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Business/Economics Professor, Department of International Studies,
Hankuk University of Foreign Studies
With direct sales totaling almost 1.8 trillion won in 2006 alone, Korean online games can no longer be considered child's play and have entered the world of big business. Since online games first entered the Korean marketplace, substantial changes have occurred within the industry and player demographics and have even triggered a growth in government involvement. These games are expected to continue to evolve and contribute a great deal to the Korean domestic and export economies, but will also face growing threats to their continued success.
Online games, which can be defined as games that connect many players together on a server that can be accessed over the Internet by individual PC terminals, first entered Korea in the 1990s and were popularized with the advent of such foreign games as Starcraft and FIFA 99. At this time, these foreign games had virtually no domestic competition and took majority control of the Korean market. Starting at the end of 1999, however, homegrown Korean games began to replace many of the foreign imports.
One of the first and most successful domestic games that reached the market was NC Soft's Lineage. Lineage is the representation of a fantasy universe populated by a horde of monsters as well as player controlled wizards, elves, and warriors for whom quests and war is a daily business. Lineage is known as a MMORPG or a Massively Multi-player Online Role Playing Game in which literally thousands of players can inhabit and explore this digital fantasy world at the same time. At its peak, Lineage is reported to have had 8 million subscribers, but is now down to a little over a million.
The Lineage MMORPG is just one example of the many widely successful games and game genres that have emerged in the Korean market. Currently, Role Playing Games (RPGs) are the most popular genre, capturing 33.1 percent of the market. Other popular genres include FPS (First Person Shooter) games such as Sudden Attack, racing games such as Kart Rider, board games, strategic simulation games and a host of others. As each evolution in the industry rolls through, new technological changes allow for improvements in graphics, usability and realism. These changes allow game companies to continue to offer new games and related products to meet the needs of the increasing numbers of players both domestically and abroad. One example of related product offerings is that of e-sports. E-sports originally started as online game competitions between amateur players. The industry, though, has grown considerably and now involves many professional teams, hundreds of registered players and even has dedicated TV channels.
The demographics of online gamers is another thing that has evolved. In the 1990s, the average gamers were young men. Today, the situation is much more complex. Although different demographic types prefer different game genres, the user base has expanded to include a growing number of women and older people. From a survey that a Korean governmental agency conducted, women comprised about 35 percent of the current, active players and 13 percent of the active gamers were older than 39. These statistics are expected to continue to change as online games become even more pervasive throughout our society.
Just as the games and user demographics have evolved, so has governmental involvement. Official activity in this sector has been growing since 1998 when the management offices moved to the Ministry of Culture and Tourism in recognition of the industry's growing importance. Since that time, the ministry organization (currently known as KOGIA or the Korea Game Industry Agency) has set about establishing a solid foundation to support the game industry from both a policy and infrastructure standpoint. Supporting policies have had an effect in both helping and regulating online game companies. A notable example of these policies is the establishment of the Game Rating Board which monitors, rates and has the power to exclude games coming on to the market in an effort to protect the public from negative influences such as illegal gambling, excessive violence and pornography. The government has been very active in assisting the development of a solid infrastructure as well. To accomplish this, KOGIA and its predecessors have provided support through activities such as incubation centers, training facilities for programmers and market related research. Perhaps the most effective form of assistance KOGIA provides is that of exposing Korean game companies to local and foreign markets. KOGIA provides official awards and recognition to domestic game companies for a variety of reasons based on game originality and places an emphasis on marketability. Another form of exposure comes from KOGIA's support of international road shows, exhibitions and competitions that allow Korean game companies access and visibility in the world market. The government has been steadily making long-term goals in order to help continue assisting this evolving industry.
Online game exports have also seen great changes. Within a decade, Korea has gone from a net importer to a net exporter. Exports have risen to a sum of $672 million in 2006. Overall industry growth is estimated as likely to reach a 19.1 percent annual growth rate until 2009. Currently, primary export destinations include the United States, Japan and Taiwan with increasing market penetration and revenue coming from China.
Although Korea maintains a top position in the world online game industry, it cannot rest on its laurels. There are an increasing number of threats that are becoming more serious to Korea's continued leadership. The primary threat stems from the lack of innovation in story lines and game types. NC Soft's revenue has decreased by 10 percent over the last 12 months as Lineage is losing its popularity and players begin looking for different games. Other titles in this genre suffer from similar symptoms. It is believed that additional collaboration between small and large Korean game companies will assist in solving this problem by coupling innovation and the successful capability to develop and market the games. The second major threat comes from growing international competition as new foreign companies try to win control of the game market. Being online decreases the barrier to market entry, thus making continued Korean successes more tenuous.
Despite the threats, the outlook for the Korean online game industry remains positive. NC Soft will be rolling out its new, multi-billion won game "Tabula Rasa" in the near future and other domestic companies are preparing similar offerings. Coupling game companies' efforts with pragmatic governmental support and investment will hopefully leave Korea riding the crest of this exciting industry.
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