SKonec: Leading VR Content Developer




The author is an analyst of NH Investment & Securities. He can be reached at kyeongkeun.kang@nhqv.com. — Ed. 

Having developed VR content in the domestic game market for over 10 years, SKonec boasts the heftiest VR game track record among Korean players. With global IT companies now starting to launch XR devices in earnest, SKonec is well situated to see earnings growth going forward.

Boasts heftiest VR game track record among domestic developers

SKonec has been deep-diving in the VR game content development arena for over 10 years, boasting the highest output of such (around 40 titles) among Korean developers. In 2015, the company commercialized games for Samsung GearVR and it developed the medical content game Befearless. In 2017, the firm’s first-person shooter (FPS) VR game Mortal Blitz topped the global download rankings at the Sony PlayStation VR Store.

Following Meta, global IT giants such as Apple, Sony, and Samsung Electronics are entering the XR market in earnest. This direction bodes well for SKonec given its acumen in developing VR game content. We note that SKonec is currently developing the VR FPS Strike Rush (for the Meta Quest) via joint investment with Meta. Its planned future game releases are also to include the VR escape room genre title Escape Room (for the PSVR2 and Meta Quest).

Expanding business scope to include XR

SKonec’s proprietary technology features its large-space XR walking system. First developed in 2016, the system leverages walk-through technology that allows multiple people to move freely within a remarkably large space offering abundant virtual scenery. In addition to attracting the lion’s share of domestic spatial XR education/training projects, SKonec has also built up impressive track records with defense, chemistry, and public safety clients. Moving ahead, the company plans to build a platform with offering a wide variety of education and training content that is to be supplied to both private companies and public institutions.

We expect the firm’s operating losses to lessen this year, anticipating an OP turnaround from 2024, the year in which sales of new VR games should start hitting full stride. Although some short-term earnings risks exist, we advise that investors take a mid/long-term interest in an appealing player offering considerable VR game content experience at a juncture when the VR game market is set to bloom.

 

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