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Industry Trends

2019.11.07
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[Game] Trends and Outlook of Korea’s Online Game Market

Market size of gaming industry in Korea

The total sales figure of the contents industry as of 2018 in Korea is estimated to be KRW 119.1 trillion, a 5.2% jump compared to the previous year. The volume has gradually increased by an annual average rate of 5.8% over the past five years (2014-2018). These numbers are quite remarkable, given that the national growth rate has risen 2.7% from a year earlier with an annual gross sales increase in the entire industry, which has gone up by an average of 3.3% for 5 years from 2013 to 2017.

The video game industry in 2018 takes up 11.7% (with sales volume of KRW 1.39 billion) of the entire contents industry. Year over year growth rate of the gaming business is 6%, which is higher than that of the contents market at 5.2%.

The export value of the industry is also on an upward spiral. In 2018, the export volume of gaming contents overall amounts to approximately KRW 6.39 billion, which is 66.9% of the entire value of cultural contents (KRW 9.55 billion) exported overseas.

Particularly, the market size has doubled over the past two years with its sales figure of KRW 6.39 billion in 2018 and KRW 3.27 billion in 2016. These numbers came from sensational hits of Playerunkown’s Battlegrounds (PUBG) and MMORPG Black Desert along with other series of newly developed online/mobile games, helping boost export growth in Korea.

In addition, the game business is part of industries, showing the biggest hiring increases with its high employment inducement coefficient (EIC) that reaches to almost 13.5, and even twice as high as EIC 5.2 in the manufacturing sector. The industry also provides high-quality jobs at which many young Koreans want to work, already accommodating 84,880 in 2018.

The scale of employment in the gaming industry in 2018 turned out to be 3.6%, bigger than the 1.4% in the contents market. The figure is a clear indicator that the video game business contributes substantially to national job creation.

A recent publication entitled the 2018 White Paper on Korean Games says that the market is overwhelmed by online/mobile games which began to dominate almost 82% of all—(KRW 6.2 trillion for mobile, KRW 4.5 trillion for online), and the figure goes up to even 95%, considering a unique consumption pattern found in Korea in the form of Internet cafe (also known as Cyber Cafe), specially designed as a place where gamers can enjoy multi-player computer games online.




<Table Ⅰ-1> ’2016~’2018 Annual Sales Figures of Video Game/Contents Industry from 2016 to 2018

(unit: KRW 1million)

Annual Sales Figures of Video Game/Contents Industry
Industrial category Year on year (YOY)
2016 2017 2018
Annual total Annual total Annual total Year on year (YOY)
Game 10,894,508 13,142,272 13,933,534 6.0%
Contents 106,116,295 113,216,467 119,110,301 5.2%
(YOY) 5.6% 6.7% 5.2% -
* Reference: Annual / 6-month trend report of 2018 contents industry (Korea Creative Content Agency)

<Table Ⅰ-2> ’2016~’2018 Annual export sales of Video Game/ Contents Industry

(unit: USD 1,000)

Annual export sales
Industrial category Annual export sales
2016 2017 2018년
Annual total Annual total Annual total Year on year(YOY)
Game 3,277,346 5,922,998 6,391,612 7.9%
Contents 6,008,063 8,814,441 9,550,780 8.4%
(YOY) 6.1% 46.7% 8.4% -
* Reference: Annual / 6-month trend report of 2018 contents industry (Korea Creative Content Agency)

<Table Ⅰ-3> ’2016~’2018 Annual employment growth in Video Game/ Contents Industry

(unit: persons)

Employment growth (YOY)
Industrial category Year on year(YOY)
2016 2017 2018년
Annual total Annual total Annual total ear on year(YOY)
Game 73,993 81,932 84,880 3.6%
Contents 631,503 644,847 653,615 1.4%
(YOY) 1.5% 2.1% 1.4% -
* Reference: Annual / 6-month trend report of 2018 contents industry (Korea Creative Content Agency)

<Table Ⅰ-4> Market share for 2017 gaming platforms in Korea

Market share for 2017 gaming platforms in Korea
Category Sales (KRW 100 million) Share (%) Ranking
Development & publishing Computer games 45,409 34.6 2
Mobile games 62,102 47.3 1
Console Games 3,734 2.8 4
Classic arcade games 1,798 1.4 5
Distribution Biz operation of Internet Cafe
(Internet Cafe)
17,600 13.4 3
Biz operation of arcade bar
(Arcade bar)
780 0.6 6
Total 131,423 100.0 -
* Reference: 2018 White Paper on Korean Games

Advantages and characteristics of the Korean gaming market

Globally competitive startups in the online/mobile game industry are now emerging in Korea. Game developers- NetMarble, Krafton, Pearl Abyss- put their names on the list of Unicorns (startups valued at over KRW 1 trillion). Krafton, Pearl Abyss, in particular, has grown exponentially since 2017.

So called ’3N- three big giants in the Korean gaming industry: Netmarble, Nexon, NC Soft’, who have consistently grown over a decade, hit the sales record above KRW 1 trillion in 2018 and remains very competitive even after moving into mobile platform from online version. In stark contrast to the performance among major players, especially the top five, turning for the better with an increasing sales volume from 3.5% in 2010 to 57.9% in 2017, SMEs are struggling to survive.

This probably results from the rising burden on marketing amid intensifying competition in the industry both home and abroad who wish to gain ground in Korean market.

Some promising startups such as Com2us, Pearl Abyss, Vespainteractive, however, are starting to appear in the spotlight in the global mobile game industry. Just as the case of Com2us, who is raising over 80% of their sales overseas, Korean game developers are sharpening their competitive edge, changing the market dynamics.


<Table Ⅰ-5> Top 10 sellers in 2018 gaming industry

Top 10 sellers in 2018 gaming industry
Ranking Businesses Sales Main service
1 NEXON 2.5296 Tn Kartrider, Dungeon & Fighter, TRAHA
2 Netmarble 2.213 Tn Modoo Marble, Blade & Soul revolution, Lineage 2: revolution
3 NC Soft 1.7151 Tn Lineage, LineageM, Blade & Soul
4 Krafton (Bluehole Inc.,) 1.120 Tn Playerunkown’s Battlegrounds (PUGB)
5 Smilegate 700 Bn Crossfire, Lostark, Epicseven
6 Com2us 4,81 Bn Summoners War: Sky arena
7 doubleu games 4,83 Bn DoubleU Casino (overseas service only)
8 NHN 4,37 Bn Hangame Card/Poker game, Crusaders Quest
9 KAKAO Games 4,17 Bn Friends Town, Friends popcorn
10 Pearl Abyss 4,04 Bn Black Desert

Business outlook

As stated above, Korean game industry keeps growing up, expanding its realm in the market. Newly emerging startups are also fiercely catching up to be competitive.

The Ministry of Culture, Sports and Tourism and the Korea Creative Content Agency (KOCCA), responsible for giving support to game business in Korea, are now coming up with longer term plans, accompanied by multiple projects to fuel the industry.

First, by making a virtuous cycle of HR training and infrastructure investment, the authorities are expected to help SMEs scale up. Second, both the Ministry and KOCCA are planning for regulatory streamlining in the industry such as the Youth Protection Revision Act, commonly known as the Shutdown Law or owners’ self-regulation process. Finally, they’re reinforcing the current system to develop e-sports in an attempt to make a leap forward.

Industry outlook seems to be positive with multiple factors that are at play – a growing size of the overall VR (virtual reality)/AR (augmented reality) game market which is now becoming a mainstream in the upcoming 5G telecommunications era to ensure SMEs remain competitive; mobile game businesses who have begun to grab larger global market share; and the rising number of classic arcade/console gaming system developers who gave way to mobile contents. Under the circumstances, chances are that capable startups with high potential in the global market will show up in the coming days.


By Kim Sung-Jun, Team Manager (sjkim2@kocca.kr)
Game Industry Team, Korea Creative Content Agency (KOCCA)



Reference

Annual / 6-month trend report of 2018 contents industry (Korea Creative Content Agency)
2018 White Paper on Korean Games


< *The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA. >


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