Last year, South Korean game developer Shift Up successfully completed its initial public offering (IPO) and became a listed company, with shares jumping by 49% (to about $64.89 apiece) in the first day of trading. This was largely due to the worldwide success of Shift Up’s flagship IPs – Stellar Blade and Goddess of Victory: NIKKE. However, as reported by South Korean outlet Global Economic, investors and analysts have recently raised concerns over the studio’s future due to a lack of transparency in its governance and potentially risky relationship with Chinese Internet giant Tencent.
While Shift Up’s founder and CEO Hyung-Tae Kim holds significant decision-making authority in the company, it’s been pointed out that the gap between his stake and the stake of Tencent, Shift Up’s second largest shareholder, is too narrow. Kim owns a 39% stake, while Tencent, through its wholly-owned subsidiary Aceville, owns 34.58% of Shift Up – a difference of only 4-5%.
Therefore, if Tencent were to increase its stake further, it could gain considerable influence over Shift Up’s management. Furthermore, since Tencent not only holds equity but also handles global publishing of Shift Up’s mobile games, they’re responsible for generating a significant portion of the studio’s revenue. As a result, Shift Up’s future financial performance could fluctuate greatly depending on their relationship with Tencent, which, according to investors, indicates a need for a contingency plan.
Additionally, on June 2, Shift Up published a report on its corporate governance which showed a very low level of transparency. At 33.3%, its compliance indicators were half that of the average listed company. These indicators are a measure of factors such as minority shareholder rights, board independence, and internal auditing, so investors are anxious to see improvements from Shift Up in those fields.
On a more positive note, Shift Up has seen overwhelming success from its recent PC launch of Stellar Blade, breaking concurrent player records of past Sony PC releases like Ghost of Tsushima. The studio is also in the midst of expansion as it starts development of its brand-new IP Project Spirits in earnest.
