'We don't think Hi-Fi Rush 2 is going to make us money:' Krafton CEO says Tango Gameworks acquisition is about legacy

Krafton CEO Changhan 'CH' Kim has explained the acquisition of Tango Gameworks from Microsoft was a "last minute deal."

Speaking to Game Developer about the buyout, which will see Krafton acquire the Japanese studio and Hi-Fi Rush franchise, Kim said the deal was creatively rather than commercially motivated.

"We wanted to maintain their legacy," says Kim. "Although they did not have a big success in their games, we saw many creatives worth pursuing. That's why we wanted to work with that organization."

Kim says Krafton wanted to "acquire as many people as possible from Tango to continue their legacy," with the studio having been shuttered by Microsoft in May. The South Korean company, best known for developing PUBG, was also rather smitten with Hi-Fi Rush and sought to acquire the IP to develop sequels.

"Because Hi-Fi Rush fans really want to see sequels, we negotiated with Tango Gameworks' parent company [Microsoft] to acquire that IP as well," he continues. According to Kim, the sudden shutdown of Tango Gameworks left employees "anxious," which is pushing Krafton to complete the deal as soon as possible.

"We wanted to make sure the deal happen fast to minimize that gap in their career," he adds. Kim says the scale and complexity of a conglomerate like Microsoft meant it was difficult to move quickly, but noted the Xbox maker was "open" to the sale of both the studio and its IP.

Given Krafton felt the move was time sensitive, the company focused on purchasing the Hi-Fi Rush franchise as opposed to Tango's entire IP slate–which also includes The Evil Within and Ghostwire Tokyo.

"If we were to acquire all IPs, I think it's going to complicate the deal too much. Krafton is a pretty big company, but Microsoft is very complicated," he says. "We wanted to help the team continue developing their games, but especially Hi-Fi Rush. When I think about our fans, I think what they really care about is Hi-Fi Rush sequels."

The acquisition is still being finalized, preventing Kim from disclosing how much Krafton has spent on the Japanese studio. He did, however, describe the purchase as "not too expensive, or too cheap either."

"We cannot really translate the volume into money. It's more about the significance," he adds. "The dollar amount was not really important to Microsoft."

It was previously reported by Game File that Krafton has brought over 50 employees from Tango Gameworks, representing around half of the development team as it existed under Microsoft. The aim now is to help the studio rescale and perhaps even expand.

"I think a minimum of 100 people [is what we're aiming for]. We have to scale it to around that size. That's a minimum requirement to continue developing the franchise. Or perhaps they'll need a bigger team. We haven't decided on that, but we don't plan to reduce the size of the team at all," says Kim.

"They have to work on new projects as well, so there is a great possibility the team will scale up even further."

Krafton boss hoping to acquire more studios like Tango Gameworks

As for what expectations Krafton has for the studio, Kim hopes to champion creativity without fear of failure. He claims Krafton will strive to take risks to produce titles that feel innovative rather than derivative. "We're trying to increase our portfolio lineup and Tango Gameworks comes into play [there]," he says, noting that many of Tango's previous games "may not even have broken even."

"We can't acquire Tango Gameworks based on their financials or their numbers, right? We don't think Hi-Fi Rush 2 is going to make us money, to be frank," he continues. "But it's part of our attempt. We have to keep trying [to develop games] in the spirit of challenge-taking.

"Tango Gameworks are creative. They want to try something new, and we want to do more of that. [Making] video games is really a hit or miss industry, and that is risk taking. But having more project lineups is actually a way to mitigate risk, because one of them might work out."

When pressed on whether Hi-Fi Rush was a commercial success for Microsoft, Kim says he doesn't know exactly how much the game earned, but when considering production costs he feels it might not have delivered a substantial return.

"Did it add a lot of money to Microsoft? That might not be the case," he says. "I'm not saying I know how much they made–this is just my guess. But the IP itself was very fresh [and featured] new types of gameplay. I know it's not a game a lot of studios were making, and we have to keep trying [that approach]."

Kim suggests corporations like Krafton shouldn't aspire to deliver an infinite procession of chart-topping hits, largely because that's a wildly unrealistic aim. Instead, he feels the goal should be to "break even" while nurturing creativity.

"Just recoup the production costs, please, is what I say. But that in itself is a pretty big challenge. If you try doing that, you might actually land a big hit. I don't trust people who say 'oh, this is going to be a hit.' I want someone who can try something new," he says.

"The big hit shouldn't be your goal. If you think about it that way, Hi-Fi Rush might have brought in a little bit of a minus in terms of the financials, but it's a team that should be encouraged to create something new and continue their journey. We want to have more teams like that under our umbrella."