WSJ News Exclusive | Tokyo Game Maker Nexon Buys Into Marvel Directors’ Production Company

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

The deal doesn’t require either company to produce 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 the board of AGBO, but the Russos and their executives will continue to own a majority 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 dissolved financing borders for entertainment that seeks a global audience. Through the deal, Nexon games and properties could be adapted into AGBO film and TV projects. The two companies hope to replicate the success the Russo brothers had in franchise adaptations at

Walt Disney Co.

’s Marvel Studios, signaling Hollywood’s continued focus on blockbuster entertainment that can sell tickets, toys and more.

The deal follows a string of investments capitalizing on a surge in production driven by Wall Street’s embrace of streaming services at major studios and at tech giants such

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 put a “for sale” sign in front of 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. SpringHill Co., the entertainment firm co-founded by basketball phenom LeBron James, unloaded a stake in October. Similar deals are expected to follow, say investors and production company executives.

Some of Nexon’s brands are relatively unknown in the U.S., but popular across parts of Asia with games including “Dungeon & Fighter” and “MapleStory.” The company focuses on games and immersive worlds that can take years to explore, said Chief Executive Officer

Owen Mahoney.

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

AGBO, which the Russos co-founded in 2017 with

Mike Larocca,

has had a mixed record with some releases, such as the action thriller “21 Bridges” and war drama “Cherry.” Its slate of coming projects includes 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 rogue CIA operative.

A spokeswoman for privately held AGBO declined to provide detailed financial results for the studio. The company was profitable in 2021, according to a person familiar with the matter, and the combined budgets for its productions neared $1 billion within the past year.

Despite co-directing one of the highest-grossing theatrical releases of all time, “Avengers: Endgame,”

Joe Russo

said that joining with a videogame company made more sense after observing the tastes of his four children, all under the age of 25. “A movie theater is not necessarily the primary source of entertainment for them,” he said.

Nexon broached a potential deal last summer over tuna tartare and salad at the Hotel Bel-Air in Los Angeles, according to people involved in the deal. AGBO Chief Executive

Jason Bergsman

met with Mr. van Dyk and discussed their shared interests, including building immersive fictional worlds and using technology such as Epic Games Inc.’s Unreal Engine. In September, Nexon pitched AGBO on an investment, which AGBO referred to an investment bank that was in discussions with numerous potential investors on its behalf.

“It became clear our companies have a similar mind-set about the future of franchise entertainment, presenting good potential for us to work together,” Mr. Bergsman said.

The deal, which values AGBO at $900 million before cash, doesn’t guarantee Nexon rights to acquire a majority stake in AGBO, according to a person familiar with the matter.

AGBO plans to use some of the capital from Nexon to develop new movie and television franchises, Mr. Bergsman said. The cash will enable AGBO to own a bigger stake in some of its productions, especially some that are slated for theatrical release and potentially videogames, he said.

Write to Erich Schwartzel at [email protected] and Benjamin Mullin at [email protected]