2020 WHITE PAPER ON KOREAN GAMES 2020 WHITE PAPER SUMMARY ON KOREAN GAMES
SUMMARY
SUMMARY
Introduction
In 2019, the domestic gaming market was worth 15.575 trillion KRW, reflecting a 9.0% increase compared to its 14.2902 trillion KRW value in 2018. From 2010 to 2019, the domestic gaming industry has steadily grown over a period of 10 years with an average annual growth rate of 9.0%. Though the market size decreased by 0.3% in 2013, it immediately rebounded in 2014, and has been continuing to rise in 2019. As users gain convenient access to countless games, the mobile platform has replaced the PC platform as the core platform. Accordingly, since 2017, the scale of the mobile gaming market has surpassed the PC gaming market. Mobile gaming market sales amounted to 7.7399 trillion KRW, covering almost half of the total gaming industry sales. In 2019, PC gaming sales amounted to 4.8058 trillion KRW, making up 30.9% of the share of the total gaming industry. Sales from Internet cafes reached 2.409 trillion KRW, or 13.1% of the market. Console gaming sales enjoyed a 3.7% share in 2018, then increased to 4.5% in 2019 with a sales volume worth 694.6 billion KRW. Only the sales volume of PC games declined by 4.3% from the previous year, while the sales volume of other gaming media increased. The growth rate of console games in terms of sales, in particular, was less than 41.5% in the previous year, but it grew the most at 31.4%. The growth rate of mobile games in terms of sales was 16.3%, while the growth rate of arcade games in terms of sales was 20.6%. The growth rates of gaming in Internet cafés and gaming
2 2020 WHITE PAPER ON KOREAN GAMES Introduction
arcades were 11.6% and 2.4%, respectively. In 2018, domestic gaming industry exports amounted to 6.65778 billion USD (7.7606 trillion KRW, applying the annual sales standard of 1,165.65 KRW by the Bank of Korea in 2019). The following year, imports were worth 298.13 million USD (approximately 347.5 billion KRW). The following outlines the key status and issues of the domestic gaming industry.
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Part 1 Gaming Industry Trends in 2019
1) A 9.0% increase in the domestic gaming market in 2019, compared to the previous year, amounting to 15.575 trillion KRW
In 2019, the domestic gaming market size was worth 15.575 trillion KRW, a 9.0% increase compared to its 14.2902 trillion KRW value in 2018. The domestic gaming industry has gradually increased for the past 10 years, except in 2013 when the market size slightly contracted. Korea’s economic growth rate remained at 2% in 2019, while the gaming industry continues to grow.
Figure 1 Total Size and Growth Rate of the Domestic Gaming Market(2009~2018)
Sales Volume (100 Mil KRW) Growth Rate (%)
155,750 142,902 131,423 107,223 108,945 97,525 97,197 99,706 88,047 74,312
18.5 20.6 12.9 10.8 7.5 8.7 9.0 -0.3 2.6 1.6
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2) The mobile gaming market amounted to 7.7399 trillion KRW, making up 49.7% of the total gaming industry sales
After surpassing the PC gaming market for the first time in 2017, the mobile gaming market has emerged as a core platform that accounts for half of the total share of the domestic gaming industry in 2019. With the convenient accessibility of mobile devices and the improvement in hardware specifications, the domestic gaming industry started to focus on the mobile gaming market, which lead to a remarkable growth. Mobile gaming market sales in 2019 amounted to 7.7399 trillion KRW, a 49.7% share.
4 2020 WHITE PAPER ON KOREAN GAMES Part 1 Gaming Industry Trends in 2019
Among the entire gaming industry, only the PC gaming sector decreased by 4.3% year-on-year (YoY), while sales in other sectors increased YoY. The PC gaming sales in 2019 amounted to 4.8058 trillion KRW, making up 30.9% of the market share. The share value decreased, compared to 35.1% in 2018. Console gaming sales amounted to 694.6 billion KRW in 2019, with a market share of 4.5%, showing an increase in both sales and shares compared to the previous year. The share of arcade games was 1.4%, that of gaming in Internet cafés was 13.1%, and that of arcade gaming was 0.5%.
Figure 2 Domestic Gaming Market Share by Field
(Unit: %)
Game Distribution Electronic Game Center (Game Arcade) 0.5 Computer Game Room 13.1
Arcade Game 1.4 Console Game 4.5 PC Game 30.9 Game Production and Distribution
Mobile Game 49.7
Following 2018 trends, the console gaming market recorded the largest growth rate, an increase of 31.4% YoY. Arcade gaming market sales increased by 20.6%, but since the market size is small, it is difficult to find its significance. Mobile gaming market sales increased by 16.3% YoY, and recorded a high growth rate despite its a large market size. Internet café sales recorded an 11.6% increase, and gaming arcade sales recorded a 2.4% increase compared to the previous year sales.
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3) Domestic gaming market size expected to show high growth in the future
The scale of the domestic gaming market in 2020 is expected to increase by approximately 9.2% when compared to 2019, and amount to 17.93 trillion KRW. In 2020, the consumption of games, a representative non-face-to-face content, increased due to the spread of the infectious disease, COVID-19. The game production business that focuses on mobile and console games, in particular, is expected to grow significantly. On the other hand, distribution businesses, such as Internet cafés and game arcades, are expected to record negative growth because they cannot operate properly due to the reinforcement of social distancing. In 2020, the PC gaming market size is expected to grow by 1.5% compared to 2019, and amount to 4.8779 trillion KRW. For PC games, the impact on the market of the release of a masterpiece, such as
1) MMORPG (Massively Multiplayer Online Role Playing Game): An online role-playing video game in which a very large number of people participate simultaneously.
6 2020 WHITE PAPER ON KOREAN GAMES Part 1 Gaming Industry Trends in 2019
Table 1 Scale and Prospect of the Domestic Gaming Market (2018-2022) (Unit: 100 Mil KRW, %) 2018 2019 2020(E) 2021(E) 2022(E) Type Sales Growth Sales Growth Sales Growth Sales Growth Sales Growth Volume Rate Volume Rate Volume Rate Volume Rate Volume Rate PC Game 50,236 10.6 48,058 -4.3 48,779 1.5 48,827 0.1 49,306 1.0 Mobile Game 66,558 7.2 77,399 16.3 93,926 21.4 100,181 6.7 110,024 9.8 Console Game 5,285 41.5 6,946 31.4 8,676 24.9 12,037 38.7 13,541 12.5 Arcade Game 1,854 3.1 2,236 20.6 766 -65.7 1,503 96.2 2,382 58.5 Internet Café 18,283 3.9 20,409 11.6 17,641 -13.6 19,605 11.1 23,146 18.1 Game Arcade 686 -12.0 703 2.4 303 -56.9 532 75.4 726 36.6 Total 142,902 8.7 155,750 9.0 170,093 9.2 182,683 7.4 199,125 9.0
The console gaming market is expected to record high growth in 2020, following 2018 and 2019, due to the increase in sales of Nintendo Switch and its popular titles, such as
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4) Exports in 2019 amounted to 6.65778 billion USD, with a 3.8% YoY increase
In 2018, the domestic gaming industry’s exports increased by 3.8% YoY, amounting to 6.65778 billion USD. If the annual sales standard of 1,165.65 KRW for KRW-USD, which announced by the Bank of Korea, is applied, it is approximately equivalent to 7.7606 trillion KRW. On the other hand, the import value decreased by 2.5%, amounting to 298.13 million USD, which is about 347.5 billion KRW.
Table 2 Export Status of the Domestic Gaming Industry (Unit: 1,000 USD, %) Type 2013 2014 2015 2016 2017 2018 2019 Export Amount 2,715,400 2,973,834 3,214,627 3,277,346 5,922,998 6,411,491 6,657,777 Exports Rate of Change 2.9 9.5 8.1 2.0 80.7 8.2 3.8
Table 3 Import Status of the Domestic Gaming Industry (Unit: 1,000 USD, %) Type 2013 2014 2015 2016 2017 2018 2019 Import Amount 172,229 165,558 177,492 147,362 262,911 305,781 298,129 Imports Rate of Change -3.9 -3.9 7.2 -17.0 78.4 16.3 -2.5
Among all the gaming platforms, the export scale of mobile games was the highest, with 3.63871 billion USD. Comparatively, the export scale of PC games amounted to 2.83148 billion USD. The export scale of console games amounted to 137.45 million USD, while that of arcade games amounted to 50.14 million USD. In terms of the import scale, PC gaming sales totaled 56.96 million USD, a 220,000 USD decrease from the previous year. As of 2019, the mobile gaming platform generated the highest sales growth, 219.15 million USD, an increase of 104.9% YoY. Console gaming sales were about 18.56 million USD, while the arcade gaming revenue was about 3.46 million USD.
8 2020 WHITE PAPER ON KOREAN GAMES Part 1 Gaming Industry Trends in 2019
Figure 3 2019 Export/Import Scale by Domestic Gaming Platform
(Unit: 1,000 USD)
6,657,777 Export Amount Import Amount 3,638,709 2,831,479
298,129
219,149
137,445
56,957 50,144 18,559 3,463
All PC Game Mobile Game Console Game Arcade Game
The research results of the major exporting countries and areas of domestic gaming in 2019 showed that “China” had the highest share with 40.6%. This was followed by “Taiwan/Hong Kong” with 14.5%, “Southeast Asia” with 11.2%, “Japan” with 10.3%, and “North America” with 9.1%. Compared to the previous year, exports to China and Southeast Asia increased, while exports to other regions decreased. The share of exports to “China” rose 9.7%p YoY, while exports to “North America” and “Japan” fell by 6.8%p and 3.9%p, respectively.
Figure 4 Comparison of the Share of Domestic Gaming Exports by Country(2018-2019)
(Unit: %)
2018 2019 +9.7%p
40.6
30.8 -1.2%p -3.9%p -6.8%p +0.8%p +1.8%p -0.5%p 15.7 14.5 14.2 15.9 11.2 10.3 10.3 9.1 8.4 6.5 6.0 6.6
China Taiwan/Hong Kong Japan Southeast Asia North America Europe Others
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In terms of the share of domestic gaming exports by country and region, the share of “China” was the highest at 56.1% for PC gaming exports. This was followed by “Taiwan/Hong Kong” (12.8%), “Japan” (7.5%), “Europe” (7.2%), “North America” (6.7%), and “Southeast Asia” (2.8%). The share of exports to “China” and “Europe” increased by 16.2%p and 0.8%p YoY, while the shares of exports to “Taiwan/Hong Kong,” “Japan,” “Southeast Asia,” and “North America” decreased by 1.9%p, 7.2%p, 2.6%p, and 6.5%p, respectively. The increase in China and the decrease in Japan were relatively significant. For mobile gaming exports, the share of “China” was the highest with 29.9%, followed by the share of “Southeast Asia” with 17.9%, “Taiwan/Hong Kong” with 15.2%, “Japan” with 12.1%, “North America” with 10.7%, and “Europe” with 5.0%. In comparison with 2019 figures, the shares of exports to “China” and “Southeast Asia” increased by 8.7% and 1.4%, respectively. On the other hand, the shares of export to “Taiwan/Hong Kong,” “Japan,” “North America,” and “Europe” decreased by 2.2%p, 1.1%p, 7.7%p, and 1.0%p, respectively.
5) Korea possesses a 6.2% share of the global market: in the top 3 of the global PC gaming market, and in the top 4 of the global mobile gaming market
As of 2019, Korea accounted for a 6.2% share in the global gaming market. The U.S., China, Japan, and Europe are ranked in the top 4 of the global gaming market, and Korea is 5th. Countries in the top 10 include France, Germany, Italy, Canada, and Spain. In terms of platforms, as of 2018, Korea ranked as the third after China and the U.S., with a 12.5% market share. Korea remained the world’s second largest player in PC gaming until 2016, but, in 2017, Korea was replaced by the U.S. and dropped down to third place. In 2018, Korea rose to the second place, overtaking the U.S., but was pushed out by the U.S. again to the third place. In 2018, Korea ranked the fourth with a 9.1% share of the global mobile gaming market, just as it was in the previous year. The top 3 countries were
10 2020 WHITE PAPER ON KOREAN GAMES Part 1 Gaming Industry Trends in 2019
China, the U.S., and Japan, respectively, after the U.S. overtook Japan. In the 2019 global mobile gaming market, the shares of China, the U.S., and Japan were 27.9%, 15.5% and 15.2%, respectively. Meanwhile, the shares of Korean console gaming and arcade gaming in the global market are minuscule at 1.3% and 0.7%, respectively. However, in recent years, the size of the console gaming market has been steadily growing, with a 0.3%p increase YoY.
Table 4 2019 Share of Domestic Gaming Market in the Global Market (Based on Sales Volume) (Unit: 1 Mil USD, %) Type PC Game Mobile Game Console Game Arcade Game All Global Gaming Market 32,896 73,278 46,497 33,819 186,491 Domestic Gaming Market 4,123 6,640 596 252 11,611 Share 12.5 9.1 1.3 0.7 6.2
Figure 5 Comparison of the Domestic Gaming Market Share in the Global Market
(Unit: %)
13.9 2018 2019 12.5
9.5 9.1
6.3 6.2
1.0 1.3 0.7 0.7
All PC Game Mobile Game Console Game Arcade Game
6) A total of 916 production/distribution companies, 11,871 Internet cafés, 600 gaming arcades, and 89,157 workers
As of 2019, there were 916 game production and distribution companies. It was estimated that there were 11,871 Internet cafés and 600 gaming arcades. Moreover, the total number of workers in the gaming industry stood at 89,157, a 4.3% increase compared to 85,492 workers in 2018. The number of workers
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in the game production and distribution business reached 39,390, making up 44.2% of the total number of workers, while the number of workers in the game distribution business stood at 49,767, making up 55.8% of the total number of workers. The number of workers in the game production and distribution business increased by 6.4% YoY. The number of workers increased across all gaming platforms, and the number of workers in the console gaming sector, in particular, significantly increased by 154.6% YoY. The number of workers in the game distribution sector (Internet cafés and game arcades) increased by 2.7% from the previous year, and the number of workers in the Internet café business increased by 4.2% YoY. However, the number of game arcade workers decreased by 40.3%.
Table 5 Number of Gaming Industry Workers (2017-2019) (Unit: Person, %) 2019 YoY Rate Type 2017 2018 2019 Composition from 2018 PC Game 13,287 13,344 13,430 15.1 0.6 Game Mobile Game 19,686 21,742 23,057 25.9 6.0 Production Console Game 478 529 1,348 1.5 154.6 & Distribution Arcade Game 1,215 1,420 1,555 1.7 9.5 Subtotal 34,666 37,035 39,390 44.2 6.4 Computer Game Center(Internet Café) 45,378 46,853 48,810 54.7 4.2 Game Electronic Game Center(Game Arcade) 1,888 1,604 957 1.1 -40.3 Circulation Subtotal 47,266 48,457 49,767 55.8 2.7 Total 81,932 85,492 89,157 100.0 4.3
7) The global gaming market in 2018 grew by 5.0% YoY
The size of the global gaming market in 2019 increased by 5.0% YoY, amounting to 186.491 billion USD. The mobile gaming market, in particular, increased by 12% compared to the previous year, leading the growth of the gaming industry. Meanwhile, the arcade gaming market increased by 3.4%, and the PC gaming market by 1.1%. However, the console gaming market decreased by 1.1% YoY.
12 2020 WHITE PAPER ON KOREAN GAMES Part 1 Gaming Industry Trends in 2019
The mobile platform, which has been maintaining its highest share in the global gaming market since 2016, occupied the entire gaming market with a 39.3% share, which amounted to 73.278 billion USD, in 2019. Following the mobile gaming market, the arcade gaming market has an 18.1% share that amounted to 33.819 billion USD, while the PC gaming market has 17.6%, amounting to 32.896 billion USD. As the smartphone distribution rate continues to increase in developing countries, and 5G high-speed wireless networks begin to be distributed around the developed countries, the gaming market share of mobile platforms is expected to expand further in the future. The market share of mobile gaming in the global gaming market is expected to increase up to 44.5%. On the other hand, the shares of PC and arcade gaming are expected to decrease, compared to their 2019 figures.
Figure 6 Global Gaming Market Share by Platform (2019/2022)
(Unit: %)
Arcade Game Arcade Game 13.8 18.1 Mobile Game Mobile 39.3 PC Game Game PC Game 16.5 44.5 17.6
Console Game Console Game 25.2 24.9
2019 2022
Source: PWC (2020), Enterbrain (2020), JOGA (2020), iResearch (2019), Playmeter (2016), NPD (2020)
In terms of the market share of each region in the global gaming market, it is assumed that, by 2022, the share of Asia will further increase from 2019. The share of North America will slightly increase, but the share of Europe will decrease significantly. The market share of the Asian region in the global gaming market in 2019 is expected to increase by 0.3%p, from 43.3% in 2019
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to 46.3% in 2022. On the other hand, in the case of Europe, despite the growth of the gaming industry, the growth rate of the global gaming market is expected to decrease by 3.2%p to 29.8% in 2022, compared to other regions.
Figure 7 Global Gaming Market Share by Region (2019/2022)
(Unit: %)
South America South America 1.6 1.6 North North America America 22.1 22.3 Asia Asia 43.3 46.3
Europe Europe 33.0 29.8
2019 2022
Source: PWC (2020), Enterbrain (2020), JOGA (2020), iResearch (2019), Playmeter (2016), NPD (2020)
14 2020 WHITE PAPER ON KOREAN GAMES Part 2 Major Issues in the Domestic Gaming Industry in 2019
Part 2 Major Issues in the Domestic Gaming Industry in 2019
1) The golden age of classic games and classic IP
“Newtro,” which was created from the combination of the terms, “new” and “retro,” has also penetrated the gaming world. It was no exaggeration to call this year as the golden age of intellectual property (IP) rights for classic games. Games that were released on online from the early 1990s to the mid-2000s have reappeared as popular mobile games. It secured competitiveness by turning on its charm as a new product to the new gamers who enjoy the idea of the past beyond simply reminiscing it. In a market environment where fans of the original work and new users are attracted to success, planning and development capabilities tended to combine “familiarity” and “newness.” The importance of IP has continued to stand out, but classic games, in particular, have been showing remarkable strength.
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for a long time. IP-based mobile games have a relatively high chance of success due to its original reputation. It is able to attract new users as well as existing users. It can build a more stable user base by improving the games that have already been proven to be fun and entertaining. The nostalgic, classic games also benefit from a gamer culture that somewhat appreciates the game even if the quality of it is a little low. However, apart from the production, it is not easy to raise the level of completion. There must be affection and a deep understanding of the work. The burden is heavier on other original works or even the original games as they are subject to comparison or competition. There is also regret behind the classic game IP becoming a hit product. As games that provide similar structures and contents at the level of replication flooded, there was a tendency to differentiate the products only with IP. Game companies that couldn’t afford the IP price have given up on developing new games. In the case of non-IP games, the CPI (ad fee per installation) unit price increased, thus accelerating this phenomenon. Since the attention toward the old IP was high, the practice of developing games and buying and putting on IP separately was also carried out. There were some cases where development stopped because it did not match the initial direction when IP was applied to a game that was already being developed.
2) WHO (World Health Organization) assigns a disease code “6C51” to gaming
The World Health Organization (WHO) held a General Assembly in Geneva, Switzerland, and passed the revision of the 11th edition of the International Classification of Diseases (ICD). ICD-11 included gaming disorder in the disease category, which became controversial even before the assembly. Gaming disorder
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was given the “6C51” code in ICD-11, which classifies it as a sub-category under mental, behavioral, and neurodevelopmental disorders. WHO has placed gaming disorders under the following criteria – persistence, frequency, and controllability. In other words, gaming can be judged as a disorder if “there is a prioritization of gaming over other daily routines when one’s controllability is impaired, and this behavior lasts for more than 12 months.” If the degree of the negative impact of gaming on daily life is severe, it can be judged as a disorder even if 12 months have not passed. WHO recommends that the health care system must respond to such addictive behavior. When WHO classified gaming disorder as a disease, debates were initiated in Korea on how to introduce this standard. The Korean Standard Classification of Disease (KCD), which is written in reference to ICD’s system, is revised every five (5) years through consultations among Statistics Korea and related ministries. ICD-11 goes into effect starting January 2022. If it is planned to be included in KCD, the disease code of gaming disorders may be introduced by as early as 2025, and executed by 2026. On May 28th, shortly after ICD-11 was passed, the Korean government held a deputy ministerial meeting that was presided by the Minister for the Cabinet Office. The Ministry of Culture, Sports, and Tourism and the Ministry of Health and Welfare attended this meeting. Each ministry agreed to form a public-private council to seek the advice of many experts with the Ministry for the Cabinet Office at the helm to prevent sharp conflicts among ministries. Participants of the public-private council were announced in July, and have been conducting related research services since then. Outcomes derived from the research will be used as reference materials to introduce disease codes and related policy designs. The public-private council consists of a total of 22 individuals, including 14 private experts representing the medical and gaming industries, as well as 8 government officials from the Ministry of Culture, Sports, and Tourism, Ministry of Health and Welfare, Ministry of Education, Ministry of Science and Technology, Information, and Communication, Ministry of Gender Equality and Family, Statistics Korea, and Office for
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Government Policy Coordination. Though government officials are participating, the discussions will be primarily conducted by the members from the private sector. A fierce, private debate took place while the government responded accordingly. The gaming industry and the medical community clashed head-on. Religious and civic groups and parent civic groups also joined in, indicating signs of opinion wars. The medical field, including Korean Pediatric Society, Korean Neuropsychiatric Association, Korean Society for Preventive Medicine, Korean Association of Neuro Psychiatric Practitioners, and Korea Society of Epidemiology stepped up to support the designation of disease codes for gaming disorder. They presented a joint statement in June, stating, “We support WHO’s diagnosis of gaming disorder as a disease.” Welfare associations, including Korea Public Health Association, Korean Association for Psychosocial Rehabilitation, Korean Psychiatric Mental Health Nurses Association, Korea Association of Mental Health Social Work, and Korean Academy of Addition Psychiatry also presented a supporting statement. This means that the majority of medical associations agreed with the classification of gaming disorder as a disease. Religious circles and parent groups placed gambling addiction and game use disorder on the same line, and parent groups supported student protection as an excuse. However, some psychiatrists have indicated that there is not enough research and evidence to grant the disease code to gaming. The gaming industry clearly expressed its objection to assigning the disease code to gaming. The Korea Game Society actively responded and launched a joint measures committee against the introduction of the gaming disorder code. The joint measures committee participated in a wide range of agents throughout the contents industry, including the Korea Association of Game Industry, the gaming industry, universities related to gaming nationwide, and local governments including Busan, as well as associations and organizations in other content industry genres.
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3) Active blockchain game development and judgment suspension
In 2019, the decision on blockchain games became a hot topic. In November 2019, the classification of
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blockchain game with
4) Improvement of game-related regulations
In 2019, baseless regulations concerning games and double regulations were
20 2020 WHITE PAPER ON KOREAN GAMES Part 2 Major Issues in the Domestic Gaming Industry in 2019
somewhat resolved. On June 27, the Ministry of Culture, Sports, and Tourism abolished the online PC game transaction limit. The online PC game transactions for adults were limited to 500,000 KRW a month for nearly 20 years. Though the transaction limit was not legally indicated, game companies must indicate the monthly transaction limit when they are under evaluation for game product ratings, making it look like a representative regulation was in effect. As such, there were constant requests to lift the online PC game transaction limit even in terms of reverse discrimination because mobile games serviced by global platforms, such as Google and Apple, do not have a game ratings transaction limit. After the appointment of Park Yangwoo as the Minister of Culture, Sports, and Tourism, the Ministry expressed its willingness to improve its response to this matter, and executed it. Accordingly, the Ministry extended the limit for adults to within 10 million KRW. Game users are now able to set the monthly transaction limit by themselves, but the monthly transaction limit was maintained for web board games, such as Go-Stop and Poker, as well as for adolescent accounts. Improvements have also been made to the double regulation of web board games. In response to the industry's opinion that it is a redundant and excessive regulation, the daily loss limit access restriction was lifted. In the past, access was unconditionally blocked for 24 hours if 100,000 KRW was lost while playing a game, but due to the abolition of the daily loss limit, the continuity of game utilization for gamers who enjoyed the game has improved. The industry expressed a welcome because the web board game market was significantly affected by regulations. Since the enforcement of the web board game regulation in 2014, sales have dropped drastically from KRW 637 billion in 2011 to KRW 226.8 billion in 2016, with sales decreasing by more than 60% over five years. More than 50% of web board game users have seceded, and usage time has also decreased. When the purchase limit increased from 300,000 KRW to 500,000 KRW in 2016, the sales of NHN's web board PC game increased by 31% YoY.
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Gaming companies have autonomically reinforced self-regulation to avoid excessive speculation, and introduced a system that allows users to set their own loss limits and game time. Users can also play arcade games by using credit cards. The Game Rating and Administration Committee decided to allow electronic transaction functions to arcade games that are open for all ages. In the past, only coins and paper bills could be used for transactions for existing arcade games, which was done to prevent speculative behavior due to these regulations. Business owners were unable to attain a flexible business model, and users could only play games if they had cash. The action taken by Game Rating and Administration Committee accommodates the social trend of going cashless, and is an improvement that allows for more freedom for company activities. These two regulation improvements have been made to ensure the convenience and freedom of users, and, in some sense, economic revitalization has been considered as well.
5) Abolition of a blanket wage system
In 2019, major companies, including the “Big 3” of the gaming industry, Nexon, Netmarble, and NCSOFT, abolished the blanket wage system (BWS) one after another. Gaming companies carefully managed working hours, following the abolition of the comprehensive wage system, and required employees to obtain pre- and post-application and approval when working overtime. BWS is a system in which legal allowances, such as overtime work allowances, are included in the basic salary, or paid in a fixed amount regardless of actual working hours. It aims to improve the rights and interests of game workers by abolishing the “free overtime,” which was identified as the main reason for the establishment of the game industry unions of Nexon and Smilegate in 2018. BWS appears to take the long hours of employees’ work for granted. In the case of Nexon, its subsidiary, Neople, decided to abolish BWS through labor-management agreements, and Nexon Korea also consented to an agreement on welfare and working environment, including the abolition of BWS
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in August. Smilegate, where the 2nd union in the gaming industry was established, decided to abolish BWS entirely by October after nine negotiations. NCSOFT and Netmarble, where no union is established, also abolished BWS. Prior to these companies, Pearl Abyss, Webzen, and WeMade likewise abolished BWS. Accordingly, the gaming industry introduced a system that closely manages working hours, while allowing workers to use their working hours autonomously and flexibly. This is the industry’s attempt to reduce unnecessary overtime work, and to settle wages accurately for additional working hours. NCSOFT decided to exclude the time from working hours if an employee stays in a space not related to work for more than five (5) minutes. This provision includes smoking rooms, in-company café, fitness rooms, and in-company hospitals. However, if employees clarify that a business-related meeting was held outside the allowed space or office building, it is recognized as working hours. Restroom breaks are included in the working hours. At Netmarble, if employees are away from their seats for more than 15 minutes, it is not included in their working hours. It is the method for employees to determine the non-operating hours of one’s PC. Flexible working hours that allow the workers to adjust their working hours freely within the basic working hours of eight (8) hours a day for a month were maintained. The companies attempted to promote work efficiency by making employees obtain prior and post approval for overtime. Nexon implemented a rule to press the “Away” button on the work PC when employees have to be away from their seats for more than 15 minutes. If the workers are away from their seats for a work-related event, it is counted as working hours. Also, if the employees have to stay at the office for more than 11 hours, they have to get approval from the company in advance to state specific reasons and specific nature of work. The standards for non-working hours vary slightly from company to company, but the overall basis is similar. Coffee break, smoking break, and time for using in-company welfare facilities are excluded from working hours.
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All three companies are seeking a way to satisfy both the company and employees by collecting employee opinions after the pilot application stage. There is a public opinion that the game development environment has improved with the implementation of the 52-hour week system and the abolition of BWS. Some have pointed out that the 52-hour system and the abolition of BWS will make the gaming industry to recover the unique characteristics of the gaming industry to respond to market trends quickly.
6) Concerns about the dissemination of game watching and copyright infringement
Throughout 2019, games in Korea have clearly established themselves as must-watch content. The gaming field have expanded its scope to content that can be broadcast, watched, and enjoyed by any gamer, in addition to e-sports. E-sports, which led the “game watching” culture, were adopted as a demonstration event for the “2018 Jakarta-Palembang Asian Games,” and were broadcasted in Korea through terrestrial broadcasting. This occasion enabled e-sports to leave a strong impression on the public, creating a room for it to become part of the mainstream culture. During his visit to Sweden in June 2019, President Moon Jae-in watched Com2uS’s “Summoners War” with King Carl Gustav of Sweden. The central government and the local governments have come up with a plan to establish an e-sports stadium. The Ministry of Culture, Sports, and Tourism included the contents related to the e-sports stadium in the 2019 plan, and will build e-sports stadiums with more than 300 seats each in the regions of Busan, Gwangju, and Daejeon, with a total budget of 18 billion KRW in 2019. Gyeonggi-do plans to build an e-sports stadium in Pangyo by March 2022. For this purpose, the province formed a budget of 29.6 billion KRW, including 10 billion KRW in provincial expenditure. The ministry also plans to equip programs and facilities to cultivate e-sports professional broadcasters, such as commentators. Riot Games, which owns
24 2020 WHITE PAPER ON KOREAN GAMES Part 2 Major Issues in the Domestic Gaming Industry in 2019
environment where broadcast and even content production are easily accessible. Yang Dding and Great Library, who professionally discuss games on their private broadcasts, are treated as celebrities. A broadcast program, Kim Sung-hoi’s G-sik Encyclopedia, which deals with gaming industry issues and game development stories, is also popular. Since the material on games has secured an enormous audience pool, it seems like a coveted material when people start a new personal broadcast. In the case of G-Star, a domestic game show, the center of its gravity has shifted from the introduction and demonstration of games to e-sports broadcasts and game broadcasts of popular influences. Some point out that it undermines the essential part of the game show. However, when the e-sports broadcasts and influencer broadcasts have been reorganized into mobile games, this trend is expected to continue for the time being because they are very effective in promoting games, more than demonstrations. Since game watching has become influential, concerns toward intellectual property rights (IP infringement) also increased. Basically, the game copyright belongs to the game company that created the game. If gameplay scenes are broadcasted without obtaining permission from the game company, the copyright holder, it is a copyright infringement. Game companies do not take issue with unlicensed game broadcasts. Interests toward their games and sales are likely to increase with more broadcasting exposure of their games. However, there are reports of malicious broadcasting or unauthorized IP damage cases, so it is difficult to conclude that copyright infringement will not be a problem in the future. In the case of a single-player game where the story is the core, if the story is known in advance, it has a negative impact on sales, so there are cases where the screenshots and video capture of games are blocked for release. If a game is aired, it will not necessarily benefit the game companies. Just because a copyright infringement has not been a problem lately, there is no guarantee that it will not be a problem in the future.
2020 WHITE PAPER ON KOREAN GAMES 25 SUMMARY
7) Discussion for the protection of rights and interests of e-sports players has started
In 2019, the protection of the rights and interests of e-sports players was discussed in earnest. Korea lacked an institutional mechanism related to the protection of the rights and interests, such as player treatment and contracts, while bearing the title of the birthplace of e-sports. In the second half of 2019, discussions on improving the treatment of e-sports players began with the so-called “Kanavi incident,” which forced illegal contracts on the professional gamers of the “League of Legends.” Tempering, which is often controversial in professional sports, refers to a prior contact with a player who has a limited contract term, or has a priority contact with a particular team. In any sport, however, it is strictly prohibited to protect players and clubs, and violations are subject to severe discipline. E-Sports prohibits inter-country tempering, which can even lead to expulsion. For professional gamers with short player life, the discipline for tempering and long-term contracts without renewal are like slave contracts. According to the “2018 E-Sports Factual Survey” released by the Korea Creative Content Agency, the average age of professional players is 20.8 years, while the average player life of active players is only 2.8 years. Many game users were angry about the Kanavi incident. More than 200,000 people agreed to sign the national petition. Many professional gamers have just come of age or are underage, revealing that there is a blind spot that could be vulnerable when signing legally binding contracts. Kanavi was 18 years old, a minor. To prevent the recurrence of such an incident, Riot Games, the government, and the National Assembly banded together. Discussions were held to create a “standard e-sports player contract” by collecting opinions from related organizations, such as the Korea Fair Trade Commission. There was a standard contract written by the Korea e-Sports Association, but there were a number of unfair provisions. While reverting all the portrait rights of the player to the company, there was no provision for returning them to the player after the contract is terminated. Also, there was
26 2020 WHITE PAPER ON KOREAN GAMES Part 2 Major Issues in the Domestic Gaming Industry in 2019
a provision in which the club set an excessive penalty for the transfer or termination of the contract without prior consultation with the player. The e-sports player registration system will be expanded and settled. It was decided that the player registration system, which was limited only to a few selected sports, will become an integrated player registration system in cooperation with the Korea e-Sports Association and corresponding e-sports event. Its objective is to manage objective player information and game records systematically, and to protect player status in annual salary contracts and domestic and overseas transfer contracts thoroughly.
8) Acceleration of game companies’ union with other industries
Domestic game companies, including Netmarble, NCSOFT, and Nexon, have expanded into non-game industries. They now cover adjacent industries, such as the character industry, as well as heterogeneous industries, such as finance, entertainment, and rental sectors. They will attempt to discover new food items through their core capabilities. Netmarble acquired a rental company, Coway, for 1.74 trillion KRW. The gaming industry interpreted the move after Netmarble Chairman Bang Jun-hyuk’s suggestion to take a break from gaming in the absence of hits for several years. Netmarble actively controlled gaming companies to expand global competitiveness and secure IPs. It acquired Jam City and Kabam, and, despite failures, it participated in the acquisition of Playtica and Nexon. Meanwhile, the company expanded its horizons by investing 200 billion KRW in Big Hit Entertainment, the agency of “BTS.” After acquiring Coway, Netmarble announced its plan to expand the real subscription economy market. It set up a goal to integrate AI, cloud, and IoT technologies accumulated during the gaming business into Coway rental products to identify the replacement cycle in real time, and build an automatic ordering and delivery system. In the past, people had to verify the replacement demand individually, so it was judged that a more aggressive business would
2020 WHITE PAPER ON KOREAN GAMES 27 SUMMARY
be possible with a new system. Since it is a structure that can be easily imagined, the prediction regarding a compound plan following the above-mentioned plan has become dominant. There is also an analysis to reduce the proportion of gaming sales, which is expected to be successful, and create a stable cash flow. A game/IT-entertainment collaboration structure was also created. NCSOFT has been preparing a new business that combines IT and entertainment by establishing a separate corporation for the entertainment business. Nexon’s holding company, NXC, which has been showing continuous interest in non-gaming fields, such as stroller, brick, fashion, and animal feed businesses, chose digital assets as a new investment field. The company plans to establish Arques, a subsidiary for the development of a digital asset trading platform, and launch services for future major consumers, like the Generation Z and Millennials. The company will adopt the elements of the management simulation game. After the acquisition of Korbit, a domestic digital asset exchange in 2017, NXC acquired Bitstamp, a European cryptocurrency exchange in October 2018. It has been gradually expanding the non-game area by investing in Tagomi, an American digital asset trading agency. There were concerns that the domestic industrial ecosystem would falter by reducing the scale of game businesses after focusing on finding new food items. Nexon stopped the operation of poorly performing games and new projects with dark prospects. Some sectors raised concerns that the company is following the path of NHN, which has not launched any hits since it became a comprehensive IT company. The specificity of the gaming industry is cited as a reason for trying to integrate into heterogeneous industries rather than one-time promotions. There are games like
28 2020 WHITE PAPER ON KOREAN GAMES Part 2 Major Issues in the Domestic Gaming Industry in 2019
integration with heterogeneous industries. The gaming market could not expect explosive growth as it used to play a part as well. There was also a sense of crisis that internal and external negatives, such as game use disorders and probability items, overlapped, and it was necessary to prepare growth engines for survival.
9) Console, multiplatform and cross-platform
A domestic gaming company has taken a challenge toward the global console gaming market that is worth 60 trillion KRW. The company actively introduced cross-platform and multiplatform approaches to overcome limitations as a latecomer, and is geared toward sustainable growth and survival. Until today, consoles have been outside of the business field for domestic gaming companies because they could not afford to invest in the domestic console gaming market, which only accounts for 4.5% of the market share. It requires plenty of development costs and manpower, but its profitability is lower than that of mobile games. However, domestic gaming companies began paying attention to console games because of the size of the overseas console game market. The global console game market is worth about 60 trillion KRW. It was a market worth challenged by domestic gaming companies, which reached their growth limit. Console games satisfied the companies’ business desire to challenge the global market beyond the domestic PC game and mobile game markets, where slowing growth has been approved. It stimulated the desire of gaming development companies and developers who want to develop AAA-level games. There is also the publicity effect of challenging the console platform, which requires a high level of planning, technology, and marketing. Another advantage is the ease of entry into North America and Europe, one of the long-standing wishes of domestic gaming companies. In Western countries, such as those in North America and Europe, the culture of console games played in the living room was established early. For this reason, major companies and small developer groups, including Nexon, NCSOFT, Netmarble, Pearl Abyss,
2020 WHITE PAPER ON KOREAN GAMES 29 SUMMARY
Kraftton, Smilegate, Line Games, Shift Up, and Next Stage, produced concrete results by accelerating the development of console games. Nexon unveiled
30 2020 WHITE PAPER ON KOREAN GAMES Part 3 Game Utilization Characteristics
Part 3 Game Utilization Characteristics
1) Overall game play rate
According to a survey on the general public (n = 3,084) ages 10-65 years old on game usage since June 2019, 70.5% played games. The mobile gaming platform (91.1%) received the highest usage rate among those with exposure to games (n=2,174). In terms of usage, PC games achieved 59.1%, console games enjoyed a reach of 20.8%, and arcade games pulled in 10.0%. Moreover, 99.1% of the respondents (n=2,174) with experience in using games usually accessed the Internet. When game users were asked about the device they used to log on to the Internet for purposes other than work/academics, the response rate showed that 94.7% use “smartphones,” 59.9% use “desktop PCs,” and 32.4% use “laptops/netbooks.”
Figure 8 Game Utilization
￭ Overall Game Utilization(2016-2020) (Unit: %)
70.3 70.5
67.9 67.2
65.7
2016 2017 2018 2019 2020 (n=3,045) (n=3,013) (n=3,020) (n=3,037) (n=3,084)
￭ Game Utilization by Platform (2020) (Unit: %, n-2,174, Multiple response)
91.1
59.1
20.8 10.0
Mobile PC Console Arcade
2020 WHITE PAPER ON KOREAN GAMES 31 SUMMARY
2) Game utilization rate by platform
(1) PC game
The recent (after June 2019) utilization rate of PC games2) for respondents ages 10-65 turned out to be 41.6%, a 0.5%p decrease compared to 2019. The PC game utilization rate for males was significantly higher than the rate for females, and it was comparatively higher for those in their 20s and below.
Figure 9 PC Game Utilization
(Unit: %, Multiple response)
69.7 -0.5%p 58.8 53.3 48.1 42.1 41.6 43.3 29.5 22.4
4.2
2019 All Male Female Teens 20s 30s 40s 50s 60-65 years old (n=3,037) (n=3,084) (n=1,575) (n=1,509) (n=377) (n=524) (n=537) (n=639) (n=663) (n=344)
By Gender By Age
(2) Mobile gaming
About 2/3 (64.2%) of the respondents were found to have recently used mobile games3) in the past year, a 5.2%p increase from 59% in 2019. There were no significant differences in utilization rates by gender, while the utilization rate for teenagers was the highest.
2) Games installed to a PC after they were downloaded from the Internet, or purchased as a game software package. Web browser-based games, which do not need a client program, are included as well. 3) Includes games in the form of apps played on smartphones and tablet PCs (iPad/iPod, Galaxy Tab, etc.) (Games played on phones other than smartphones (feature phones) are excluded).
32 2020 WHITE PAPER ON KOREAN GAMES Part 3 Game Utilization Characteristics
Figure 10 Mobile Game Utilization
(Unit: %, Multiple response)
+5.2%p 82.4 73.9 72.3 64.2 63.7 64.7 67.9 59.0 52.1
31.9
2019 All Male Female Teens 20s 30s 40s 50s 60-65 years old (n=3,037) (n=3,084) (n=1,575) (n=1,509) (n=377) (n=524) (n=537) (n=639) (n=663) (n=344)
By Gender By Age
(3) Console gaming
The utilization rate of console games4) turned out to be 14.6%, a 1.3%p increase from 13.3% in 2019. The utilization rate by males was higher than females, while the utilization rate by those in their 30s was comparatively higher than those of other age groups.
Figure 11 Console Game Utilization
(Unit: %, Multiple response)
25.8 +1.3%p 19.4 20.7 16.4 14.6 13.3 12.8 10.4 5.9 0.0
2019 All Male Female Teens 20s 30s 40s 50s 60-65 years old (n=3,037) (n=3,084) (n=1,575) (n=1,509) (n=377) (n=524) (n=537) (n=639) (n=663) (n=344)
By Gender By Age
4) Includes games played on game consoles (Playstation, Xbox, etc.) connected to a TV or a display screen, as well as portable consoles (PS Vita, Nintendo Switch).
2020 WHITE PAPER ON KOREAN GAMES 33 SUMMARY
(4) Arcade gaming
A total of 7.1% of the respondents stated that they recently played arcade games,5) a 0.7%p decrease from the 2019 survey. There was no significant difference between genders. The utilization rate of arcade games among those in their 20s and 40s was comparatively higher than the other age groups.
Figure 12 Arcade Game Utilization
(Unit: %, Multiple response)
-0.7%p 12.6 10.8 8.8 7.8 7.1 6.7 7.4 4.0 3.0 0.0
2019 All Male Female Teens 20s 30s 40s 50s 60-65 years old (n=3,037) (n=3,084) (n=1,575) (n=1,509) (n=377) (n=524) (n=537) (n=639) (n=663) (n=344)
By Gender By Age
(5) Virtual Reality Gaming
The utilization rate of a Virtual Reality (VR) game6) was 5.4%, a 0.4%p decrease from 2019. The utilization rate among females was comparatively higher than the rate of males, and those in their 20s to 40s recorded a higher utilization rate.
5) Refers to games played at a facility commonly referred to as an arcade. 6) Refers to games simulating reality in a virtual space, and can be played on hardware, such as PC, mobile device, console, and attractions.
34 2020 WHITE PAPER ON KOREAN GAMES Part 3 Game Utilization Characteristics
Figure 13 VR Game Utilization
(Unit: %, Multiple response)
-0.4%p 7.3 7.5 7.4 6.1 5.8 5.4 4.7 4.2 3.5
0.5
2019 All Male Female Teens 20s 30s 40s 50s 60-65 years old (n=3,037) (n=3,084) (n=1,575) (n=1,509) (n=377) (n=524) (n=537) (n=639) (n=663) (n=344)
By Gender By Age
2020 WHITE PAPER ON KOREAN GAMES 35 2020 WHITE PAPER ON KOREAN GAMES 2020 WHITE PAPER SUMMARY ON KOREAN GAMES
SUMMARY