Why Owen Mahoney stepped down after a decade of success as Nexon’s CEO

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. Under his management, Nexon delivered constant development in income and working revenue and essentially 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.

Despite the very fact Mahoney was a Westerner in command of 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 cellular hits like Dungeon&Fighter Mobile, MapleStory M, Blue Archive and Dave the Diver. During the latest quarter, MapleStory grew 46% in comparison with a yr in the past.

Starting subsequent March, Mahoney will stand for re-election to Nexon’s board and function senior advisor. Both Lee and Mahoney will serve of their present roles till the succession is formally permitted. It will probably be attention-grabbing to see the place this firm, valued at $2 billion within the inventory market, goes subsequent.

Here’s an edited transcript of our interview.

GamesBeat: Thanks for doing this interview. I used to be shocked to see you made this choice. I’m wondering why you probably did that presently?

Mahoney: Well, personally for me, it’s simply been a terrific run. And an extremely pleasant 10 years as CEO. I joined Nexon 13 years in the past as CFO. And then 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 pleasant run from a private perspective. From an expert perspective, the true query about timing and CEO succession is known as a subject about the long run. It’s about longevity of returns for shareholders, which is a company governance subject.

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 plenty of corporations discuss a very good 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 subject, and it’s been not nice for shareholders. From our perspective, we need to be very critical about this. But you don’t simply get up sooner or later and say, ‘Okay, we’re going to switch to the following era.’ You should have an excellent bench of implausible individuals in place. And so it begins with having a terrific bench.

And I might, respectfully submit that within the on-line video games enterprise, Nexon has bought probably the greatest, if not the very best govt groups on the planet of any on-line video games firm. The second huge element of all of it is about timing. And, the query is, when do you need to do a generational change? And you don’t need to do it whenever you’re in your heels as an organization. That makes a transition very, very tough. And you’re doing no favors for the following era. You need to do it when issues are going nice. In our case, we simply had a completely phenomenal quarter. We gave steerage for our seventh consecutive quarter of double-digit, year-over-year development with no main new product launches, main new product launches.

And then we’ve bought the very best 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 predict it factors to a really, very robust pipeline. And then there’s way more within the pipeline after that coming from Embark and different components of Nexon studios globally. So we’re in nice form. We’re firing on all cylinders. And so now’s a implausible time to be doing it. Again it’s not that widespread to do it the way in which that we’re doing it, however we predict that any firm critical about shareholder returns and company governance would do it, takes this strategy.

GamesBeat: You’re going out when you’re up to the mark.

Mahoney: That’s one strategy to put it. The different strategy to put it’s organising the following era for fulfillment relatively than setting them up for challenges. And and once more, for those who’re a long-term shareholder, you care lots about these things. And so I feel now could be a really, excellent time for transition to a subsequent era, for certain.

GamesBeat: Have you additionally discovered what you need 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. Overall, I feel that the video games trade is an underachiever for what it could possibly be. And we’ve confirmed out a number of issues round themes that you simply and I’ve talked about for the final decade Dean. We’ve confirmed these issues out at Nexon, and we predict that this quarter is a living proof of proving these out. That is, in our reside digital world’s longevity, we simply grew MapleStory 46% yr over yr, 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 is simply astounding. And no person thought that was attainable 10 years in the past. Nobody thought it was attainable at any level in historical past, mainly. And it’s greater than ever, and it’s stronger than ever. So that was level No. 1. Point No. 2 is we simply launched, or we’re within the strategy of introducing, what we predict is without doubt one of the greatest and most essential mental properties to hit our trade in a while. And that’s very arduous to do. And we’re speaking about The Finals right here. But it’s not nearly The Finals in a single sport. It’s about the way in which we’ve gone about it.

Which is, we predict that we will convey 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 value financial savings. This is a subject about getting sport builders nearer to the event course of. If you’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 permitted set of software program instruments to the fore, you may then get sport builders to be sport builders once more.

And we predict that’s actually essential. 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 convey blue ocean new concepts to the trade, and to clients. So the scenario within the trade proper now could be that clients are very understandably sad as a result of they see plenty of the identical product. And it’s not as differentiated. Game builders are sad as a result of they’re working very arduous, primarily doing manufacturing unit work. And huge groups are constructing artwork by hand. That could possibly be performed way more effectively and successfully.

Of course, traders who’re our bosses are sad as a result of individuals like me should, within the conventional sport enterprise, give the inexperienced mild 100 million {dollars} to $200 million initiatives, which have large downsides. So that causes individuals to be much more conservative relatively than exit and seek for the blue ocean. And so from every of these views, it’s unhealthy. And we predict it’s crucial to alter that scenario within the video games trade. So getting again to your query, I feel the trade has lots that it could actually 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 plenty of layoffs. People is likely to be on the lookout for some reassurance right here. Are they seeing the entire image? I’m wondering for those who might deal with the massive image?

Mahoney: When you speak about individuals, do you imply workers or traders?

GamesBeat: The information now we have is that there’s been plenty of layoffs of individuals and we don’t know what the massive image is.

Mahoney: Oh, I see. Well, look, it’s too early to declare victory with the way in which that we’re doing video games. But I feel it’ll work. And if it does, we are going to show that you are able to do one thing totally different. And you may keep 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 e book that was about this. This 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 guess. And I blow it then and I blow it a second time, there will probably 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 chance. And what does decrease the chance imply? That means you make darn certain you’ve bought lots of people engaged on a sport, that they’re constructing a sport that you simply assume is, if it does something, it’s not going to fail miserably. It’s not going to be a stomach flop. And as a result of in any other case you’re going to look dumb.

Shareholders will probably be calling in your head since you wasted their cash. And it’s their hard-earned cash, and their reputations are on the road as nicely. So what can we get? We primarily get the identical sport yr after yr, and clients don’t like that. We’ve managed to prove, as an trade — I’m not being essential of any particular firm or something like that — however as an trade, it’s an issue as a result of we’ve bought plenty of purple ocean merchandise. And I feel we’re seeing a few of that proper now with Murderers Row finish of yr 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 huge.

And we predict that isn’t a mannequin that’s going to work, and we don’t need to be in that enterprise. This goes 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 can construct on high of one another. We can construct after which after we do new sport growth, we must be going farther out with one thing that’s new and totally different and wacky and unusual, as a result of that’s going to provide 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 nicely. And that has been a core a part of what we do with new growth. The second a part of new growth is relatively 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 convey software program to bear. Instead of placing individuals on it — hiring extra lots of of individuals — we use software program to resolve a few of these sport growth issues. And because of this, now we have 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 nicely, we’re going to have the ability to take extra bets which can be farther on the market, relatively than much less. So it doesn’t imply that now we have to make use of much less individuals. It simply signifies that we’re in a position to put them to more practical use. And by the way in which, it’s not about the entire thought of getting value financial savings so you’ve gotten a smaller workforce relatively than a large workforce. You can have a 100 individual workforce as an alternative 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 or not it’s cool if we did this?’ And iterating time and again. And so to do this, you may’t try this with a forged of hundreds or a forged of lots of. You can solely try this with a smaller group. That’s why we predict small groups being more practical is a really, very huge deal. And the excellent news is there’s plenty of software program coming at us from round you, from exterior the trade. What we actually must do is leverage these instruments way more successfully.

GamesBeat: Do you are worried although that these groups might additionally take simply eternally to complete their video games, the smaller ones?

Mahoney: Well, that’s at all times an issue. But that’s an issue with huge groups too. It’s simply way more damaging with huge groups. I might respectfully submit that artists get within the enterprise finally to ship merchandise. And so people who find themselves very, critical about making nice new merchandise need to ship it. They need to have an enormous fan base. And so they need 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 plenty of effort and time on over time, going again about 5 years or so. You’ve coated 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 plenty 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. Numerous 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 instant 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.

And then we began in our Embark Studios beginning to experiment lots with new sport growth. And it labored there as nicely. It’s not at all times LLMs. That’s very new. But the returns [on early AI investments] are very, excellent. And once more, the entire idea isn’t 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 are feeling just like the payoff from AI continues to be come, like possibly nonetheless far into the long run? Or is it really already very near paying off?

Mahoney: No, I positively 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 rapidly how you can rank you.

And it’s not nearly capacity, it’s about matching you with the optimum group of individuals. They could also be extra expert or much less expert than you, however your gameplay model matches very nicely. There’s an optimization operate in any given liquidity pool of individuals which can be within the sport at that second. And that’s the kind of factor we might rent one million individuals and we wouldn’t be capable of create that kind of end result.

But we will do it with machine studying in a short time on the fly in actual time. And it has a right away 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, however it’s right here as we speak and we use it. And we use it in MapleStory and different video games that we reside in as we speak.

GamesBeat: What about the primary concern that individuals worry proper now — that it’s going to eradicate jobs?

Mahoney: Well there’s at all times going to be a worry of that, for certain. And that’s an important subject. But I might respectfully submit that the people who find themselves sport builders and who’re sport artists bought into the video games enterprise as a result of they need to make video games. They need to be inventive. And they 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? Again, they find yourself working amongst lots of of different builders portray digital leaves below digital bushes 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, really inventive individuals, don’t need to be doing low finish manufacturing unit work. They need to be inventive. And they need 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’re able to 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 simply need to be doing. And I feel our trade will probably be a lot greater and due to this fact make use of many extra individuals if we will convey higher video games to market. Games which can be totally different and extra attention-grabbing. And that’s not simply discuss. We’ve seen it occur time and again. Think of all of the individuals who didn’t was FPS gamers who got here in to play Fortnite. Think concerning the those who Minecraft introduced in. Go again to Zynga once they did their IPO. They made an excellent level [about making blue ocean games].

I believed it was very eloquent once they stated we consider avid gamers as a sure kind of a sure age, a sure gender, and so forth, however everyone’s a gamer. Maybe they play Sudoku, possibly they play chess, possibly they play golf or tennis or what have you ever. I feel that the trade pie might be a lot, a lot greater if we convey a greater variety 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 greater trade, which suggests we’re going to be using much more individuals total. That’s my take.

GamesBeat: Are there some closing ideas you’ve gotten about issues like how Nexon is known. And something extra about, say, achievements or frustrations?

Mahoney: Well, 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 arduous with the workforce to elucidate what Nexon is all about. And for many of that point, individuals have had a extremely arduous time understanding that you could have a reside digital world final and develop indefinitely.

That was one thing that was closely misunderstood. People simply didn’t imagine it for a really very long time. I feel plenty of what you and others wrote concerning the Metaverse opened individuals’s eyes {that a} sport expertise isn’t a disc that you simply purchase or a product that you simply obtain that has a pure product lifecycle that goes up and that goes down. It’s really a spot that you simply go to.

And you may preserve going again to that place for a really, very very long time as a result of it’s so entertaining. And as a result of the builders preserve making new issues to return to. And that from a enterprise perspective, that may final for a lot of, a few years. People have a, particularly traders have a extremely arduous time understanding that. So when the No. 1 query I’ve gotten throughout my complete 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?’ Because that’s what everyone’s psychological mannequin of the product lifecycle is. We have confirmed time and again that they really can proceed to get greater and larger if we do our job nicely.

As a consequence, our enterprise might double inside a number of years with out ever including a single new product launch. The second huge 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 totally different from different issues which can be on the market. And by doing so, by not being like different issues that exist already out out there, that we will convey contemporary video games out and the avid gamers will actually admire that. And this final quarter was actually, I feel it illustrated each factors very well. Oh, by the way in which, we will additionally do it with out having to rent lots of of individuals.

We can do it with a a lot smaller workforce that may be way more inventive and way more nimble. So all these issues I feel are actually essential. And they’re essential 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 may be, that may be actually nice. As an worker, I feel workers want to be nearer to the event course of and be nearer to being inventive, relatively 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 traders 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 purple ocean to combine my metaphors a little bit bit like, they don’t need us to make purple ocean merchandise as a result of they normally don’t have get away outcomes. And so all three teams have been annoyed. And I feel we’ve actually gone a good distance. It’s been an uphill battle for certain, however we’ve gone an extended strategy to present a brand new manner of going about addressing our trade to the profit hopefully of those totally different constituents. All of them are crucial.

GamesBeat: Interesting. 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: Well, I’m in Korea proper now. It’s like one large WiFi land. It’s really been working off my cell phone too.

GamesBeat: Wow. Congratulations on a terrific run. We’ll have an interest to see the place you wind up, whether or not touring the world or different issues.

Mahoney: Nice to speak to you, Dean.