Xbox One, PC and Xbox 360 platforms since it was released in March of 2014. However, EA is being cautious about the prospects of the Asian F2P version. During a financial conference call on July 30, EA chief operating officer Peter Moore said the publisher does not expect the title to have a material effect on revenue. “It’s an interesting experiment in looking at that type of game and whether it plays in a free-to-play environment,” Moore said. “We’ll be interested to see the results.” Outside of Korea, Nexon’s F2P version of Titanfall will be released in Brunei, Cambodia, China, Hong Kong, Indonesia, Japan, Macau, Malaysia, Singapore, Taiwan, Thailand and Vietnam. EA has worked with Nexon before, most notably on FIFA Online 3, which is the No. 1 online sports title in South Korea. In China, FIFA Online 3 is published by Tencent Holdings Ltd., and Moore said the title is projected to repatriate $10 million to $15 million per quarter to the publisher.

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Impact: Peter Moore is one of the most optimistic of game industry executives around. That is why we sit up and take note when he is openly cautious about a new iteration of a major franchise. Granted, Titanfall is just not as big as Call of Duty, but name recognition is high in Asia thanks to the recent current-generation console introductions in China. If this were a question of a Chinese release alone, DFC would be endorsing such caution since there are plenty of regulatory and market hurdles to conquer to sell inside the Middle Kingdom. China will be a huge component of any Asian launch, yet we think Titanfall’s game mechanic is a good sell across a region where intense shooters are well received. SmileGate’s Crossfire, for example, has been a huge hit in Asia for years. Plus, Call of Duty Online finally entered open beta in China last January, which helps prime interest in the Western FPS category. Despite any worries of too many Western shooters too fast in Asia, Moore’s caution may have to do with the fact that EA has a different financial equation with a third-party title versus a homegrown franchise like FIFA. Titanfall is a royalty-bearing franchise, which means whatever gross revenue EA receives on the F2P version for Asia will be dampened by payments to Respawn. Another factor is that FIFA Online 3 was developed at EA’s Seoul studio, but was published in Asia by others such as Nexon and Tencent. In the case of Titanfall F2P, Nexon is the lead on development, which suggests the company is taking on more risk, with EA less reward. If those assumptions prove correct we can easily see how Moore would characterize the agreement as an experiment despite the relative success of Titanfall as a franchise so far.

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