Fee War (10)
Until now, the 30 percent fee had been treated as a kind of golden rule, an immutable law of the digital world.
But that law had finally been broken.
Since Guble had lowered its maximum fee to 25 percent first, Enple had no choice but to follow.
The losses from the fee cuts and external payment allowances added up to well over $10 billion between the two companies.
In response, Guble and Enple shares plunged 6.7 percent and 8.8 percent respectively, and the shock dragged the Nasdaq down 4.3 percent, marking its worst one-day drop in 52 weeks.
Enple’s market cap had evaporated by $200 billion in a single day, but thanks to bargain hunters rushing in, it had barely managed to hold onto the $2 trillion line.
Market analysts blamed the crash not only on declining expected profits, but also on fiercer competition in the app market, rising regulatory risks around the world, and the possibility of game companies fleeing the platforms, along with the damage to both firms’ public image.
On the other hand, shares of developers expected to benefit from the fee cuts all rose at once.
Developers around the world threw up their hands and cheered.
* * *
The lawsuit had only just reached its first hearing, and yet we were already setting off fireworks.
Regardless of how the case ultimately ended, we had succeeded in forcing the fees down.
Charles and Ken looked relieved and overjoyed.
“That’s such a relief.”
“I was worried the mobile service might be shut down after all this, but thankfully it worked out.”
Block Valley had also launched a console service.
Normally, review and registration would take time, but perhaps because everyone was aware of the current situation, NS, Sonyu, and Lindendo approved the games right away.
They wanted to pull as many users as possible away from the mobile side.
Legend Games CEO Tom Scott was so busy taking calls from game companies that he hardly had a moment to breathe. The entire industry was expressing its gratitude for his efforts.
I also got a call from the head of one of those companies.
[Hey! So it really worked.]
“I told you it would.”
[The entire game industry is praising Legend Games and Continue Capital right now.]
“I can see why.”
[Thanks to the fee cuts, LD Studio, which had been crashing nonstop, is up 20 percent. The other mobile game companies are seeing similar gains.]
Of all Korean game companies, the one that benefited most from this fee cut was none other than LD Studio.
At Brotherhood M’s peak, annual revenue had once exceeded 2 trillion won.
It had been a mobile-only game, not even cross-platform, which meant it had been paying nearly 500 billion won a year in app market fees alone.
If they had originally been paying 30 percent and now were paying just 5 percent less, the math said they could save about 100 billion won a year.
Of course, with revenue now cut in half, the savings would be half that as well, but even so, wasn’t that still a huge amount?
[Legend Games Store seems to be doing well with both PC games and cloud gaming, and the mobile controller is apparently selling too. It’s a little awkward to use on a smartphone screen, though.]
“Hmm, really?”
Hearing that made me remember something else.
[When are you coming back to Korea?]
“Pretty soon.”
[Okay.]
I hadn’t expected to stay in the United States this long either.
Between one thing and another, winter had already passed and spring had arrived in full bloom.
After that, I called Chairman Yoo Jae-ho.
[Congratulations. You’ve done it again.]
“It’s thanks to your help, Chairman.”
[I feel as though I was the one who received help. When I saw the sales from CosmicStore, President Gu Dongjin actually cried. In over twenty years of working together, it was the first time I’d seen him cry.]
“What? So that rumor was true?”
[Yes. He says he’d like to thank Mr. Han personally the next time he meets you.]
Because of this incident, Enple and Guble’s images had taken a hit, while Yuseong Electronics’ reputation had risen sharply.
Perhaps for that reason, a CosmicPhone Challenge was now spreading among developers.
Nine out of ten developers used Enphones. But in protest against Enple’s monopoly, they were switching to CosmicPhone and posting proof of it on social media.
It wasn’t enough to affect total sales in any serious way, but it would still help create a favorable image for CosmicPhone.
Who would have guessed that CosmicStore would rise so quickly to become a major player in the app market?
In my first life, Yuseong Electronics had been subordinate to Guble.
If things had gone according to the original path, they would have hesitated to invest in CosmicStore for fear of offending Guble.
But this time, their remarkable growth in semiconductors, combined with their entry into the data center industry, had pushed them to a position Guble couldn’t simply ignore.
“Oh, there’s one more favor I need to ask.”
[What is it?]
“Nothing too different, really...”
After listening to me, Chairman Yoo Jae-ho burst out laughing.
[Understood. We’ll do that.]
“Thank you.”
I hung up and asked the grinning Tom Scott, “You’re that happy?”
“Yes. The fee cuts and external payment allowances benefit not just us, but every game company and every user as well.”
Even in my first life, Legend Games had helped force part of the fee structure down, and antitrust lawsuits sprang up all over the world, eventually banning forced in-app purchases.
But Legend Games, which had been one of the plaintiffs, still had to shoulder the losses and suffer the consequences.
This time was different.
Legend Games Store had expanded beyond PC into the mobile ESD market, and without spending a cent on advertising, it had introduced Legend Games Cloud to the world.
Thanks to that, Penny transaction volume had risen sharply as well.
At this point, it was fair to call it our victory.
That didn’t mean Enple or Guble had taken a fatal blow, of course.
The app market was only one part of their broader businesses. At most, we had given them a few scratches.
And we still had a long way to go before we could surpass either of them.
“Whenever I felt like giving up, I kept thinking about what you said.”
“What exactly did I say?”
“Didn’t you say that if you put conviction into an egg, it could crack a rock?”
“Ah, that...”
I was about to say that was just nonsense, but Tom Scott clenched his fist and said, “That’s why we’ve decided to make it our company slogan.”
I stared at him, shocked.
“Excuse me?”
“Is something wrong?”
“No, it’s just...”
Was it really okay for an American capitalist company to make a slogan out of something like that?
The one small relief was that the original phrase had been “If you inject ideology into an egg, it can crack a rock,” but due to the difference in translation, it had been softened into “If you put conviction into an egg, it can crack a rock.”
Come to think of it, hadn’t the supreme authority up north not said it yet this time?
Tom Scott looked at me and said, “Taking investment from Continue Capital was the best decision we ever made.”
“I’m glad to hear you say that. In fact, I have one proposal of my own.”
He pricked up his ears.
“What is it?”
“How about releasing a dedicated game device for Legend Games while the opportunity’s here?”
Perhaps thinking the idea had come out of nowhere, he looked at me in confusion.
“You mean a console?”
“More specifically, a portable gaming device. Something like an UMPC, maybe. I’d like to make a machine that can play PC games and mobile games together. With a SIM slot too, so it can handle data connections.”
The reason mobile games accounted for 60 percent of the game market was simple: everyone already owned a smartphone.
But as a gaming device, the smartphone had obvious limits.
The screen was small, and you had to play by touch without a controller. A portable gaming device, on the other hand, could solve those problems.
“There are plenty of high-spec games on PC. If we add a controller too, the size and weight won’t be trivial.”
“It doesn’t have to replace smartphones. Just being something you can toss into a bag and carry around, or use while lying on the sofa or in bed, would already be a huge advantage.”
That had already been proven by the success of Lindendo Portable.
Besides, in a couple of years, Stream’s PC ESD platform would release its own portable device, the Stream Deck, and win huge support from gamers.
I wanted Legend Games to move first, before that happened.
“As you can see from the cases of Sonyu and NS, consoles aren’t really a profitable business.”
And yet those companies still poured enormous sums into developing and launching consoles because they were building ecosystems of their own.
I nodded.
“It might not even make money. In fact, it could easily run at a loss. But wouldn’t it greatly expand the Legend Games Store ecosystem?”
The biggest gain we’d gotten from all this was the industry’s overwhelming support. Everyone in the business felt gratitude toward Legend Games, and some measure of guilt as well.
That was an asset you couldn’t buy with any amount of money.
“Portable gaming devices are harder to develop and manufacture than consoles. You have to consider the display, performance, weight, controller layout, battery life, and everything else. But if we want it to go mainstream, we’ll have to get the price down to around $500, similar to other consoles.”
He was right.
No matter how well made it was, who would buy it if we priced it at $2,000?
“That’s why it’s important to build scale and drive the production cost down as much as possible. Fortunately, Chairman Yoo Jae-ho says he’s more than willing to cooperate.”
Tom Scott blinked at my words.
“Yuseong Electronics?”
“Yes. For development, we’d need not just communication chips but custom chipsets as well, and Yuseong Electronics happens to design its own communication chips and hold a 32 percent stake in ADM.”
Yuseong Electronics had become ADM’s largest shareholder thanks to my advice.
And as expected, after the investment, the CPU based on the REN2 architecture became a massive hit, sending ADM’s stock skyrocketing fivefold.
“Legend Store isn’t limited to PC games anymore; it carries mobile games too, and it offers cloud gaming services as well. If we make the device well enough, couldn’t we take a slice of the mobile game market too? Then we’d be able to pull even more mobile games over to our side.”
If we could capture even 10 percent of the mobile game share currently split between NOS and Andromeda, that alone would mean enormous profits.
“I’ve even thought of a name. How about Legend Deck?”
That definitely wasn’t a copy of the Stream Deck.
Tom Scott sat there blankly for a moment, then suddenly shouted, “D-Don’t tell me you planned this from the very beginning?”
Charles and Ken, who had been listening quietly from the side, were stunned.
“T-That’s right! You were planning to build your own device and enter the mobile game market, so you prepared everything from cloud gaming to the lawsuit!”
“My God! So it was all planned!”
“Uh...”
Not exactly.
It had just occurred to me out of the blue.