Giant Step Entering KOSDAQ... Targeting Metaverse Market with VFX Technology

The Metaverse is becoming a reality. The term Metaverse is a combination of "Meta," meaning virtual, and "Universe," meaning world. It is similar to the spaces "Matrix" and "Oasis" featured in the movies "The Matrix" and "Ready Player One." The COVID-19 pandemic accelerated the adoption of non-face-to-face (untact) culture. Generation Z, born from the mid-1990s to early 2000s, adapted most quickly to the pandemic situation. They began communicating by creating avatars within the Metaverse. The Metaverse is most actively realized through gaming. With the advancement and integration of various technologies such as location-based technology (GPS), augmented reality (AR), and digital graphics, diverse Metaverses are emerging. Asia Economy aims to assess growth potential in the Metaverse environment by analyzing Big Hit Entertainment and Giantstep.

[Asia Economy Reporter Yoo Hyun-seok] Visual effects (VFX) company Giantstep is entering the KOSDAQ market. Although it recorded losses until last year, it plans to turn a profit this year by introducing various immersive contents in line with the blossoming Metaverse market.

Giantstep, established in 2008, is a specialized company in advertising and video VFX. As of the third quarter of last year, content production such as advertising, video VFX, and real-time content accounted for 77% of total sales. Other sales include video content sales (16.6%), broadcasting equipment products and merchandise sales (3.4%), and broadcasting equipment service sales (2.9%). The company is now expanding its business into immersive new media content such as virtual reality (VR), AR, interactive design, and holograms.

VFX is a technique that synthesizes images or videos to create scenes that cannot exist in reality or are difficult to film. It is used in various content industries such as advertising, gaming, and movies. Based on this technological capability, Giantstep conducted the paid 'XR Live' concert 'Beyond LIVE' with SM Entertainment last year and participated in the production of the girl group 'aespa.' It also operates the real-time untact XR live show on Naver's live streaming platform 'NOW.'

Additionally, Giantstep introduced the 'Vincent Project,' a real-time engine-based virtual human capable of responding and conversing in real time. The company has also steadily prepared for overseas market expansion. It has a branch in the United States and serves as an official vendor for global content producers such as Walt Disney, Netflix, Google, and NBC Universal.

Giantstep plans to prepare for the growing Metaverse industry by integrating real-time engine technology with visual creativity. In particular, it plans to showcase content where virtual characters, artists, and celebrities are augmented into reality, enabling real-time live broadcasts where actual people and virtual humans interact and move together. Kang Kyung-geun, a researcher at NH Investment & Securities, explained, "Giantstep possesses optimized technology and equipment operation know-how for producing various real-time content," adding, "Expansion of real-time content through additional equity investments from big tech and entertainment companies and joint ventures (JVs) is expected."

Despite high expectations, the company has yet to turn a profit. In 2018 and 2019, it achieved sales of 20.5 billion KRW and 21.2 billion KRW, respectively, but recorded operating losses of 2.5 billion KRW and 2.6 billion KRW. As of the third quarter of last year, cumulative sales were 13.6 billion KRW with an operating loss of 1.8 billion KRW. However, it passed the technology evaluation by Korea Enterprise Data and the Korea Institute for Advancement of Technology and is proceeding with an initial public offering (IPO) through a special listing for technology growth companies. The desired public offering price range is 9,000 to 11,000 KRW. After institutional investor demand forecasting on the 10th and 11th, the final public offering price was set at 11,000 KRW.

The desired public offering price was determined using a comparative valuation method based on the price-earnings ratio (PER), referencing estimated net income for 2023. According to the prospectus, Giantstep expects to record sales of 35.3 billion KRW and an operating profit of 4.5 billion KRW this year, turning profitable. It also forecasts sales of 43.6 billion KRW and 53 billion KRW and operating profits of 8.2 billion KRW and 12.3 billion KRW for 2022 and 2023, respectively. However, these are projections and may vary depending on actual business performance.

Giantstep anticipates a turnaround as investments made so far are expected to generate profits in earnest. A company representative said, "We established the GX-Lab, a technology development research center, in 2016 and have continuously spent on R&D and promotional projects (such as the virtual human Vincent). Although these projects did not generate sales, costs were incurred, resulting in losses over three years. Since the second half of last year, commercialization of real-time content has begun, increasing sales, and we expect sales from the virtual human and virtual studio currently under development, making a turnaround possible."

Giantstep plans to enter the KOSDAQ market later this month after a two-day subscription for general investors on the 15th and 16th.

This content was produced with the assistance of AI translation services.