A Presentation for Prospective Investors Partners Aug

A Presentation for Prospective Investors & Partners Aug 2004

Company Profile Overview Financial Highlights Services & Products 2004 Outlook Shareholding Structure Neowiz at a Glance Management

Company Profile Summary of Company History Balance Sheet (KRW billion) 2002 2003 - 1997 Neowiz Founded by Sung-Kyun Nah Assets 90 111 - 1998 Modem dial-up ISP business launched Current Assets 78 86 Investment 5 16 - 2000 Introduced Avatar business Others 7 10 - 2001 Acquired M-cube Corp Total Liabilities 12 18 Total Shareholder’s Equity 78 93 - 1999 Online Community Sayclub. com launched - 2000 KOSDAQ Initial Public Offering - 2002 Web-board game business launched - 2003 Acquired Ntix Soft Inc. Corp - 2003 Dedicated game publishing portal Pmang. com launched - 2003 Online Music Streaming Service Jukeon. com launched Income Statement 420 Employees as of Aug 2004 2002 2003 Sales 42 81 - Major Shareholders: Sung-Kun Nah (17. 3%), Byung-Ku Chang Gross Profit 17 48 (15. 5%), Sae-Yeon Choi (10. 2%) Operating Income 9 25 Pretax Income 9 22 Net Earnings 8 16 Stock Info. - Common stock of 7. 6 million shares outstanding Management CEO: Jin-Hwan Park CFO: Kwan-Yong Song COO: Kwan-Ho Choi (KRW billion)

Shareholding Structure Shareholder # of Shares % Sung-Kyun Na 1, 350, 000 17. 67% Byung-Kyu Chang 1, 137, 900 14. 89% Sae-Yeon Choi 779, 750 10. 21% Local Institutions 131, 831 1. 73% Foreign Institutions 669, 169 8. 76% 18, 000 0. 24% Treasury stock Others 3, 554, 070 46. 51% Total 7, 640, 720 100% (December 31, 2003) Sung-Kyun Nah 17. 67% Others 46. 51% 14. 89% 8. 76% 10. 21% Byung-Kyu Chang Sae-Yeon Choi Foreign Institutions

Neowiz at Glance ¡ Integrating “Online Community” service with developing and publishing on line game ¡ Strategic initiative to develop into online entertainment group through focused & diverse portfolio of businesses Online Entertainment Revenue Sources 11 million active online community users with highest loyalty 2004 Revenue Streams V e r t ic a l In t e g r a t io n Avatars Web Board Games Pmang. com Quality Web Board Games with NO. 1 market share Networked arcade games starts from 2004 Advertising + Game Publishing Online Music Jukeon. com Getting ready for the emergence of online music market MMORPG 2005 Upcoming Revenue Streams Revenue M axim ization Say. Club. com Foundation for future online businesses

Management Team CEO Jin-Hwan Park v. Seoul National Univ (BA in Management) COO Kwan-Ho Choi v. Nexon v. Seoul National Univ (MA in Mgmt) v. Strategic Planning Manger v. Chaeil Communication CTO Seong-Kyu Oh v. KAIST (MS in Computer Science) v. Hangul & Computer v. Serome Technology CFO Kwan-Yong Song v. Seoul National Univ (MA in Management) v. Price. Waterhouse. Coopers / CPA Director Seung Hwan Park v. George Washington University v. Harvard University, MBA v. Midas Asset Auditor v. DB Interactive Director Gae-Hyun Cho v. KAIST (Ph. D in Management) v. Kino Net Managing Director

Overview Growth & Profitability Financial Highlights Revenue & Net Income Services & Product Cost Structure 2004 Outlook Sales Breakdown

Growth and Profitability Except for two quarters, the company has stayed in the black, maintaining a minimum 20% operating margin over the past five years. Profitability is improving (from 20% in 2002 to 31% in 2003) based on increasing scale and a frugal management team. Revenue Trends 90 (KRW billion) 82 60 Net Profit Trends Operating Income Trends 30 (KRW billion) 15 25. 1 10 20 42 30 7. 3 31 10 Y 2001 Y 2002 Y 2003 15. 6 (KRW billion) 6. 8 Y 2001 8. 7 Y 2002 7. 7 5 Y 2003 Y 2001 Y 2002 Y 2003

Quarterly Revenues & Profits Quarterly Operating Income Trends Quarterly Revenue Trends (KRW in billion) 22. 5 20. 0 21. 4 21. 5 19. 1 18. 4 17. 1 11. 4 8. 3 7. 2 9. 0 5. 7 6. 1 4. 7 2. 9 3. 4 2 Q 02 3 Q 02 4 Q 02 1 Q 03 2 Q 03 3 Q 03 4 Q 03 1 Q 04 2. 6 0. 3 2 Q 02 3 Q 02 4 Q 02 1 Q 03 2 Q 03 3 Q 03 4 Q 03 1 Q 04 2 Q 04 [Unit: KRW in billion] 2 Q 02 3 Q 02 4 Q 02 1 Q 03 2 Q 03 3 Q 03 4 Q 03 1 Q 04 2 Q 04 Q-Q Revenue 7. 2 11. 4 17. 1 20. 0 21. 4 18. 4 21. 5 22. 5 19. 1 15%↓ Op 0. 3 2. 9 6. 1 8. 3 9. 0 3. 4 4. 4 5. 7 2. 6 55%↓ Ordinary Income 0. 6 3. 2 5. 7 8. 5 9. 0 3. 5 0. 6 4. 8 1. 7 64%↓ -0. 5 2. 4 4. 9 6. 1 6. 4 2. 3 0. 8 3. 2 1. 2 62%↓ Net Income Annual Total 2002 revenue 41. 5 bn, OP 8. 7 bn, OP margin 21% 2003 revenue 81. 3 bn, OP 25. 1 bn OP margin 31%

Sales Breakdown Quarterly Sales Breakdown (KRW in billion) 24 22. 5 22 20. 0 20 21. 4 19. 1 18. 4 17. 1 18 16 14 12 11. 1 10 7. 5 8 Others Advertising Sayclub Game 6 4 2 2 Q 02 Wbn 3 Q 02 2 Q 02 4 Q 02 1 Q 03 3 Q 02 4 Q 02 2 Q 03 1 Q 03 3 Q 03 2 Q 03 4 Q 03 3 Q 03 1 Q 04 4 Q 03 2 Q 04 1 Q 04 2 Q 04 Q-Q Game N/A 2. 6 7. 6 10. 6 11. 1 9. 0 11. 4 14. 7 12. 8 13 %↓ Sayclub 5. 9 6. 7 7. 6 7. 8 8. 7 8. 0 8. 3 6. 6 5. 3 21 %↓ Ad 0. 3 0. 7 1. 1 0. 9 1. 3 1. 1 1. 5 1. 2 1. 0 12 %↓ Others 1. 3 1. 1 0. 8 0. 6 0. 3 0. 2 - - - TTL Sales 7. 5 11. 1 17. 1 20. 0 21. 4 18. 4 21. 4 22. 5 19. 1 15 %↓

Cost Structure Y 2003 % 1 Q 04 % 2 Q 04 Co % System 12. 0 21% 3. 0 18% 3. 5 10. 5 19% 2. 4 14% 2. 2 13% HR 19. 0 34% 7. 1 42% 7. 4 2% 0 0% 0 76% 12. 5 74% 13. 1 79% Others TTL Fixed Cost 10% 1. 5 9% 0. 7 5% Profit Sharing 4. 5 8% 1. 7 10% Bad debt Exp 3. 4 6% 1. 1 7% 1. 0 6% TTL Var. Cost 13. 4 24% 4. 3 26% 3. 4 20% Total Cost 56. 3 100% 16. 8 100% 16. 5 100% (KRW in billion) Co Default 5. 5 Human Resource t of i Pr ring a Sh Commission m te ys S Marketing & Others 0 42. 9 n 45% 1. 4 mm iss io 21% Marketing etc Default t of i Pr ring a Sh Neowiz benefits from a high operating leverage as most of its expenses are fixed costs. Wages, depreciation should account for about 54% of its expenses. Although labor cost are rising, this is justified by strong business expansion, and impact on profitability should not be excessive. (KRW in billion) mm iss io Y 2004 2 Q - Capex: 3. 4 - Marketing: 1. 6 - Depreciation: 2. 4 - Employee: 360 m te ys S n Human Resource Marketing & others Y 2003 - Capex: 10. 0 - Marketing: 12 - Depreciation: 7. 4

Overview Financial Highlights Service Portfolios Services & Product Game Portal Landscape 2004 Outlook Sayclub. com Pmang. com Avatar Online Music

Online Service Portfolios l Game Portal with No. 1 Traffic Market Share in Korea. Pmang (www. pmang. com) l Provides web-board games for more than 7 million adult game users each month. l Starting game publishing business with 10+ titles produced by domestic game software developers. Revenues: Game Currency Refill Game Items Monthly Subscription Fee Online Advertising l MMORPG game ‘Yoguruting’ to be released in 3 H 04. Say. Club l Korea’s leading chat site & online community. Revenues: (www. sayclub. com) l 11 million monthly visitors, regularly ranks among the top 20 in Alexa. com’s top 500 global website traffic rankings. Avatars Online Advertising Mobile Services l The company’s core platform for future business expansion. l Generate revenues via sales of avatars & online advertising. l Online music portal. Jukeon. com l Provides online music streaming services. Revenues: (www. jukeon. com) l Concurrent users base has reached 50, 000. Monthly Subscription l Music content download service opened in 2 H 04.

Pmang: #1 Web board games Revenues Trend 14. 7 15 (KRW in billion) 12. 7 11. 1 10 11. 5 Game Avatars: Users pay W 950 -W 6, 500 to buy game avatars that grant varying amounts of virtual cash that can be used for betting. 10. 6 5 2 Q 03 3 Q 03 4 Q 03 Revenue is generated by: 1 Q 04 2 Q 04 Monthly Subscription: Users pay a W 12, 000 monthly subscription fee that grants a larger amount of cash for betting and a daily cash refill. This service was launched on Feb 15, 2004. Game Items: Users can purchase a variety of special skills and ‘hire’ virtual tutors to enhance their win ratio. (Pmang’s Porker Game)

Korean Game Portal Landscape [Source: Koreanclick] Facts l More than 11 million Korean adults are estimated to visit game portals every month. Daily Unique Visitors Trends Pmang Hangame Netmarble l Pmang’s traffic market share stands at 23%, the company has widened its lead over competitors [Source: Ranky. com] Traffic Market Share Pmang Hangame Netmarble 24% 23% 19% 12 -J a 26 n -J an 09 -F eb 23 -F eb 8 M ar 22 M ar 05 -A p 12 r -A pr 26 -A p 10 r -M a 24 y -M a 07 y -J un e 21 -J un 19 e -J ul y l Pmang is the most popular game portal in terms of traffic. More than 5. 1 million people visit the site everyday. 12 -J a 26 n -J an 09 -F eb 23 -F eb 8 M ar 22 M ar 05 -A p 12 r -A pr 26 -A p 10 r -M a 24 y -M a 07 y -J un e 21 -J un 19 e -J ul y l More than 1. 5 million people are paying monthly fees for web board game services.

Pmang Key Operating Index Monthly Unique Visitors and Paying Rate(%) 6 5. 1% Monthly Visitors (LHS) 5. 1% (in million) 5. 5% 4. 9% 4. 2% 4 6 Paying Rate (RHS) 4 (%) 4. 5 2 4. 7 5. 9 5. 1 2 UV 1 Q 03 2 Q 03 3 Q 03 4 Q 03 1 Q 04 Monthly Paying customers and ARPU (‘ 000) 400 W 15, 300 Monthly 300 Paying Users (LHS) 200 W 15, 400 2 Q 04 229, 365 W 14, 800 ARPU ( RHS) 238, 564 290, 744 3 Q 03 4 Q 03 326, 973 248, 858 100 - 1 Q 03 2 Q 03 l Paying rate has reached 4. 9% in 3 Q 04, which is relatively lower than for other major game portals. W 17, 000 W 12, 900 W 13, 000 237, 370 l Paying subscribers and unique visitors were reduced in 2 Q 04, due to seasonal factors and slowdown of paying subscribers’ acquisition. However it is picking up and taking #1 traffic M/S in beg of 3 Q 04 1 Q 04 2 Q 04 l Pmang. com generates the highest web board game monthly ARPU in the industry (W 17, 000 in 2 Q 04).

Say. Club: No 1. Online Community 450 million Mini Homepy service Monthly Access 10 million Online Community Unique Visitors Web Chatting with over 515, 145 Concurrent Users Say. Club. com Avatar Revenue Trends 8 87 (단위: 억) 6 76 78 80 83 67 4 67 53 1 Q 04 2 Q 04 59 2 Q 2 02 Q 3 02 Q 4 02 Q 1 03 Q 2 03 Q 3 03 Q 4 03

Say. Club at a Glance With its no. of concurrent users exceeding 480, 000 every day, Sayclub is the most active chatting environment in the world. Users graphic representation (Avatar). Online Advertising 880, 000+ active communities are present in Say. Club. The Avatar Mall is where Say. Club users purchase the Avatar of their choice. Over the past 3 years, more than 4 million people have purchase Avatars from Say. Club’s users can enjoy listening to music. Launched in Dec 2003, Sayclub’s streaming music service is a good example for others of how an online music service should operated. Every Sayclub user has their own Avatar representation that can be viewed by other users.

Say. Club Avatar: the concept Users saw Avatars as a way to represent their virtual personality Avatar Bulletin Board Memo Internet Broadcasting Room Messenger Buddy List Introduction in Chat Rooms

Global Avatar Licensing Partners • Mattel: “Barbie” Character (Neowiz is the “Only” licensee of Mattel “Barbie Collectibles” in the world) • NIKE, FILA: Sports apparels & celebrity • Blizzard: Starcraft, Diablo II, War Craft III Game Characters • Movie Characters: The Lord of the Rings 3/21

Overview Financial Highlights Services & Products 2004 Business Outlook 2004 Outlook Game Business Outlook Pmang Expansion Avatar & Online Music

2004 Overall Business Outlook in 2 H ü Increasing buying users to double, in order to strengthen in web board game biz More powerful growth engine ü Publishing our first MMORPG, “Yogurting” ü Commercializing online games (publishing only) in full scale ü Growing “Jukeon”, online music business ü Raising awareness of our blog service in market

2004 Game Business Outlook Monthly Membership 8% of Monthly Visitors will pays the fee. Fee Paying Rate Repurchasing rate reaches 70% in 3 Q 04 Monthly Membership service launched on Feb 15, 2004. Monthly Membership Introduced on Feb 15. (%) 10 8% 5 5. 1% 5. 5% 4. 9% 4. 2% 1 Q 03 2 Q 03 3 Q 03 Monthly membership subscribers exceeded 100, 000 in Mar 2004. 1 Q 04 2 Q 04 3 Q 04 4 Q 04

2004 Game Business Outlook New Teen Customer Acquisition: Currently Pmang is covering adult segments only. With the launch of MMORPG & arcade games, the company is expanding its service coverage into teen segment. Expanding Customer Base Current Pmang Coverage (% ) 100 2000. 8 2001. 6 2002. 6 2003. 6 90 80 Older Customer Acquisition: The online game playing population figure will rise as the current web board game users reach the higher age segment. 70 60 50 40 30 20 10 0 6~19 age 20 s 30 s 40 s 50 s Over 60 Online Game Playing Population of Korea by Age Group

2004 Pmang Coverage Expansion Entering MMORPG & Online arcade games arena… 3 Q 04 Online Arcade Games Pmang Web board games Market Size: W 230 bn Arcade Games Market Size: W 150 bn MMORPG Games Market Size: W 450 bn Series of online arcade games has been published. By 1 H 04, Pmang is expected to offer 6 or more arcade games that will bring Pmang into arcade games sector. 1 H 04 MMORPG Game With the expected public launch of ‘Yogruting’ (3 D online role playing game) in summer 2004, the company will enter the MMORPG game arena for the first time.

Major Titles Publishing Schedules Intro 6. 21 1 th Closed Beta 7. 07~7. 11 2 th Closed Beta (Plan) 3 Q 2004 Open Beta (Plan) Commercialized (Plan) 4 Q 2004 1 H 2005 N a m e : Yogurting Name concept from “Yogurt cities” that are the places with active culture-access. T y p e : MMOAAG NEW (Massively Multi-player Online Action Adventure Game) Introduction: 1) Online action game of school adventurous life 2) Based on variety of episode and stages to gain level up and items Rev. generated by (plan) : 1) Monthly membership 2) Game items Schedule: Commercialized 1 H 05

Major Titles Publishing Schedules Special Force Closed Beta Launch on June 2004 Open Beta launch on 3 Q 04 and then commercialized. Team Revolution (Racing) 5+ more titles under development.

2004 Say. Club: Avatars & Beyond 20 million Registered Users 2004 Revenues Execution Operation AR v Avatar buying customers to exceed 550, 000 v Concurrent users to reach 600, 000 v Reach 1. 5 million unique visitors v Incubate online music business PU W 6, 00 0 600, 000 Concurrent Users v Commercialize mobile services Avatars Online Music Mobile ly th ers on m M sto 0 00 Cu , 00 ing 6 y Pa 1. 5 million Unique Visitors New Services v Introduce brand new Sayclub services (2 H 04) v Avatars: w 35. 4 bn v Mobile: w 7. 6 bn Non Paying Users Paying Customers Free Services Commercialized Services

Online Music Market Due to the emergence of free online music services & P 2 P file sharing sites, the domestic music market size has fallen almost KRW 124 billion in two years. However, government regulatory bodies are clamping down big illegal music sites, meaning that this lost portion of the market will be regained in form of online music customers. Shrinking of Korean Music Industry (KRW in billion) 400 124 Billion won 300 200 Emergence of P 2 P & Free online Streaming Service 100 1996 1997 1998 1999 2000 2001 2002 Online music market Neowiz is targeting. Starting with its online streaming service; a music downloading service will be started before the end of 2004.

Jukeon. com: Online Music O F F L IIN E OFFL NE • • • Licensing fee arrangements completed with most big record labels Monthly re-subscription rate of 90% Preparing for the ‘post-illegal’ online service market Song창작자 Writhers 창작자 Record음반사 Companies 음반사 도매상 Whole Sales 도매상 소매상 Retailers 소매상 Licensing Agreements Project Investment O N LI N E 기획사 Planning Agency 기획사 Obtain copyright 아인스디지탈 Eins Digital 아인스디지탈 네오위즈 Neowiz 네오위즈 Streaming Service Music Download Service Value added online contents 소비자 Customers 소비자

Contact www. neowiz. com/eng/ Jason Lee (Head of IR) jasonlee@neowiz. com +82. 2. 6001. 1605 Katie Park katie@neowiz. com +82. 2. 6001. 1603