Kyu Lee interview — Why Com2Us Holdings pivoted into blockchain games

Kyu Lee, president of Com2Us USA, has been making mobile games like Summoners War for many years. But a few years ago, the whole company started exploring making games using blockchain and nonfungible tokens (NFTs).

In 2020, the Seoul-based company invested in Coinone, a big cryptocurrency exchange in South Korea, and it invested in Wysiwyg Studio. It looked for partners and invested in Animoca Brands, Sandbox, Upland, and Mythical Games. It also rebranded itself globally from Gamevil to Com2Us Holdings.

And now the company is pivoting in a major way, going beyond free-to-play mobile games that have brought it great prosperity and partnerships with brands like the NBA. Its entire staff is diving into NFT games and other blockchain technology, and it will focus on them in the same way that it focused on the transition to free-to-play mobiel games many years ago.

This makes Com2Us one of the biggest mobile game companies to move into NFT games. Established in 1998 and headquartered in South Korea, Com2uS became a subsidiary of mobile game publisher Gamevil in 2013 (and now the whole company is Com2Us Holdings). Com2Us’ Summoners War has more than 100 million downloads and $2 billion in sales.

Com2Us games coming soon include Chromatic Soul: AFK, Kritika: the White Knights, Project MR , and Summoners War: Chronicles. Blockchain games coming soon include Baseball Superstars, World of Zenonia, and The Great Merchant.

I caughter up with Lee about this pivot and quizzed him about it. Here’s an edited transcript of our interview.

GamesBeat: It sounds like a big pivot for Gamevil and Com2Us. Can you talk about the context and the background?

Kyu Lee: In 2020 we started investing in Coinone. Coinone is the third largest crypto exchange in South Korea. We were always generally interested in the blockchain space, but we didn’t have any action items, so to speak. We knew that there was a lot of traction there. We knew we needed to study it a bit more. We decided to invest in an exchange. That would be the best way to start learning.

After that, NBA Top Shot came around. Because we’re also very involved in the sports collectible market in some ways – we have four games with Major League Baseball, and we also have a game with the NBA – we were trying to figure out NFTs. We were thinking this was going to be mass market. It’s a big signal that a top brand like the NBA was getting on top of that.

When we saw the numbers coming up from Axie Infinity, we played the game. We saw that there’s so much opportunity. There are so many hurdles in the game that it was unbelievable, but it was also unbelievable that it was generating that much profit, and so many people were playing. That’s what got us into it. We started talking to our internal production teams to make this thing real. We started preparing, researching the games. Our CEO, Yong Kuk Lee, has a lot of interest in this space. He’s always been thinking about the metaverse and all of that.

What happened in the meantime, we acquired a company called Wysiwyg Studios. Wysiwyg Studios is a publicly listed South Korean company. They’re originally a VFX studio. They’ve done a lot of things in the metaverse preparation area, so to speak. But when we acquired them, we did it because we thought Netflix was the new app store for all of the TV production companies in South Korea. There’s so much great talent in South Korea, but they were only distributing their content through the local TV service providers. With Netflix, there’s more room for–there’s a big company called Studio Dragon that does a lot of distribution through Netflix. We thought there was much more play to be done, so we thought we should acquire Wysiwyg and roll up a lot of TV production studios underneath it.

There’s a lot of synergies between the entertainment business, the webtoons, the IP creation that they’re doing. They always wanted to partner with a gaming company and we always wanted to expand our IP. We’ve done that through our partnership with Skybound, but how can we do more of this? That was the vision we had. All of these things pointed in a direction where we had to go Web3. We had to do metaverse. We had to do blockchain gaming. We had to do NFTs. That’s how we ended up investing in Candy.com. Candy.com has the exclusive rights for Major League Baseball NFTs. We went in with Insight and Softbank. We put in $10 million of investment there.

While our company was moving its production teams over, looking for the right blockchain and the right partners, we thought that money could move faster. We started talking to all of the top players in the blockchain gaming and metaverse space. That’s how we ended up investing in Animoca Brands, Sandbox, Upland, and Mythical Games. Those were the four investments that we also did. These were all pretty late-stage, already established companies, but it was a great way to get our foot in and understand what’s going on, build relationships within the ecosystem, and also promote that we are not only just a gaming company, but we have ambitions to become a blockchain gaming company too.

I think it worked out pretty well. After we started doing those investments–all of these were oversubscribed rounds, but I think everyone was happy to have a gaming company. We’re not the biggest gaming company in the world, but we’re an established gaming company coming on their cap table. They were very welcoming of our entry into the space. They all made room for us to invest. We’re very happy about that. Now we’re looking at a lot more companies to invest in, even at earlier stages. We want to become like what Animoca is doing. That looks really cool.

Our approach inside–we thought about a lot of different chains. There are so many great chains and solutions that we could have adopted. Personally, I love what Solana is doing and how they’re building up an ecosystem that’s going to be awesome to run games, because of the speed and all that. But we decided to work with Terra. Terra being a South Korean company and such an established company in the crypto space–they have an amazing ecosystem. I was pretty shocked that they weren’t as well-known in the west. It seems like even within the past few months, though, they’ve been gaining so much traction.

When you’re only doing a stablecoin play or a DeFi play, it doesn’t gain a lot of traction among the app developers or the entertainment space, where we are. After they announced their smart contracts I’m seeing so many projects being built on Terra. Just reading through the hundreds of pages of documents in English is a tough one to swallow for our development team. Having a South Korean team–Do Kwan, the CEO, is amazing. Having his team to help us was a perfect fit. We’re very happy with the relationship that we have with Terra. We’re building an NFT marketplace that’s going to have K-pop stars and all the entertainment brands we have. It’s going to be about gaming too. We’re also going to use them as our blockchain partner. We’re going to build wallets together and everything else we need to service our games.

GamesBeat: It seems like about as full a pivot as you could do. Are you planning to still do non-NFT, non-blockchain mobile games?

Lee: There are still a lot of restrictions on where we can service our games and where we can’t. The very interesting thing that I learned, though, is that once you step into this side of the world, the other side looks so stale and boring. I’ve been telling my friends–all of these people, when they step into this new world, everybody talks about the same thing. This feels like how it felt when mobile was starting. Just having that feel of enjoyment and learning everything that you can. Making sure that you’re on the beat all the time. That in itself is so rewarding.

We still have a lot of products that are going to launch as scheduled. But I think a lot of our production heads are becoming much more open-minded about moving over. They’ve been launching game after game. They probably needed something new like this.

GamesBeat: The developers themselves are interested in going this direction, then?

Lee: Yes, yes. This empowers you in a lot of ways. I only noticed how–when the App Store first came around, I thought, “Oh, let’s have a virtual currency that can run across all of our games. Let’s make a market where the users can buy and sell.” We had these ideas. But by following the rules, we contained ourselves into a fixed way of thinking. With all of these blockchain technologies enabling game developers, you realize, “Oh, I forgot that we could do that!” We run into so many of those moments. It’s another great tool for game developers to express themselves. If you want to use that tool, we want to encourage that.

Obviously there are going to be a lot of games that work better in the Web2 world. But there are going to be tons of new types of games that we’ll see in the Web3 world.

GamesBeat: Is there a certain percentage of the company that’s dedicated to working on this, or is basically everyone working on it?

Lee: At this stage, it’s everyone. The order is coming from the top in our company. Everyone is going to go through the educational curve. We started out having a small team, but now that there are so many different projects involved–it’s not anything secret, and it’s not just one or two projects. We’ve already announced around 10 projects for the new year. We pivoted a lot of the games we were planning to launch this year or early next year, and we’re repositioning them so that they have a play-to-earn or NFT aspect.

If you remember when in-app purchases first came out on the App Store, I don’t think every game all of a sudden went over to free-to-play, following the true spirit of free-to-play. There were some limited adoption efforts. I think we’ll go through that same process. Not everything may be fully baked in. We’ll learn a lot. We’ll fail a lot, but at least from a gaming perspective, I think we’re bringing in the best-looking games. All of the games I’ve looked at so far, they’re good, but they’re super high production quality. A lot of the games we’re releasing even in the next year have been in development for four or five years.

GamesBeat: Did you see the Ubisoft announcement about NFTs in Ghost Recon Breakpoint?

Lee: I saw the link.

GamesBeat: It’s the tiniest of steps. I think it’s meant to educate the market and get people to accept it. It’s a very strictly controlled distribution to people who played a lot of the Ghost Recon game. And even those who buy in on the secondary market have to have played the game as well. They’re not selling the NFTs. They’re being as careful as you can going into this. [Ubisoft pulled down a video due to lots of negative feedback].

Lee: There’s going to be a lot of baby steps. But those games are going to look much better. A lot of the newer projects that are starting from the ground up in our studios, they’ll probably try to think about how they can adopt the technology as much as possible. But those games will take another two, three, four, however many years. Who knows? There will be so many new trends.

Right now we saw Axie Infinity. Everybody’s thinking in that mentality. In South Korea there was a game called Mir4, made by Wemade. That game was completely the opposite. They switched a free-to-play game and just added a small amount of play-to-earn aspects. Now all of a sudden people are realizing you can do this. There’s going to be a lot of swings, even within our production teams, around how they’re going to design these new kinds of economies. That’s how I see it.

GamesBeat: Have you seen any resistance from gamers? I know Ubisoft has run into some of that today. It seems like the more hardcore gamers, they associate this with things like loot boxes and scams and aggressive monetization.

Lee: We haven’t seen that much from our users yet. I’ve seen it around other games. Even Cookie Run, at one of our sister game companies, they announced they were going to do Cookie Run NFTs and they faced a huge backlash. We’ll have to see. The same thing happened as everyone was moving over to free-to-play and using things like loot boxes. It’s going to require a lot of education. We’re filling in a gap, I think, and we’re going to provide much more value to our users at the same time.

Even crypto itself still has a lot of negative associations around it, whether it’s environmental impact or money laundering and all of that. But it’s such a powerful tool. We just have to try to use it the right way.

GamesBeat: How soon are some of these things going to arrive? Are you looking at 2022?

Lee: I don’t know what’s going to come first. Our schedules always change. Most of the games are going to come around the middle of next year, though.

GamesBeat: Anything else you’d like to mention today?

Lee: A lot of the time we feel like we’re moving in fast forward. We want to be in a leading position. That may mean we take the bullets. But we want to pave the way. We’re very excited about this new opportunity. It’s going to be fun.