Korea's heavily-regulated game industry to lose its edge

Korean esports gamers play "League of Legends" during a competition at the Dalian Sports Center Stadium in China, July 8. Hwang Sung-ik, president of the Korea Mobile Game Association said the government should ease regulations on game companies to help them strengthen their competitiveness to make inroads into foreign markets. / Courtesy of Riot Games

Moon administration urged to follow global standards

By Baek Byung-yeul

Hwang Sung-ik, president of Korea Mobile Game Association (KMGA)

Korea has the world's fifth largest game development industry after the U.S., China, Japan and the United Kingdom. However, the country's regulation-stricken companies industry may lose their competitiveness, the head of the domestic mobile game industry lobby group said recently.

"Korea's game industry is weighed down by government regulations, which have been undermining the competitiveness of local developers," Hwang Sung-ik, president of the Korea Mobile Game Association (KMGA) said in a recent interview with The Korea Times.

Hwang said one example of the government's strict regulation can be seen in randomized in-game virtual items. Currently many online games are adopting the so-called "loot box," a virtual in-game box that has random items helping players advance in a game. Game firms have been criticized for selling the lucky-draw items as it may encourage overspending.

Acknowledging such criticism, the Korea Association of Game Industry (K-Games), the country's largest game industry lobby, introduced a self-regulatory measure in 2015. The self-regulation requires game developers to provide detailed information to gamers about winning rates when selling the randomized virtual items.

Hwang said over 90 percent of member companies in the association have been in compliance with the measure, but added they are facing reverse discrimination because foreign game companies don't necessary follow the guideline.

"Though the self-regulatory measures require local firms to put in an additional investment, most Korean companies try to follow them. However, foreign game companies don't follow the guidelines. There is no way to impose sanctions on them over their violations, so this is causing a reverse discrimination issue," Hwang said. According to data from K-Games, seven of nine violation cases came from foreign game companies last month.

The KMGA represents the interests of 670 small-sized game companies here. It is an affiliate organization of the Ministry of Science and ICT. The association was first known as the Korea Mobile Contents Association but changed its name to KMGA in January, 2015 as most of its members were game companies.

As a chief of the industry lobby, Hwang urged the government to help local game companies fairly compete with their overseas competitors.

"Another example is the so-called shutdown law. Countries that have a highly advanced game development industry don't implement such a regulation," Hwang said.

To protect children from game addiction, the government introduced the "shutdown law" in 2011. Under the law, children under the age of 16 are prohibited from playing online games between midnight and 6 a.m.

Hwang said the government's move to regulate the industry has created a negative perception towards the game industry.

"Since the government tried to regulate the game industry too much, people have been feeling increasingly negative towards it.

"Games accounted more than 50 percent of Korean-made cultural content last year according to data from the Korea Creative Content Agency. However, when comparing a successful game product to a K-pop band such as BTS, you may find there is a significant disparity between perceptions of a game and the K-pop band," Hwang said.

Stating that the game industry has a huge job creation effect, Hwang said it is time to dispel the negative perceptions of playing games.

"Games are a composite art form. There are a slew of technologies in one game ranging from software programming to network technology. It also cannot be completed without literary and artistic works such as painting, music, animation and scenarios. Considering all these, the industry and the government need to take action to dispel the negative perceptions of playing games," Hwang said.

He said the game development industry has a positive future vision. "The global game market is expected to reach over $130 billion this year. All these figures show this industry has the power to attract more young people. So I would like to urge the government to provide more support for game developers here," Hwang said.

When asked about his opinion on the World Health Organization's recent announcement that compulsive game playing could be a mental health problem, Hwang said he was overcome with shame.

"When I heard the news that the WHO classified gaming disorder as a form of addiction, I felt a sense of shame. I was so disappointed that I have become a person who works in an industry that provides toxic products," Hwang said.

"But at the same time, I could realize that we, the game community, need to pay more attention to educate people into the proper way of playing games."

Supporting small-sized game companies

Hwang said the major job of the KMGA is to represent the interest of the country's' small-sized game companies.

"We are not only representing companies developing mobile games but also supporting every small-sized company here," Hwang said.

The KMGA has supported small sized-game companies by funding them for game creation and providing marketing services.

"Along with One Store -- a local mobile application market created by Korea's three mobile carriers and portal site Naver -- we have provided funding and marketing services to small-sized companies. This is called the One Star Project," Hwang said. "The One Star Project is a good example of a partnership between small and big companies."

The KMGA also has been running an annual Mobile Game Star Awards. Co-organized by the KMGA, the Ministry of Science and ICT and One Store, the awards recognized 12 mobile games produced by small-sized local game companies in its inaugural event last year. Among the 12 games, iPeoples' mobile board game "Blue Marble M" won the grand prize and received 4 million won in prize money and 70 million won worth of marketing services. "The award-winning companies can also receive support when they try to sell their games overseas," Hwang said.

To provide a place for communication between local game companies, and overseas buyers and game developers, the KMGA has been co-organizing the Busan Indie Connect Festival since 2015.

"This event is a global independent game conference as it features hundreds of independent game developers from around the world. It has helped those developers build their own network and has provided business opportunities and seminars to offer them an insight into the industry," Hwang said. This year's conference is scheduled to be held from Sept. 13 to 16.

Hwang said the KMGA is also preparing to launch a blockchain association for small-sized game companies.

"We are planning to establish the tentatively named Korea Blockchain Content Association by August. This is for small-sized game companies here as some of them are planning to enter the blockchain business," Hwang said.

Given game companies have adopted in-game item trade systems, the KMGA president explained blockchain technology is not an unfamiliar term for game companies.

"Game companies are agile to technology change. Given Korean game companies have introduced an in-game currency system better than any other game firms in the world, blockchain technology is not alien to them," Hwang said.

"We expect the convergence of game development technology and blockchain technology will prevent in-game fraud that happens in the virtual goods market of a game, and enhance in-game security."