Eight out of 10 blockchain companies in South Korea failed to generate sales last year. On the other hand, conglomerates accounted for 86 percent of sales in the domestic blockchain market.
The data come from the 2018 Software Industry Survey, which was released by the Software Policy & Research Institute on Sept. 4. The institute is affiliated with the National IT Industry Promotion Agency, a government-funded organization.
The report said only 44 out of 198 blockchain businesses in South Korea generated any sales from their newly developed offerings last year. In short, only 22.2 percent of companies engaged in the blockchain business have reported sales, though the comparable figure is 50 to 70 percent for companies in other new software businesses, such as cloud, big data and Internet of Things (IoT).
The report said, “There is no doubt that blockchain gets much attention in the market but there is few successful cases and it has a low rate of making revenues. However, the size of blockchain workforce is expanding with the highest growth rate compared to other new software businesses over the same period.”
The combined sales of the domestic blockchain industry came to 127.40 billion won (US$106.03 million) last year, according to the report. Out of the total, 110.80 billion won (US$92.19 million), or 86 percent, came from blockchain companies affiliated with conglomerates. There was also a big gap in average sales by company between conglomerates and small and mid-sized companies. Large companies generated 15.80 billion won (US$13.14 million) in blockchain a year on average, while smaller firms had only 2.80 billion won (US$2.33 million) of sales.
The South Korean blockchain industry ecosystem mainly consists of small companies with average annual sales of less than 1 billion won (US$832,015) and a workforce of five employees. Out of the 198, 183 were small blockchain companies, while 5 were mid-sized companies and 10 conglomerates. For the number of employees by company, 77 companies had less than five employees, taking up the most. The number of companies with sales of less than 1 billion won (US$832,015) was 97, accounting for nearly 50 percent of the total.
Among the ongoing blockchain projects, application services accounted for 66 percent of the total. In particular, smaller companies showed a higher ratio of blockchain app development. In contrast, conglomerates and mid-sized companies focused more on blockchain platforms and IT services.