“Chinese Capital Tightens Its Grip on K-Gaming” — Even Wemade Set to Fall Under Chinese Control as Korea’s Industry Leadership Wavers

Kingnet joins acquisition consortium with $298 million after settling Mir IP dispute
Focus on securing IP and core developers to target China’s $5 billion-plus market
Concerns that China’s in-house development capabilities may weaken incentives to retain South Korean operations

Chinese game company Kingnet is investing $298 million in a consortium seeking to acquire control of Wemade. The company that remained locked in a legal battle with Wemade over the intellectual property (IP) rights to “The Legend of Mir 2” until February has now joined the consortium set to become its new controlling shareholder. Chinese companies have made numerous equity investments in South Korean game developers, but this marks the first effective takeover of an entire company ranked among the country’s 10 largest game publishers. Once the transaction is completed, China will effectively hold decision-making authority over the Mir IP, which underpins a market worth more than $5.2 billion in China. Concerns are mounting that a nationally significant gaming asset generating more than $74.5 million in annual royalties could be transferred to Chinese control.

Kingnet Joins Wemade Acquisition

According to gaming industry sources on Sept. 22, Kingnet recently joined an investor consortium poised to become Wemade’s new controlling shareholder. Wemade and gaming-focused investment platform Neopulse issued a joint statement on the change in controlling ownership on Sept. 14, formally announcing that a consortium comprising Neopulse, Kingnet and other investors had signed a share purchase agreement (SPA) with Wemade Chairman Park Kwan-ho. The consortium will complete the procedures necessary to close the transaction, including payment of the remaining balance and regulatory approvals, by Oct. 30. Once the process is completed, the consortium will hold an aggregate 40.25% stake and become Wemade’s largest shareholder.

Kingnet disclosed to the Shenzhen Stock Exchange on Sept. 12 that it would acquire a 49% stake in Neosphere through its Hong Kong subsidiary, Cypress Technology HK. Neosphere is an upper-tier holding company with an equity interest in Neopulse, the acquisition vehicle for Wemade. Kingnet’s planned investment totals $298 million. Neopulse will become Wemade’s largest shareholder, while Kingnet will wield influence over Neopulse through its stake in Neosphere.

Former Mir Adversary Invests in Wemade’s Controlling Stake

Chinese companies have long coveted the Mir IP, widely regarded as a “goose that lays golden eggs.” Games based on the Mir IP sparked a Korean gaming wave in China, establishing the franchise as Wemade’s flagship asset. According to Gamma Data, a Chinese gaming and digital content research firm, the Mir IP generated a Chinese market worth approximately $5.4 billion last year.

Kingnet’s participation has drawn particular attention because of its long and contentious relationship with Wemade. The two companies were embroiled in a protracted legal dispute in China over the IP rights to Wemade’s flagship title, “The Legend of Mir 2.” The conflict began after Kingnet subsidiary Zhejiang Huanyu failed to pay royalties for “Namwoljeongi,” a game based on “The Legend of Mir 2” IP that it had operated in China since 2016. Wemade secured recognition of its rights as the original copyright holder through international arbitration and litigation in Chinese courts, obtained rulings holding Kingnet liable for compensation and subsequently pursued enforcement proceedings. The dispute, which lasted nearly a decade, ended in February when the two sides signed a settlement agreement. Wemade received approximately $32 million from Kingnet and withdrew all arbitration and litigation proceedings related to “Namwoljeongi” in South Korea, China and Singapore.

Kingnet has now become a direct financial participant in the acquisition of Wemade’s controlling stake. The equity sale is valued at approximately $685 million, or about $51.34 per share. Given that Wemade’s KOSDAQ-listed shares currently trade at around $11.18, the offer effectively adds a management-control premium of approximately $37.25 per share, equivalent to 3.6 times the prevailing share price. Park reportedly negotiated the stake sale directly with the Chinese investors through his personal accounting firm without sharing the information with the company. According to financial industry sources, Park used the transaction’s $68.5 million deposit to repay all loans incurred through his blockchain ventures.

Table 1. Rationale and Revenue Base Behind Kingnet’s Investment in the Mir IP

Exclusive Mir License Pursuit and Bet on Two Decades of Commercial Success

Kingnet’s primary focus is Mir’s enduring commercial appeal, sustained for more than two decades. Released in China in 2001, “The Legend of Mir 2” captured 65% of the country’s online gaming market in 2004 and reached 800,000 concurrent users the following year. Successive releases of web games, mobile titles and sequels subsequently established Mir as a familiar brand among Chinese gamers. In its investment disclosure, Kingnet also emphasized that Mir has a stable user base, strong brand recognition and a mature business ecosystem. Its strategy is to secure a proven IP, shorten development cycles, reduce user acquisition costs and channel the existing fan base into new titles.

The profitability of the Mir IP is also evident in Wemade’s recent financial results. Chinese licensing agreements for “The Legend of Mir 2” and “The Legend of Mir 3” helped Wemade generate $530 million in revenue in 2024, extending its record-revenue streak to four consecutive years. In the fourth quarter of last year, licensing payments and the performance of new titles lifted revenue 16% year on year to $143 million, while the share of overseas revenue climbed to 78%. Kingnet committed $298 million to Wemade’s acquisition structure to secure access to this revenue base, and the agreement includes a provision covering the pursuit of an exclusive license for the Mir IP. Once the transaction closes, Kingnet is expected to assume a larger role in developing new Mir titles and managing their operations in China.

Potential Absorption of IP and Core Talent

Concerns remain widespread within South Korea’s gaming industry over the future of Wemade’s development organization. China’s gaming industry has expanded rapidly in both domestic and overseas markets. In the first half of last year, domestic revenue from games developed by Chinese companies rose 19.3% year on year to approximately $21 billion, while overseas revenue increased 11.1% to $9.501 billion. In particular, “Black Myth: Wukong,” developed by Chinese game company Game Science, sold nearly 25 million copies within approximately five months of its release and generated $1.1 billion in revenue, demonstrating China’s capacity to produce blockbuster games.

This has fueled speculation that Kingnet’s long-term investment may focus primarily on the Mir IP and a select group of core developers. Wemade stated in its recent joint announcement that it would continue operating its existing core businesses and organization as planned, but it did not provide a concrete investment plan covering long-term employment or its South Korean development organization. If the exclusive Mir IP license and related business authority are transferred to Kingnet, the possibility cannot be ruled out that overlapping functions could be eliminated and the development framework for future titles reorganized around Chinese studios.

The Mir IP may also be deployed to support Kingnet’s expansion into the South Korean market. A Chinese gaming industry report estimated the South Korean gaming market at $18.6 billion in 2024, identifying the country as the third-largest overseas market for Chinese games. In June this year, games distributed by Chinese companies accounted for half of the 10 highest-grossing mobile games in South Korea. “Whiteout Survival” and “Kingshot,” both developed by China’s Century Games, ranked first and fourth, respectively, by revenue. Chinese game companies have steadily expanded their domestic market share through operating models that combine large-scale advertising, rapid content updates and user-specific monetization design. By additionally leveraging the Mir IP’s recognition in both South Korea and China, as well as Wemade’s domestic business infrastructure, Kingnet could reduce the cost and time required to acquire new users.

Chinese Capital Tightens Its Grip on K-Gaming

Mir is not the only South Korean gaming IP targeted by Chinese capital. As of the end of the first quarter this year, Chinese information technology (IT) and gaming conglomerate Tencent held stakes of 14.01% in Krafton, 34.66% in Shift Up and 18.37% in Netmarble. Tencent is the second-largest shareholder in all three companies. Chinese game company Ourpalm is also Webzen’s second-largest shareholder, with a 20.66% stake. Tencent’s interest in Krafton is only 1.04 percentage points below the 15.05% stake held by founder and board chairman Chang Byung-gyu. Tencent is also a key shareholder in Shift Up, where it owns more than 30%, while Netmarble is another major game developer in which the Chinese company holds a significant equity interest. Krafton, Shift Up and Netmarble are all regarded as leading companies in South Korea’s gaming industry.

Mid-sized developers are no exception. Webzen owns the Mu IP, which has established strong recognition in the Chinese market. Ourpalm’s investment in Webzen demonstrates that Chinese capital has entered not only South Korea’s leading game companies but also IP owners whose assets have significant commercial utility in China. There is also precedent for Chinese investors examining the acquisition of control over a South Korean game company. Tencent was reportedly among the prospective buyers when the late NXC founder Kim Jung-ju sought to sell his stake in 2019, although the transaction ultimately collapsed.

Two-Decade Capital-and-Technology Alliance Morphs Into IP Acquisition Drive

The relationship between Chinese capital and South Korean game companies began through investment and distribution partnerships. Capital-constrained South Korean developers used Chinese investment to expand their workforces and produce sequels, while Chinese companies handled local publishing, generating enormous revenue from South Korean games and accumulating user data. Industry observers say that over roughly two decades of cooperation, Chinese companies expanded their market by leveraging South Korean developers’ planning and production capabilities, as well as their IP portfolios. The model under which Tencent remained the second-largest shareholder of major game companies while their founders retained managerial control likewise reflected an alignment of interests between the two sides.

With Chinese developers’ capabilities having advanced rapidly, the position of South Korean development organizations has changed. Chinese companies can now produce major new titles entirely with domestic development teams and distribute them directly in global markets. South Korean developers’ technology and operational expertise were once essential, but Chinese companies are now considered capable of producing sequels independently once they secure proven IPs and user data. Some industry observers consequently fear that, following the acquisition of control, only a limited number of employees responsible for IP management and domestic services may remain at the South Korean entity, while core production functions could be transferred to China. “Over the past 20 years, Chinese capital grew by leveraging the technology and service expertise of South Korean developers while financing the country’s game companies,” one gaming industry expert said. “Now that China’s in-house development capabilities have risen to a level that surpasses South Korea’s, there is little incentive to retain domestic operations and employment even after securing management control.”