Sucked into Google
Korean mobile game developers’ payments for the use of the application markets of Google, Kakao Talk, and the like often exceeds their operating profits. This reduces the resources available for investment in R&D, which could result in a deterioration in product quality.
Specifically, their payment to platform providers amounted to over 42 billion won (US$38 million) for the first three quarters of last year, while their operating profits were 37 billion won (US$34 million) or so during the same period. Ninety percent of the payments went to Google.
NHN Entertainment paid 26.483 billion won (US$24.068 million) to platform providers between January and September last year. Its operating profits were 8.8 billion won (US$8.0 million) during the period. The amounts for the first half of 2014 were 1.457 billion won (US$1.324 million) vs. 4.684 billion won (US$4.256 million) for Party Games. Dev Sisters, meanwhile, earned 26.4 billion won (US$24.0 million) and paid 12.8 billion won (US$11.6 million) during the same six months.
“Mobile games are highly dependent on platforms by nature, and the fees significantly affect their profitability,” said an industry source, adding, “With the structure of the competition among platform providers showing no signs of change, unlike that among game developers, developers are trying to reduce the ratio of fees to sales.”
In particular, the payments to Google by the developers recording higher sales reached 700 million to 1.5 billion won (US$636,000 to $1.3 million) a month, whereas that to domestic platform providers is around 100 million won (US$90,000) at best. Under the circumstances, controversy is likely to be growing over the issue, with Google estimated to earn more than 1 trillion won (US$908 million) in sales in Korea alone.