This week I’m tipping a Korea-listed game developer. In this case it is the beneficiary of some restructuring going on in the gaming sector, prompted by Microsoft effectively reshuffling its portfolio of development studios, with the usual brutal hack and slash.
In this case, one of the most respected video games development brands in Asia, and dare I say it, the world, was slated for closure, but has been saved at the last minute by a larger, Korea listed gaming company.
As a consequence of the acquisition, we are already seeing decent upside price action in the shares of the buyer, which is picking up some of the best brands in gaming. The stock was already motoring, and this deal has turbo-charged it.
Tango Gameworks are the developers behind infamous dark games like The Evil Within and Ghostwire: Tokyo, as well as the critically acclaimed Hi-Fi RUSH.
Hi-Fi RUSH, Tango Gameworks’ most recent game, is currently rated 9/10 on IGN and 10/10 on Steam.
Earlier this year in May, Microsoft NASDAQ:MSFT announced that they would be closing Tango Gameworks alongside three other studios: Arkane Austin, Alpha Dog Studios, and Roundhouse Games. Many fans expressed their displeasure with the decision as Tango Gameworks had released some great games that also performed exceptionally well on the market.
However, many fans – and investors – are delighted to learn that Tango Gameworks is being acquired by Krafton [KRX:295960], rekindling life in the company.
Tango Gameworks is a great IP asset
Tango Gameworks have made some really great games. Although they were well-known for dark games like The Evil Within and Ghostwire: Tokyo, Tango really hit the mark with Hi-Fi RUSH, a completely different rhythm-based action RPG that gained some good ratings. For instance, IGN gave it a 9/10 while fans rated it a 10/10 on Steam, genuinely reflecting its success.
Gaming fans were crushed when they learned that Microsoft was shutting down the studio alongside three other studios. With that context in mind, anyone can appreciate why so many gamers were ecstatic to read that Krafton, publishers of the infamous Battle Royale game PUBG, have taken Tango Gameworks under their wing, with no intentions of detracting from their successful projects.
Krafton made the following announcement on their website:
“KRAFTON, Inc. today welcomed the talented people of Tango Gameworks to their team, marking an exciting moment in the company’s global expansion and its first significant investment in the Japanese video game market. This strategic move will include the rights to Tango Gameworks’ acclaimed IP, Hi-Fi RUSH.”
As part of this strategic agreement, Krafton intends to collaborate with Xbox and ZeniMax to ensure a smooth transition and maintain continuity at Tango Gameworks, allowing the talented team to continue developing the Hi-Fi RUSH IP and explore future projects.
Krafton also said it plans to support the Tango Gameworks team “to continue its commitment to innovation and deliver fresh and exciting experiences for fans.” There will be no impact on the existing game catalogue of The Evil Within, The Evil Within 2, Ghostwire: Tokyo, and the original Hi-Fi RUSH game.
Towards the end of the announcement, the company also ties in the acquisition with its greater ambitions:
“This integration reinforces Krafton’s dedication to expanding its global footprint and enhancing its portfolio with innovative and high-quality content. The addition of Tango Gameworks represents a strategic alignment with KRAFTON’s mission to push the boundaries of interactive entertainment.”
The deal considerably enhances Krafton’s value for investors, with a new portfolio of gaming brands and a team of developers in Japan. Sources in the industry indicated some developers had left Tango already.
Shares in Krafton have been on an absolute blinder this year, up from KRW 150k back in September, to hit KRW 325k last week. Needless to say analysts in Seoul were revising their ratings upwards on Friday in the wake of the Tango deal.
The Armchair Trader tipped Krafton stock at KRW 324,500 on Friday 16 August. Krafton joins our longer term buy and hold list.
