Vision and Purpose of Coway Acquisition Oct 14, 2019
Vision and Purpose of
Coway Acquisition
Oct 14, 2019
Netmarble Investment in Gaming Sector
Netmarble has pursed active investment in game companies for the last 5 years
Netmarble focused on sizable companies showing stable growth based on platforms
However, it is challenging to find attractive targets having stable revenue and
R&D capability
Netmarble’s recent investment targets
※ Netmarble has reviewed investment opportunities of more than 100 companies
Investment in Non-gaming Sectors
Entertainment
(IP)
Netmarble invested across various non-gaming sectors to find future growth engines
including entertainment, digital bank, AI, blockchain and platform
However, these are mainly minor investments in early stage companies with
limited earnings in the near future
AI/Big data
AR/VR
Digital
bankBlockchain Platform
Netmarble named as
the Preferred Bidder for Coway
Netmarble is named as the preferred bidder for acquiring 25% controlling ownership
Coway is the No.1 leader in ‘Product Subscription Economy’ with water/air purifiers
and mattresses
With Netmarble’s IT capability in AI/big data/cloud, Coway has potential to expand
its business to Smart Home market
Rental Subscription
Economy
AS-IS TO-BE
Global Major Player in Smart Home &
Subscription Economy
IntegrateAI / Big Data / Cloud
technology
100
111 130
155
180
217
269
322
100 105 106 111 114 120 125 126
100 105 106 111 108 110 117
125
2011 2012 2013 2014 2015 2016 2017 2018
Growth of Subscription Economy
Korea Consumer/Household Rental
Market Size
Global subscription economy market is forecast to grow to $ 530 BN by 2020
Korea consumer/household rental market is also forecast to grow to ₩ 10.7 TN by 2020
with 5-years CAGR of 16%
5.0 5.5
6.5
7.6
8.5
10.7
2015 2016 2017 2018 2019E 2020E
(Unit: Trillion won)
Source : Korea Development Institute
Subscription Economy Index
SEI = Total subscription business sales of companies (SaaS/IoT/Media)
Source : ZUORA
(2011 = 100)
S&P500 Revenue
CAGR 3.2%
US Consumer
Sales Index
CAGR 3.3%
SubscriptionEconomy
Index
Growth of Coway
Coway has shown steady growth with revenue of ₩ 2.7 TN and EBIT of ₩ 0.52 TN in 2018
The number of gross accounts also has shown stable growth with 7 MN (Korea 5.9 MN
and Overseas 1.1 MN) accounts in 2018
Coway is expected to show rapid growth in SEA and the US markets
Financial Performance
1.82 1.99
2.12 2.16 2.32 2.38
2.52 2.71
2.99
0.39 0.41 0.54 0.58 0.69 0.57
0.71 0.78 0.82
0.23 0.23 0.34 0.36 0.46 0.34
0.47 0.52 0.55
2011 2012 2013 2014 2015 2016 2017 2018 2019E
Revenue EBITDA EBIT
Number of Gross Accounts
(Unit: Trillion KRW)
3%5%
6% 9%12%
16%
5.6 5.9
6.1 6.2 6.5
7.0
3%
5% 4%
2%
5%
7%
2013 2014 2015 2016 2017 2018
Korea Overseas YoY Growth
(Unit: Million Accounts)
What is Subscription Economy?
Subscription and Sharing Economy has risen as new business models as a result of paradigm
shift called ‘The Age of Access’ in the 4th Industrial Revolution
People have shown increasing interests in subscription economy as it can generate
stable cash flow without conflicts with existing ecosystem
Sharing Economy Subscription Economy
‘The Age of Access’
People share products and services
The key goal is to improve efficiency of resources
People sign up membership service to use products and services
The key goal is to provide customized experience
Trendshift
‘Product Subscription Economy’ is expected to rapidly rise after ‘Contents Subscription’
While rental model was slow in innovation, it has growth potential based on integration
with IT components
Potential of Product Subscription Economy
Netflix Model Rental ModelMembership Model
Provide infinite access to contents
with monthly subscription
Deliver curated products with
monthly subscription
Provide door-to-door service
with monthly subscription
‘Product’‘Content’
Synergy between Subscription Economy and IT
Product subscription economy model was not globally adopted due to difficulty of
providing services to wide region
However, Product Subscription started to rise as mainstream with recent development of
AI/Cloud technology and logistics innovation
Coway also partnered with Amazon DRS to expand its business in the NA market
One of top sellers among Amazon’s air purifiers
Expanding product category including water purifier and bidet
Coway Air-purifier ‘Air Mega’ IoT functions of ‘Air Mega’
Filter lifetime calculation
Filter order through Amazon with alarm to a user
Filter delivery
Smart Home Market Forecast
Smart Home is intelligent service based on appliances connected to network with IoT
Global Smart Home market is forecast to witness a 6-yrs CAGR of 43% to $ 192 BN in 2023
Coway has advantages in transforming to global Smart Home business
Global Smart Home Market Size
22
51
74
120
150
172
192
2017 2018 2019E 2020E 2021E 2022E 2023E
(Unit: Billion USD)
Startups in Smart Home Market
Source : IHS Markit Source : CB INSIGHTS
Active M&A Trends
Amazon and Google have competitively acquired Smart Home companies
Google acquired NEST for $ 3 BN and Amazon acquired RING for $ 1 BN
They aim to provide the best service by collecting and analyzing data from various
IoT-based devices in households
Google acquired NEST for $ 3 BN
NEST offers customized A/C and heating system based
on machine-learning analysis of data collected from
motion, moisture, temperature sensors
Amazon acquired RING for $ 1 BN
RING helps a user to monitor a visitor through its
doorbell camera
NEST by Google RING by Amazon
Synergy with Netmarble
AI
DataAnalysis
Game Device (Netmarble) Smart Home Device (Coway)
Know-how Transfer
DataAnalysis
Cloud
The goal is to implement to all devices of Coway the know-how of user big data analysis
and operation which Netmarble has accumulated via game business
Cloud
Big Data AIBig Data
Secure a Stable Revenue Business
With the acquisition of a growing platform-based, subscription-economy company,
Netmarble’s operational stability is expected to be further strengthened
Hit-driven
game business
Platform-based
Subscription
Economy business
+
Thank you.