According to industry sources on June 29, small and medium-sized Korean gaming companies are under attack from a large number of foreign mobile game developers. They are also suffering from large local gaming companies' domination of the market and a delay in the government's support.
The weight of foreign games in the top 50 mobile games in the nation is showing an upward trend for three years in a row from 18 percent in 2013, to 20 percent in 2014, and to 32 percent as of May 2015, according to Nielsen-KoreanClick. The upward trend can be ascribed to the growing penetration of foreign game developers into the local market and local gaming companies' efforts to distribute foreign games.
Among foreign game developers, Chinese offensive is the most noticeable. In addition to establishing local branches in the nation, Chinese gaming companies like Longtu Games and Locojoy entered the Korean market this year by acquiring local companies listed on the KOSDAQ market.
An increasing number of local gaming companies are also importing popular mobile games in China. Prime examples are Samgumho and Master Tanker 2 imported by Nexon, Crouching Tiger Hidden Dragon and Reversworld imported by Netmarble Games, and Webzen's Muorigin. Hence, it is getting more difficult for small and medium-sized game developers to create new games.
Chinese companies used to be subcontracted by Korean firms to develop games, but the situation has reversed.
A head of a local gaming company remarked, "Two years ago, the weight of games made at the request of foreign firms was minimal, less than 10 percent of the total," adding, "But the proportion of outsourcing game projects from large Chinese game developers such as Tencent, YuuZoo Corporation, and Giant Interactive amounts to 40 percent this year."
The current market structure of mobile games that is virtually dominated by large gaming companies is also making small and mid-sized game developers struggle in the market. As of June 29, 50 percent of the top 10 mobile games and 60 percent of the top 5 mobile games on Google Play all belong to Netmarble Games, the nation's largest mobile game developer. Three games in the top 5 are owned by Netmarble Games's affiliates such as Netmarble ST, Netmarble Nexus, and Netmarble N2. The rest are Chinese or European games. According to Nielsen-KoreanClick, foreign games made up 18 percent of mobile games in the top 50 as of May 2013, a year-on-year decrease of 24 percent.
An industry source pointed out, "Local small and mid-sized game developers are increasingly dependent on Chinese capital to survive. So, I think that at the end of the day, most of them will become subcontractors who only develop games demanded by Chinese firms."