Tokyo Game Maker Nexon Buys Into Marvel Directors’ Production Company

Tokyo-based Nexon said it would invest $400 million for a 38% stake in AGBO, which produced the Netflix Inc. hit “Extraction” and has several film and TV projects in development across streaming services.

The transaction is valued at AGBO $1.1 billion, and AGBO has the option of requesting an additional $100 million from Nexon in the first half of 2022.

The deal doesn’t require either company to make movies or games using the other’s intellectual property, but executives from both said they would look for opportunities to work together. Nexon will get two seats on AGBO’s board, but Russos and his executives will remain majority owners of the company and control the board.

AGBO is the latest independent production firm to benefit from a wave of funding, showing how the streaming era has breached funding limits for entertainment that seeks a global audience. Through the deal, Nexon games and properties could be adapted into AGBO film and TV projects. Both companies hope to replicate the success of the Russo brothers in the Walt Disney Company’s franchise adaptation of Marvel Studios, indicating Hollywood’s continued focus on blockbuster entertainment that can sell tickets, toys, and more.

The deal follows a string of capitalizations on increased production driven by Wall Street’s embrace of streaming services at major studios and tech giants such as Apple Inc. and Amazon.com Inc. Last summer, Reese Witherspoon’s Hello Sunshine was sold to a firm. Backed by Blackstone Inc., a move that effectively places a “For Sale” sign against similar entities.

Since then, children’s entertainment firm Moonbug Entertainment Ltd. has been acquired by the same Blackstone-backed company, which this week also bought a 10% stake in actor Will Smith’s Westbrook Inc. for about $60 million. The SpringHill Company, the entertainment firm co-founded by basketball phenom LeBron James, pulled down a stake in October. Investors and production company executives say similar deals are expected to follow.

Some brands of Nexon are relatively unknown in the US, but are popular in parts of Asia with games including “Dungeon & Fighter” and “MapleStory”. The company’s chief executive officer, Owen Mahoney, said the company focuses on games and immersive worlds that could take years to explore.

The company’s expansion into film and TV followed the hiring of Nick Van Dyke, a former executive in Disney’s corporate-strategy division and head of the film and TV division at Activision Blizzard Studios. Mr Van Dyke runs Nexon Film and Television.

AGBO, which Ross co-founded with Mike LaRocca in 2017, has had a mixed record with a few releases, such as the action thriller “21 Bridges” and the war drama “Cherry.” Its upcoming projects include several of the big-budget action movies Netflix and other services are producing to compete with the big screen, such as “The Gray Man” starring Ryan Gosling as a CIA operative.

A spokesperson for the privately held AGBO declined to provide detailed financial results for the studio. According to a person familiar with the matter, the company was profitable in 2021, and the combined budget for its construction within the past year was close to $1 billion.

Despite co-directing “Avengers: Endgame,” one of the highest-grossing theatrical releases of all time, Joe Russo said joining a videogame company made more sense after seeing his four kids’ tastes. Came in, all under the age of 25. “A movie theater is not necessarily the primary source of entertainment for them,” he said.

According to people involved in the deal, Nexon struck a potential deal last summer on tuna tartare and salad at the Hotel Bel-Air in Los Angeles. AGBO CEO Jason Bergsman met with Mr. Van Dyke and discussed their shared interests, which include building immersive fantasy worlds and developing Epic Games Inc. It uses technology like Unreal Engine. In September, Nexon pitched AGBO on an investment that AGBO referred to an investment bank it was discussing with a number of potential investors on its behalf.

“It became clear that our companies have similar mindsets about the future of franchise entertainment, which presents great potential for us to work together,” said Mr. Bergsman.

According to a person familiar with the matter, the deal does not guarantee Nexon rights to acquire a majority stake in AGBO.

AGBO plans to use some of Nexon’s capital to develop new film and television franchises, Mr. Bergsman said. The cash will enable AGBO to hold a larger stake in some of its productions, especially some that are slated for theatrical release and potential videogames, he said.

This story has been published without modification to the text from a wire agency feed