White Paper on Korean Games 2020 White Paper Summary on Korean Games
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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. 2020 WHITE PAPER ON KOREAN GAMES 3 SUMMARY 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. 2020 WHITE PAPER ON KOREAN GAMES 5 SUMMARY 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 <Player Unknown’s Battlegrounds> is very significant. PC platforms, such as Steam, remain popular, but users who are new to the game, including children and women, prefer mobile platforms that are easy to access and operate. Thus, the growth of the mobile platform is expected to stay strong for the time being. Meanwhile, Internet café sales are expected to decrease as the number of users continue to decline due to the COVID-19 outbreak in 2020. Once COVID-19 pandemic is moderated, Internet café sales are expected to increase again in 2021. The use of mobile games has started to increase as people spend more time at home and non-face-to-face activities increase due to COVID-19. Moreover, mobile gaming is expected to become the most important gaming platform in the future because of the excellent accessibility of mobile devices. Mobile games based on PC MMORPG IP1), in particular, are leading the growth of the domestic gaming industry. Mobile gaming sales are expected to grow significantly in 2020, which will continue for the time being. 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 <Animal Crossing: New Horizons>. The three major console platform holders have been striving to localize popular titles, and major domestic gaming companies are also actively entering the console market by releasing console versions of popular games. Moreover, with Sony and Microsoft releasing next-generation game consoles in November 2020, console game sales are expected to surge in 2021, showing a higher growth rate compared to 2020. Arcade games and gaming arcades have been greatly struggled with the COVID-19 pandemic. Many domestic gaming arcades have been closed, resulting in game machines being put up on the market for sale.