Deal focus: DRX wants e-sports to surf the Korean wave

Jamie Park spent five years up to 2019 as the head of global business development at CJ E&M, a Korean talent agency and media company that produced the hit film “Parasite” and stages world tours for the rabidly popular K-pop boy band BTS. But his most insightful experience during this period was the last two years when he took the reins of the firm’s longstanding e-sports broadcaster OGN.

Park began to crystalize a vision for the global e-sports market, which he recognized as massive and rapidly growing but diffuse and somewhat unorganized. Last year, he left OGN to set up e-sports private equity firm ATU Partners as a subsidiary of his family’s business Kibo Steel. Woori Technology Investment and SB Partners came in as LPs as did industry players such as Kakao Games.

ATU’s debut fund closed at $17 million and immediately acquired 100% of Korean e-sports team DRX. This week, Seoul Investment Partners, Quantum Venture Korea, Shinhan Capital, Wonik Investment Partners, and Devsisters Ventures invested $10 million in the team with support from luxury handbags maker JS Corporation. The investors took a combined 25% stake.

Much of the plan is to recreate the Korean wave phenomenon in e-sports. To this end, Bae Yong-joon, a popular actor recognized as a key figure of the Korean wave, has come in as a DRX shareholder and strategic advisor on global branding. The US will be targeted in the first year, with China and Southeast Asia to follow in the next 4-5 years. ATU is pumping an additional $12.5 million into the effort.

“About 70% of the top e-sports players are from Korea and the audience base in the US is huge, but there is no clear bridge between them,” says Park. “A lot of Americans really want to invest in Korean teams and a lot of Korean teams want to go global in China and the US, but they don’t know how. I see a clear opportunity there.”

DRX is a successful team in tournaments for the game “League of Legends,” but the plan is to become a broader organization encompassing several teams dedicated to locally popular games. DRX would negotiate agreements with game publishers that allow it to carve out partial exposure to the intellectual property of their hit titles.

DRX gets 80% of its revenue from sponsors like Redbull, Kakao, and UK sports carmaker McLaren, but Park sees branded merchandise and fostering global fandom as the biggest opportunity.

“We can’t have 10 patches on our uniform, and some sponsors can drop their sponsorship abruptly. The potential for B2C is limitless and more sustainable compared to B2B,” he says. “Our superfans are willing to purchase DRX goods several times and attend fan meetings. Tickets for fan meetings sell out within an hour even though the first-tier price is $250.”

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• Topics
• North Asia
• Early-stage
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• South Korea
• TMT
• Qualcomm Ventures
• Venture
• ATU Partners