Table of Contents

1. Introduction

2. NHN’s 24-Year Journey of Innovation and Its Next Leap Forward
2-1. 24 Years of Growth Driven by Continuous Change and Innovation
2-2. Structural Limitations of the Gaming Industry and the Need for Global Expansion
2-3. ‘Pebble’: A Forward Base for NHN’s Global Web3 Gaming Expansion
2-4. Overcoming Regulatory Challenges in Web3 Social Casino Gaming

3. Launching Web3 Social Casino Game ‘Pebble City’ with NHN’s Core Capabilities
3-1. Why Web3 Social Casino Gaming?
3-2. Pebble: A Bridge Connecting Users to Web3
3-3. Pebble’s First Game: Pebble City
3-4. Limitations of Existing Web3 Games and How Pebble City Overcomes Them
3-5. Pebble City Roadmap

4. Conclusion

1. Introduction

When discussing the most prominent platforms for online board games in Korea—such as Go-Stop, poker, baduk (Go), and janggi (Korean chess)—NHN’s Hangame inevitably comes to mind. As a key player in the Korean gaming industry, NHN has significantly influenced the market since its inception. Established in 1999 as a gaming portal under the name Hangame, the company rapidly expanded into various gaming sectors, including online and mobile games. By 2019, NHN had evolved beyond gaming to become a global IT enterprise.

NHN has consistently adapted to technological and industry shifts, and now, it is making a strategic push into Web3. To facilitate this transition, NHN has established Pebble Stream and Pebble Games, affiliates dedicated to Web3 gaming services. The launch of Pebble City, a Web3 social casino game by Pebble Games on September 25, 2024, marks NHN’s first major foray into the Web3 gaming space. This report explores NHN’s perspective on Web3, how it is integrating blockchain technology into gaming, and the potential transformative impact of this shift.

2. NHN's 24-Year Journey of Innovation and Its Next Leap Forward

2-1. 24 Years of Growth Driven by Continuous Change and Innovation

Early Hangame homepage, source: NHN official newsroom

In the late 1990s, when internet penetration in Korea was still in its early stages, NHN launched ”Hangame,” the country’s first online gaming portal. Featuring simple board games like poker, Go-Stop, and Tetris, Hangame quickly became a sensation, amassing 10 million members and 120,000 concurrent users within its first year by 2000.

By the mid-2000s, NHN expanded beyond arcade games into high-end PC online games. The MMORPGs ‘C9’ and ‘Tera’ became notable successes, winning multiple awards at the Korea Game Awards.

The 2010s saw the rapid rise of the mobile gaming market, driven by the rise of smartphones from Apple and Samsung. NHN swiftly pivoted to capitalize on this shift, prioritizing mobile-first strategies. This transition proved successful—by Q4 2015, NHN’s mobile gaming revenue exceeded that of its PC gaming segment for the first time, setting a new record.

In 2019, NHN rebranded from “NHN Entertainment” to simply ”NHN,” signaling its transformation from a gaming company into a diversified IT enterprise. The company expanded into fintech, cloud computing, AI, and big data, increasing its corporate value. As a result, a growing share of NHN’s revenue now comes from non-gaming sectors, and this surge in non-gaming revenue has propelled NHN into a more diversified business model, with operations spanning gaming, payments, advertising, and other key sectors.

From 1999 to 2024, NHN has continuously evolved in response to industry changes. Now, the company is embarking on another industry-defining transformation—embracing Web3.

2-2. Structural Limitations of the Gaming Industry and the Need for Global Expansion

NHN’s strategic move into Web3 is driven by two primary factors: the structural limitations within the gaming industry and stagnation in NHN’s gaming revenue growth.

The gaming industry faces two major structural challenges: limitations in revenue models and the game lifecycle sustainability. The monetization strategies of game companies have evolved significantly. Initially, games were sold as one-time purchases. With the advent of PC online gaming, the subscription model gained traction. However, as the barrier to entry remained high, the free-to-play (F2P) model emerged, enabling developers to monetize through in-game purchases. The introduction of gacha mechanics—which leveraged probability-based microtransactions—further boosted revenue streams.

While F2P initially proved lucrative, aggressive monetization tactics and low gacha probabilities have led to growing regulatory scrutiny and user backlash, exposing the limitations of traditional in-game purchase models. This has created a pressing need for alternative revenue structures.

Another major concern is game sustainability. The market is oversaturated, with over 14,000 new games released on Steam in 2023 alone. This intense competition makes player retention increasingly difficult, especially for games without frequent content updates. A 2023 study found that 83% of mobile games shut down within three years of launch, highlighting the volatility of the industry. As a result, developers are actively seeking innovative models to extend game lifespans—one of which is Web3 technology.

NHN’s push into Web3 is not only a response to broader industry challenges but also a strategic move to address stagnating gaming revenue. The company faces two key challenges:

1. The declining share of gaming revenue within NHN’s overall business portfolio
2. Limited success in overseas gaming markets

Over the years, NHN has diversified beyond gaming, expanding into payments, advertising, and cloud services. While these non-gaming segments continue to grow, the gaming division has struggled to scale, reducing its contribution to NHN’s total revenue. This decline is largely due to industry-wide structural limitations that restrict growth opportunities in traditional gaming models.

Additionally, NHN’s overseas gaming revenue has been declining since 2020. A significant portion of NHN’s international earnings comes from the Japanese mobile game “LINE: Disney Tsum Tsum”, which has generated approximately 3.3 trillion KRW over the past decade. However, NHN’s over-reliance on a single title and its heavy concentration in Japan pose significant risks. To secure long-term growth, NHN must expand beyond Asia and penetrate global markets, including North America and Europe.

NHN sees Web3 as a potential solution to these challenges. Throughout its history, the company has demonstrated an ability to navigate and capitalize on industry transformations. Now, it is making a bold move into the Web3 space, aiming to unlock new phases of growth and innovation.

NHN views Web3 as a key to overcoming these challenges. Recently, the company has been refocusing on its foundational gaming business while pursuing new opportunities through genre diversification and global expansion. As part of this strategy, NHN is accelerating its Web3 initiatives. Having consistently embraced innovation to adapt to industry shifts, the company is once again making a bold move into the Web3 space—positioning itself for the next stage of growth.

2-3. ‘Pebble’: A Forward Base for NHN’s Global Web3 Gaming Expansion

To solidify its Web3 ambitions, NHN established Pebble Games and Pebble Stream as independent subsidiaries, collectively branded as ”Pebble.” While NHN continues to oversee game development and operations, Pebble is dedicated to Web3 gaming services. This separation enables NHN to pursue a targeted and strategic expansion into the global Web3 market.

The name “Pebble” carries significant meaning. It symbolizes the company’s goal of serving as a stepping stone that connects players, developers, and communities to Web3 gaming. Additionally, akin to the durability and stability of pebbles, Pebble aims to provide a reliable and secure Web3 gaming ecosystem. The name also draws inspiration from ancient Greek democracy, where pebbles were used in voting to symbolize user sovereignty, aligning with Web3 principles of ownership and governance.

Web3 gaming represents a paradigm shift from traditional gaming and internet business models. NHN structured Pebble as a separate entity to ensure dedicated focus on Web3 technologies and business models while maintaining operational flexibility for global expansion.

This independent structure also enables Pebble to navigate complex regulatory environments across different jurisdictions. While Pebble and NHN operate separately, NHN’s development expertise continues to support Pebble’s Web3 initiatives, fostering synergies that drive NHN’s global Web3 expansion.

2-4. Overcoming Regulatory Challenges in Web3 Social Casino Gaming

Both blockchain technology and social casino gaming face heightened regulatory scrutiny, making compliance a critical consideration. Many Web3 gaming projects encounter legal and regulatory hurdles, and Pebble is fully aware of these complexities.

Rather than circumventing regulations, Pebble is committed to full compliance. Given that Web3 gaming involves digital assets, it must adhere to strict virtual asset regulations and anti-money laundering (AML) laws. Additionally, social casino games fall under various gambling regulations worldwide. Notably, games that allow cryptocurrency or NFT cash-out often face stricter oversight, which is why Pebble has explicitly excluded direct asset liquidation from its platform.

To ensure regulatory compliance, Pebble is actively preparing to meet the Markets in Crypto-Assets (MiCA) framework in Europe, given its clearer and more structured regulatory approach compared to Korea’s uncertain regulatory landscape. Pebble is also working toward obtaining a Virtual Asset Service Provider (VASP) license to mitigate compliance risks and facilitate smoother market entry.

3. Launching Web3 Social Casino Game 'Pebble City' with NHN's Core Capabilities

In September 2024, Pebble launched ‘Pebble City,’ its debut Web3 game, under early access. This section explores why Pebble chose a social casino game as its first Web3 title, provides an overview of Pebble City, and examines how it aims to overcome the limitations of existing Web3 games.

3-1. Why Web3 Social Casino Gaming?

Social casino games, including slots, roulette, and poker, integrate social engagement elements, allowing players to compete with friends and showcase achievements. These games gained popularity in the late 2000s alongside the rise of social media platforms like Facebook, where games like Zynga Poker became global hits due to their simple gameplay and strong engagement loops. Over time, social casino games evolved into standalone apps, establishing themselves as a distinct and profitable gaming genre.

According to The Business Research Company, the global social casino market is projected to grow from $7.99 billion in 2024 to $11.2 billion by 2028, with North America holding the largest market share.

Pebble’s decision to launch a social casino game as its first Web3 title strategic one, NHN’s extensive experience in developing and operating web board games like Go-Stop and poker. Additionally, social casino games align with NHN’s strategy to expand into global markets, particularly North America.

Furthermore, social casino games revolve around betting and asset accumulation, making in-game economies a core aspect of gameplay. Pebble believes that Web3’s core principle—ensuring true ownership of digital assets—can significantly enhance the social casino experience by allowing players to genuinely own, trade, and utilize their in-game assets, fostering a more dynamic and player-driven economic ecosystem.

3-2. Pebble: A Bridge Connecting Users to Web3

Before exploring Pebble City, it’s essential to introduce the platform it’s built on—Pebble Platform. Launched in March 2024, Pebble Platform is NHN's Web3 gaming hub powered by the Sui Layer 1 blockchain. Moving forward, all Web3 games under Pebble will launch on this platform, enabling integrated asset management and cross-game interactions.

Currently in beta, Pebble Platform offers essential features such as social login via Google accounts and asset management. Future updates will introduce an NFT marketplace for trading and sales, allowing users to buy and sell game-related NFT items.

With these updates, Pebble Platform accounts will seamlessly integrate with Pebble City, ensuring that players can use assets acquired in one game across the ecosystem. This connection reinforces Pebble’s goal of making Web3 gaming more accessible.

3-3. Pebble’s First Game: Pebble City

Pebble City, Pebble’s first Web3 title, launched in Early Access in September 2024. The game offers a social casino experience, featuring slot machines, roulette, and poker. Available on Android and iOS app stores in key overseas markets, it blends familiar casino gameplay with innovative Web3 elements.

At its core, Pebble City shares similarities with traditional social casino games, where the primary objective is to amass in-game currency by spinning slot machines. However, it introduces several key differentiators that set it apart.

1) A Casino Metropolis Offering a Varied Experience

As suggested by its name, Pebble City is not just a single casino but a city composed of multiple casinos. This design allows players to explore and experience diverse casino environments within a single game, enhancing engagement and preventing the repetitiveness often associated with social casino titles.

Currently, the game features three open casinos: Showdown, Jackpot Planet, and Star Casino, with additional casinos planned for future updates. Each casino has a unique theme and consists of ten slot games and one community game. Slot games can be played solo and typically require just pressing a button to spin. Meanwhile, community games allow multiple players to play together, emphasizing the “social” aspect of social casino games.

For example, the Showdown casino, themed around poker, offers 10 standard slot games and a signature community game called Showdown. Unlike solo slot gameplay, Showdown is a Texas Hold’em poker game where players compete directly against one another.

Similarly, Jackpot Planet which embraces a futuristic "moonshot" theme symbolized by a rocket, features Astro Bet as its community game. In Astro Bet, multiple players place bets simultaneously, view results in real time, and engage in live chat. These distinct themes and interactive gameplay elements elevate Pebble City beyond conventional social casino games, delivering a more dynamic and immersive experience.

2) Unique Tokenomics with Three Currencies

Pebble City incorporates Web3 elements into a unique tokenomics structure. The game’s economy consists of three main currencies: Master Chip, Star, and Starble.

Master Chip is the most commonly used in-game currency in Pebble City, used for betting and winning rewards in various casinos. Players can earn Master Chips through in-game missions or purchase them via in-app purchases.

How to Earn Star, Source: Pebble City Blog

Star is a unique currency in Pebble City. Players can earn Stars not only by winning big (jackpots) but also by completing specific missions during gameplay, alongside the standard Master Chip rewards. The Stars earned are initially stored in a "Starbank", a piggy bank-like feature, and can be accessed by breaking it using a Starbank Hammer. Acting as a form of loyalty currency, Stars accumulate naturally through gameplay, serving as a strong incentive for players to keep engaging with the game.

Star Casino, Source: Pebble City Blog

Stars accumulated through gameplay can be used exclusively at Star Casino, a premium casino where Stars replace Master Chips as the in-game currency. Like other casinos, players bet with their in-game currency and win rewards, but the key distinction is that only Stars can be used in this casino. Since Stars are harder to obtain compared to Master Chips, betting with them creates a more thrilling and immersive experience for players.

Starble <> Master Chip Conversion Page on Pebble Platform (Upcoming Feature), Source: Pebble City Blog

Starble is a utility token on the Pebble platform that can be obtained by converting Stars. Currently, 10,000 Stars can be exchanged for 1 Starble token. Starble has two primary uses: it can be converted into Master Chips for casino gameplay or used as a transaction currency when the NFT marketplace launches.

Starble is not limited to Pebble City but serves as a common currency across the entire Pebble ecosystem, potentially linking various onboarded games and expanding the platform’s reach beyond gaming.

3) Casino Membership NFTs: A Web3 Loyalty Program

Beyond its utility token (Starble), Pebble City introduces a range of blockchain-driven innovations, with the Casino Membership NFT standing out as a key feature.

The Casino Membership NFT functions as a VIP card, granting holders various exclusive benefits within the casino. Key perks include airdrops of in-game assets such as free game currency (Rolling Chips) as well as community rewards. Additionally, NFT holders can own a fractional share of Pebble City’s casino, entitling them to receive a portion of the casino chip's revenue based on their holdings.

Available in multiple tiers, the Casino Membership NFT offers varying levels of rewards. It will be sold through a presale, with the whitelist currently open for registration. To qualify for the whitelist, players must actively participate in in-game events and engage with the Pebble City ecosystem through platforms like Zealy.

At the core of Pebble Platform’s vision is the principle of user ownership, shifting players from passive participants to stakeholders with vested interests in the game’s ecosystem. The Casino Membership NFT embodies this vision by enabling users to own a portion of the casino, fostering a stronger sense of investment and engagement. This structure is designed to enhance player loyalty and encourage greater participation in the ecosystem’s development. However, with no direct governance mechanisms currently in place, designing a framework that enables active user involvementremains an ongoing challenge.

Various Web3 elements integrated into Pebble City serve to increase user retention and ecosystem participation. In particular, the Starble token is expected to play a vital role in linking multiple games onboarded onto the Pebble Platform. Looking ahead, its utility may extend beyond the Pebble ecosystem, integrating with external services and contributing to a broader interconnected Web3 gaming economy.

3-4. Limitations of Existing Web3 Games and How Pebble City Overcomes Them

Even before developing Pebble City, Pebble recognized fundamental limitations in existing Web3 games and set out to design a game that successfully overcomes these challenges. This section explores the key issues identified by Pebble and how Pebble City addresses them.

Pebble has pinpointed three major limitations in current Web3 games: high entry barriers that hinder mass adoption, lack of engaging gameplay, and challenges in designing sustainable tokenomics.

1) Lowering Entry Barriers to Drive Mass Adoption of Web3 Games

One of the major obstacles for Web3 adoption is the high entry barrier that users unfamiliar with blockchain face when trying to understand its structure and mechanics. This issue is not only prevalent in Web3 games but also in the broader Web3 business landscape. Recognizing this, Pebble adopted a dual approach—ensuring accessibility for blockchain newcomers while still providing depth for experienced Web3 users. The goal is to make gameplay intuitive and enjoyable, even for those with no prior blockchain knowledge, while offering clear, simple guides for those who wish to explore Web3 mechanics further.

Pebble City exemplifies this approach. Upon first access, users can log in effortlessly via social accounts, bypassing common Web3 hurdles such as setting up a blockchain wallet, purchasing and transferring crypto assets, or navigating complex onboarding procedures. Similarly, Pebble Platform enables seamless account creation and wallet address generation through social logins, eliminating the friction typically associated with blockchain-based gaming.

2) Enhancing Gameplay Engagement Through Proven Game Development Expertise

Another major limitation of Web3 games is their lack of engaging gameplay. Some of the most well-known Web3 games, such as Axie Infinity and STEPN, garnered massive global attention and a large player base at their peak. However, these games have since seen a significant decline in user numbers and engagement, effectively becoming "ghost games."

A common issue with these Web3 games is that they prioritize profitability over enjoyment. This undermines the fundamental essence of gaming—fun—ultimately reducing the game's long-term sustainability. If a game’s primary appeal is financial gain, players lose interest as soon as profitability declines. Moreover, as the player base shrinks and engagement drops, the in-game assets lose value, creating a vicious cycle that accelerates the game's collapse.

NHN's Representative Web Board Games, Source: INSIDE NHN

In contrast, NHN has over two decades of experience developing games that players enjoy purely for entertainment, independent of financial incentives. With a track record of successfully managing games for over 30 million users, NHN brings an extensive understanding of player engagement and retention. Pebble City leverages NHN’s expertise, ensuring that gameplay remains at the core of the experience rather than financial incentives, creating a high-quality, immersive gaming environment.

3) Building a Sustainable In-Game Economy Through Expert Tokenomics Design

The final limitation Pebble identified in Web3 games is the difficulty in designing sustainable tokenomics. Even traditional gaming companies struggle with balancing in-game economies—issuing too many in-game currencies and items leads to inflation, eroding asset value, while issuing too few discourages player engagement by making rewards feel unattainable. A well-balanced game economy is critical for long-term player retention and overall ecosystem health.

In Web3 games, designing the structure of in-game tokens—which serve as both in-game and external economic assets—is particularly critical. While many Web3 game developers understand token mechanics, they often lack experience in structuring sustainable game economies, leading to challenges in maintaining the value of tokens and in-game assets. STEPN, for example, suffered from extreme token price volatility, creating significant confusion for users.

Pebble, however, benefits from NHN’s deep expertise in managing in-game economies, particularly in the competitive and highly complex web-based board game market, where meticulous economic balancing is essential. This expertise translates seamlessly into tokenomics design, giving Pebble a significant advantage in developing a sustainable in-game economy as well as an external token economy. As seen in Pebble City's tokenomics structure, Pebble integrates multiple types of in-game assets to naturally connect Web3 mechanisms with in-game economic interactions. However, challenges such as inflation control and token value preservation remain, and it will be important to observe how Pebble tackles these issues going forward.

3-5. Pebble City Roadmap

The roadmap for Pebble City is outlined above. Currently available in early access, the game has yet to fully implement its blockchain-integrated features. However, these elements—along with other key services—are slated for rollout following Q4 2024.

As a first step, in this transition, the Casino Membership NFT presale is scheduled to take place from February 12 to 14. This marks a crucial milestone ahead of the game's full-access launch. Additionally, the Pebble Platform will introduce an NFT marketplace and token swap functionality, completing the integration of Web3 elements into both Pebble Platform and Pebble City. Looking ahead, Pebble plans to onboard new games, further expanding its ecosystem and reinforcing its commitment to Web3 gaming.

4. Conclusion

Since 1999, NHN has demonstrated a remarkable ability to adapt to rapid technological advancements and shifting industry landscapes, achieving sustained growth over the years. This agility has now positioned NHN to take on the Web3 gaming revolution, integrating blockchain technology into its ecosystem with a forward-thinking approach.

Pebble's vision for Web3 gaming goes beyond the traditional Play-to-Earn (P2E) model, instead embracing Play-and-Earn (P&E). Unlike P2E, which prioritizes monetary incentives as the primary draw, P&E integrates blockchain as a value-added feature—enhancing gameplay rather than defining it.

As the first game reflecting Pebble’s Web3 gaming vision, Pebble City aims to deliver a fun and sustainable gaming experience. With plans to expand its lineup of P&E titles on the Pebble Platform, Pebble is setting the stage for a new era of engaging and long-lasting Web3 gaming experiences.