Seoul-based Shift Up went public last week, raising $320M on the Korean stock exchange. Its stock climbed 49% on its first day of trading, and though the price will inevitably fluctuate once the IPO exuberance fades, Shift Up is undoubtedly one of the industry’s most fascinating companies.

Founded in 2013, it had launched two free-to-play mobile gacha titles and established a close relationship with Tencent as an investor and publisher before releasing Stellar Blade, a premium, single player PS5 exclusive that was the top-selling console game this April.

The audacity to even attempt such an ambitious and unlikely project, let alone succeed in topping the charts, is remarkable. Shift Up developed a best-selling game on a new platform, with a new publisher, using different technology, and an unfamiliar business model. All the while, it continued to grow one of the top mobile games in the world, Goddess of Victory: Nikke. The company has less than 300 employees, and its founder and CEO, Kim Hyung-tae, is now a billionaire.

Hyung-tae is something of a celebrity in certain gaming communities. Known for his unique style of character illustration, he cut his teeth on early 2000s PC and console franchises like War of Genesis and Magna Carta before leading art direction for Blade & Soul at NCSoft. But he wanted creative control over the entire game development process, so he quit to start Shift Up in 2013.

Due to his fame, Hyung-tae received early investment and a publishing deal for Shift Up's first game, Destiny Child, from LINE Corp, a major social and messaging platform in Korea and Japan. After the game topped the charts in Korea upon release, Shift Up bought back the publishing rights from LINE, and continued to amass a who’s who of Korean strategic investors, such as Kakao, Smilegate, and Wemade, the latter of which eventually sold its stake to Tencent. The studio’s valuation has increased fivefold over eight years in the lead-up to its IPO.

A Very Optimistic IPO Debut

Shift Up ended its first day on public markets with a market cap of ₩4.12T, or nearly $3B. As gaming advisor Dr. Serkan Toto described on X, “Shift Up is now worth as much as Koei Tecmo — essentially just on the back of 2 IPs + implied future blockbuster production potential.” All of a sudden, Shift Up is now Korea’s fourth-largest game developer, though its market cap lags significantly behind gacha rival HoYoverse’s private valuation of $23B.

The company announced its planned IPO in March, even before Stellar Blade’s release in April. This apparently spooked Korean regulators since the studio was reliant on its premier title — Goddess of Victory: Nikke — for over 97% of its revenue. (Shift Up ceased supporting its first game, Destiny Child, in September.) As a result, Shift Up delayed its intended IPO until July.

This strategy breaks many conventions of large companies. Planning to go public while essentially all revenue comes from one game (and having only brought three games to market) is bold, to say the least. Such high concentration in a single title, followed by a highly risky expansion into an entirely different platform, genre, and business model, would in theory give investors pause. Yet many analysts appear extremely excited by Shift Up’s prospects.

Daishin Securities described how “the company stands out from local rivals due to its intellectual property, diversified platforms, and high success ratio” when it issued a "buy" recommendation. Arun George of Global Equity Research declared: “The investment case rests on a stellar game development track record, several growth drivers, high profitability, and cash generation.”

Shift Up’s Games Portfolio

Shift Up’s reliance on a single game is reminiscent of crosstown PUBG firm, Krafton. In fact, Shift Up is the first significant public offering by a Korean gaming developer since Krafton’s $3.8B IPO in 2021.

While Stellar Blade has put Shift Up on the map in the West and for the PC/console audience at large, the foundation of its success is gacha hit Goddess of Victory: Nikke, and to a lesser extent, its first title Destiny Child (also a gacha).

To be blunt, Shift Up’s top game is more than a little cringe. As we covered in a Naavik Deep Dive product deconstruct, the core loop is to collect various Nikkes — oversexualized waifu cyborgs with cartoonish proportions — that fight robots for the player, who acts as their commander.

This is unavoidably a game that is meant to tickle the fantasies (and wallets) of its mostly male players, and Destiny Child was much the same. Though Stellar Blade also faces significant criticism about the oversexualization of its main character, Eve, Shift Up’s console debut received strong positive reviews on top of tremendous commercial success, with an 82 metascore and particular admiration for its combat and boss fights. But regardless of platform, Shift Up’s games unfortunately go out of their way to present their heroines in problematic ways.

Nikke, originally born from an internal game jam, has not only been a boon for Shift Up, but for its publisher Tencent as well. During its launch month in November 2022, it quickly soared to become the fourth highest-grossing game globally, according to Sensor Tower. More recently, Nikke was specifically called out in Tencent's latest Q4 earnings report as a source of significant growth, and at one point it was Tencent’s third-highest earning game.

Tencent is Shift Up’s second largest shareholder, and its global publishing label Level Infinite not only manages distribution worldwide, but also provides login and identity for Nikke via the Level Infinite Pass shared login system.

One particularly unique aspect of Nikke’s live ops is its collaboration with PC/console titles. For example, Shift Up ran a crossover event with NieR: Automata, which reportedly boosted Nikke’s revenue by 215% during the period. Platinum Games, the developer of the NieR and Bayonetta series, is an obvious inspiration for Shift Up’s work, especially Stellar Blade.

Right now, Nikke features a live ops minigame collaboration with Dave the Diver. Though it may seem unlikely for a beloved, relaxing indie title to integrate with a hardcore F2P gacha, there is more overlap than may appear: Both developers are quasi-independent Korean studios with an admiration for each other’s games. Shift Up said it approached the collaboration with the intent to “faithfully preserve the original gameplay experience and fun,” and there is even a plan to bring a Nikke-themed boat skin into Dave the Diver.

Stellar Blade, first revealed as a multiplatform console and PC title in 2019 with the working title Project Eve, was re-revealed as a PlayStation exclusive at Sony’s PlayStation Showcase in 2021, with inspiration clearly drawn from the likes of Bayonetta and NieR: Automata. In fact, Stellar Blade was announced at the same press event as Nikke — though Nikke would end up releasing two years sooner.

It’s very unusual to see studios investing so heavily in two very different corners of the gaming market concurrently, but Hyung-tae has said his goal is “to create a valuable IP” in order to “solidify” Shift Up’s brand and form “a fandom.” “We minimized the parts that users might find objectionable, such as micropayments, for the sake of brand value, and we plan to reflect this to a level that users can accept,” he continued.

In short, creating a beloved brand identity for Shift Up meant reaching single-player console gamers. Befitting the different platforms, Nikke was developed using Unity, while Stellar Blade was built in Unreal Engine 4. The lack of development synergies between the two development teams is worthwhile to consider, as is the length of time and development expense Stellar Blade must have incurred in its five years of development, especially in comparison to Nikke’s quickly soaring revenue.

The Future of Shift Up

While the sudden release of a PS5 exclusive and an IPO shortly afterward may seem unusual for a mobile studio, it's clear Hyung-tae had always intended Shift Up to be a multiplatform developer that owns several strong IPs. With the influx of capital, Shift Up will continue to build new games across multiple platforms, turning them into leading franchises under a singular studio brand.

According to Bloomberg, Shift Up “plans to use the IPO proceeds to diversify its game portfolios,” and even before the launch of Stellar Blade, job postings revealed the company was developing a cross-platform urban sci-fi action RPG in Unreal Engine. This would imply a brand new IP (its fourth) for the company, and bring it into even more direct competition with HoYoverse — especially given the thematic similarities it may share with Zenless Zone Zero.

Shift Up’s franchise portfolio actually began by licensing the Destiny Child IP to another Korean studio to create a tower defense game years before Nikke launched. Now, the company will want to capitalize on the success of Stellar Blade; it has stated a desire to bring the game to PC (if Sony permits it), and will likely release new content, game modes, and eventually a sequel. At the same time, Nikke’s live services continue to drive the bulk of the company’s revenue and brand awareness, especially in markets like Korea, Japan, and China.

While Stellar Blade certainly helped the studio break into Western markets, it is not necessarily the case that Shift Up needs to appeal to Western gamers for growth. While China’s top publishers must look to the West, due in part to their existing scale and domestic regulation, a smaller developer like Shift Up still has significant room for expansion, primarily in Asia, without needing to adapt to Western preferences as much.

Shift Up is also likely to continue working with publishers instead of self-publishing. In most cases, a studio that relies on third parties for market access is not an especially attractive investment due to the lower margins and lack of control. But Shift Up’s already high profitability — thanks to Nikke — and its investor-publisher relationship with Tencent gives it greater distribution (particularly in China), development infrastructure, and marketing resources than it would have otherwise.

Tencent remains the second-largest shareholder with 35% of the company at the time of the IPO (with Hyung-tae holding 39%). There is even some cynical speculation that Shift Up’s IPO is merely a step toward an eventual Tencent buyout.

This apparent lack of interest in self-publishing is one of the many unique things about Shift Up, one of gaming’s newest public companies. But like its ambitious multiplatform development cycles, it makes sense in the context of the studio’s history. While it’s still walking a risky path with its overreliance on Nikke, Stellar Blade further proved the company’s abilities, and its next title is even more ambitious. Shift Up’s unique outlook makes it a formidable player as it takes its first steps into the public markets.

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