Korean Game Developers Are in Their Second Prime

The leading contributor to the revival of Korea’s creative content industry is games. According to the Korea Creative Content Agency (KOCCA), the revenue of the game industry last year was 12.24 trillion won, a 12.4% rise from the same period last year. Game exports amounted to 3.9 trillion won, accounting for 56% of the total content exported.

It is no exaggeration to say that domestic game companies are in their second prime. In addition to 3Ns (Nexon, NCsoft, and Netmarble), which are the existing top players, new faces such as PUBG and Pearl Abyss are showing their prominence.

Things cannot be better this year for Nexon, the eldest player in the gaming industry. Nexon's sales in the first quarter of this year amounted to about 895.3 billion won (90.5 billion yen, standard rate of 989 won per 100 yen), with operating profit reaching 54.1 billion won (54.7 billion yen). Among domestic game companies, it recorded the highest quarterly sales and operating profit. This is thought to be due to the success of “Dungeon & Fighter” in China. Last year, Nexon had to give its first place to Netmarble. However, it showed some strength in the first quarter this year. It is aiming to surpass the yearly sales of 3 trillion won this year as it released several new games including “FIFA Online 4” in the second quarter.

Netmarble and NCsoft continued to show good results. Netmarble placed second with sales of 507.4 billion won in the first quarter, followed by NCsoft at 475.2 billion won. However, Netmarble could not sustain its steep growth due to the absence of new games. Netmarble is expecting a rebound in the second half of the year with the release of new mobile games such as “Fishing Strike,” “Harry Potter: Hogwart Mystery” and “Iron Throne.”

Nowadays, there are game companies that attract more attention than 3Ns. It is Blue Hole, which is famous for “Battleground,” and Pearl Abyss, which released “Black Desert.” Blue Hole's Battleground went beyond Korea and became a global game. It recorded sales of 666.5 billion won and an operating profit of 251.7 billion won with just Battleground last year. Blue Hole’s corporate value is estimated to exceed 4 trillion won due to the popularity of Battleground.

Pearl Abyss, another new player, is attracting as much attention as Blue Hall. In the first quarter of this year, its sales reached 75.5 billion won and operating profit 33.5 billion won, the highest level in its history. “Black Desert Mobile,” which was launched in February, has been a hit and successfully entered Southeast Asian market, raising the expectation of reaching 300 billion won of sales this year.

Overall, domestic game companies are showing improving performance, but there are many challenges. New faces are emerging one by one, but the typical polarization of the game industry is still not resolved. Of the top 20 domestic game companies’ combined sales, 3Ns account for 60% to 70%.

As a way to solve the polarization, advancing to overseas market is suggested. Lee Jung-yeop, a professor of cultural content at Soonchunhyang University, said, "New game companies should turn their eyes to overseas markets. For them, it would be better to be known in overseas markets, which are less affected by marketing. Then they can start providing services in Korea.”

Negative views on games are also a stumbling block to the development of the game industry. It is better than before, but there is still the unfavorable attitude towards games. Regulations stemming from negative perceptions such as the shutdown system, regulations on web-board games, and online game payment limits remain intact and hinder the development of the industry.

Another challenge is that new IPs are not being developed. Most of the successful game companies are using the existing IPs. Lee Jae-hong, a professor of creative writing at Soongsil University, said, "You should not rely too much on existing IPs. It’s time to pioneer new IPs and new genres."