Exploring the motivations behind Crescendo’s multi-million dollar investment in LINE NEXT

Korean Metaverse Platforms Face Uncertain Future Amidst Mounting ChallengesSeveral Korean metaverse platforms, which had promised to usher in a new world bridging online and offline experiences, have found themselves in premature jeopardy, according to industry observations. Various companies that had earmarked metaverse platforms as their future growth driver failed to establish an effective revenue structure to bring this to fruition, leading to speculation that there are limits to successfully developing this branch of business.Photo by GuerrillaBuzz on UnsplashDwindling popularityMetaverse platforms first garnered significant attention during the COVID-19 pandemic, but interest has waned since then — in Google Trends, the keyword “metaverse” has been showing a clear decline since reaching its peak in November of 2021.The actual usage rates of such platforms have also been low. According to the Korea Information Society Development Institute, last year’s usage rate was a mere 4.2%, and some local government-funded platforms had only about 200 daily visitors despite considerable budget sizes.As a result, companies struggling with financial difficulties have opted to downsize their operations, strategizing for mid- to long-term approaches to improving efficiency until an era of metaverse popularization arrives.Roadblocks for small and large companies alikeAccording to industry sources on Friday, platforms like Cytown, developed by social networking space Cyworld, have shut down after just a year, while Kakao Games’ collaborative metaverse venture Colorverse and Com2us Group’s Com2Verse have entered into restructuring phases.Com2verse’s decision comes just two months after the official release of its all-in-one metaverse platform. The company plans to provide three months’ salary to those applying for voluntary resignation and prioritize hiring new faces when expanding the workforce in the future. The scale of voluntary resignation has not been disclosed.The restructuring process will affect all employees except those involved in core functions such as development and services. Employees opting for voluntary resignation will also have the option to transfer to other subsidiaries under Com2us Group.Founded in April of last year, Com2Verse recorded an operating loss of KRW 8.3 billion (approximately $6.2 million) in the first half of this year. Its parent company, Com2us, also recorded consecutive deficits, starting with an operating loss of KRW 19.4 billion in last year’s fourth quarter, followed by losses of KRW 14.8 billion and KRW 5.6 billion in this year’s first and second quarters, respectively. Despite maintaining a stable revenue in its game business, the company faced challenges due to the poor performance of its subsidiary companies and the mounting labor costs needed for accelerating new business endeavors.Com2us has thus determined that it would be difficult to boost revenue and improve cost structure in the short term. Hence, the company chose to restructure its organization while retaining key personnel working under the Convention Center, an event platform on Com2Verse, which is expected to drive the business forward.Com2us emphasized that its commitment to the metaverse market remains unchanged, stating, “Given the current situation of local and international metaverse industries, we believe that significant time and investment will always be necessary. Therefore, we have decided that choosing our priorities and focusing on them is the best way to respond to long-term market changes.”Similarly, Kakao Entertainment had signed a memorandum of understanding (MOU) last year with Neptune, a game developer in which Kakao Games owns a 35% share, and Colorverse, a metaverse company in which Neptune owns a 44% share, to jointly work on an open three-dimensional metaverse platform also called Colorverse. However, Colorverse has also undergone restructuring since earlier this year to reduce its workforce after it posted an operating loss of KRW 11.5 billion last year.Industry analysts have attributed Colorverse’s business slump to the departure of Namkoong Whon, the former CEO who had pinned his hopes on a metaverse as one of the conglomerate’s promising enterprises.Korean game developer NCSOFT had also said that it is building its own metaverse platform dubbed “Miniverse,” which allows various types of online gatherings from community meetups and study groups to remote classes and work. The company had even conducted a welcome presentation for new employees through Miniverse, but news regarding the project has been scant since then.As these major corporations have been struggling to overcome such hurdles, smaller startups have undoubtedly been facing increasingly dire circumstances as well, with some even resorting to unexpected suspensions of service operations without prior notice. Others have promoted themselves as metaverse platforms and issued virtual assets that can be used within the virtual world, but in many cases, these assets have proven to be of little benefit or use.“A revenue structure that can generate income from metaverse platforms has not yet been established. With the gradual decline in remote education, meetings, and telecommuting after the easing of the pandemic, the value of metaverse platforms has also decreased. Also, factors like increased information technology (IT) labor costs and the overall state of the global economy are influencing business momentum,” an industry insider commented.

Tokyo Government Launches Initiative to Support Security Token BusinessesThe Office of the Governor for Policy Planning under the Tokyo Metropolitan Government made an announcement yesterday regarding its new initiative aimed at promoting the issuance of security tokens.Photo by Ben Cheung on PexelsBlockchain-based security tokensGiven the growing interest in blockchain technology, which allows for decentralized peer-to-peer transactions, various applications have emerged within the financial sector. Notably, blockchain-based security tokens hold significance as they possess the potential to promote retail investments and reshape startup financing. This potential largely stems from the fact that these tokens can be issued in smaller denominations than traditional securities, facilitating direct connections between issuers and investors.Promoting growthIn an effort to broaden this market, the Tokyo government undertakes this initiative to foster the growth of security token issuance. This endeavor is expected to stimulate the development of various use cases for security tokens, as well as facilitate the widespread exchange of valuable expertise and insights into potential challenges within this sector.Financial supportIn accordance with the Financial Instruments and Exchange Act and the Specified Joint Real Estate Ventures Act, the Tokyo government will introduce subsidies for Tokyo-based businesses involved in security token-related activities. This initiative aims to provide financial support to businesses by covering a portion of the expenses associated with token issuance. Eligible expenses that can be subsidized by the government include platform usage, consultation, and system development costs.Under this program, the Tokyo government will offer financial assistance by funding up to half of the project-related expenses, with startups eligible for up to two-thirds. The maximum grant amount per project is set at 5 million yen ($36,000). Businesses can apply for these subsidies starting from May 31, 2023, with the application window remaining open until February 29, 2024. Although applications can be submitted at any point during this period, the window will close once the allocated budget is exhausted.

Blockchain-based digital payment network enterprise Ripple has announced that it has acquired in-principle approval of a financial services license from the Dubai Financial Services Authority (DFSA) in the United Arab Emirates (UAE). In a press release published on the firm’s website on Oct. 1, Ripple claimed that the approval “unlocks Ripple’s end-to-end payment services in the UAE, boosting Middle East operations.” The in-principle approval is a first step on the company’s path towards full approval. That eventuality will enable Ripple to offer cross-border payment services relative to fiat and digital assets, within the Dubai International Financial Center (DIFC) special economic zone.Photo by Moose Photos on PexelsExpanding Middle Eastern presenceThe company claims that pursuing the license is part of a broader strategy to expand its Middle Eastern presence. It follows on from the firm’s move in 2020 to establish its Middle Eastern headquarters in Dubai. Ripple claims that the licensing “significantly strengthens Ripple’s global footprint as a regulated entity and enables the introduction of seamless cross-border payment services, including Ripple Payments Direct (RPD), in the United Arab Emirates (UAE).” In moving from in-principle approval to full approval, Ripple will have further obligations to accomplish, such as securing office space within the DIFC special economic zone. The company had previously indicated its intention of establishing an office within the DIFC. Back in August, it emerged that Ripple had partnered with the DIFC Innovation Hub with a view towards promoting blockchain and digital asset innovation within the UAE. Regulatory clarity in the UAERipple is striving to become the first blockchain-enabled payment services provider licensed by the DFSA. Once licensed, the company plans to roll out its enterprise-grade digital asset infrastructure. Ripple’s XRP has been one of five digital assets approved by the DFSA such that investment funds are allowed to invest in it, although the regulator did indicate in June that it is moving towards expanding the list of recognized tokens. Mired in legal difficulties with local regulator the Securities and Exchange Commission (SEC) in its home market of the United States in recent years, the company signaled a change of strategy in 2023, indicating its interest in focusing more on international expansion. While speaking at an event in Dubai at the time, Ripple CEO Brad Garlinghouse said that Ripple was expanding in Dubai. Taking to X in relation to this latest milestone, Garlinghouse wrote that “regulatory clarity is what businesses want, and what consumers need,” adding that “the UAE understands that.” In the company’s press release, Garlinghouse referred to the “forward-thinking regulatory approach” being pursued in the UAE, which he believes is positioning the country “as a global leader in this new era of financial technology.” The UAE isn’t the only focus for the company’s international expansion. Ripple has established an office in Singapore which handles over 50% of the firm’s payment flows. On Oct. 1, U.S. investment bank Houlihan Lokey published a report in which it highlighted Ripple as an emerging competitor to the SWIFT cross-border payments system.  Although the company has had some success in navigating its way through litigation with the SEC in the U.S., it’s thought that the dispute may be prolonged further as some commentators have suggested that the SEC plans to appeal a recent court decision.