By Juwon Seok
SEOUL, Korea (AVING Special Report on 'GSP 2010′) - A while ago, I went on a business trip to Brazil to cover an international game competition called GNGWC. Since Brazil is better known as a soccer champion and the land of samba festivals, I felt somewhat unfamiliar with an international game competition being held in the country. I checked into the game markets in Brazil and overall South America before departure, and after witnessing the locals really enjoying the games, I realized how developed the Korean game industry was. Just where is the Korean game market situated on the global rank, which allows us to laugh, chat and entertain ourselves with people from the other side of the planet?
The era of the Korean game market can be classified as pre-'The Kingdom of the Winds' and post-'The Kingdom of the Winds' in 1996. While the Korean game market prior to 1996 was heavily concentrated on the arcade sector, a few game developers were pouring their efforts on developing PC package games. The overall game market was small, but as for PC games, illegal duplication of software left the game development market on the verge of collapse, despite the few but quality games including 'The War of Genesis' and 'White Day'. The troubleshooter to such problems was NEXON's 'The Kingdom of the Winds'.
'The Kingdom of the Winds' borrowed the world view of its cartoon original and was the first game to graphically embody multiple user dungeon (MUD), a gradually popularizing network-based game genre. Furthermore, the game had surpassed the symbolic meaning of the first graphic-based online game to change the entire paradigm of the Korean game market.
The environment that forced users to play only by connecting directly to the server imposed numerous restrictions on illegal duplication, which was forcing the game market off the cliff. In addition, the new billing system of receiving a fixed portion of monthly service fee from the users created a stable business structure creating steady sales. 'The Kingdom of the Winds' had become a new role model of the game market.
The success of 'The Kingdom of the Winds' breathed new life into the Korean game development market, which had been constantly stagnant. The participation of numerous classes, such as game developers facing difficulties in the package market, as well as those interested but hesitant due to the market conditions, and those jumping into the opportunity of blue ocean led to an unprecedented vigor in the Korean game market.
Two years after 'The Kingdom of the Winds' had presented the breakthrough, 'Lineage' launched official services in 1998. 'Lineage' provided the future direction of online games. Just as with 'The Kingdom of the Winds', 'Lineage' borrowed the world view from its original cartoon, and also paved the systematic foundation of MMORPG. Moreover, it fundamentally utilized the principle that online games should be based on exchange and competition between the users.
The introduction and development of 'Lineage' is closely related to the growth of PC cafés. Since the high-speed internet network of present times was not widely distributed to individuals back then, many people sought PC cafés to enjoy online games. Amidst such background, online games including 'Lineage' and PC cafés grew together by providing synergy effect to one another.
Counted to be around only 3,000 in 1998, the number of nationwide PC cafés rose rapidly to 15,000 in 1999 and over 21,000 in 2000. Likewise, 'Lineage' enjoyed top popularity by breaking through 100,000 simultaneous logins in 2000, albeit only 1,000 during its initial servicing in 1998. NCsoft Corporation, the developer of 'Lineage', was listed on KOSDAQ in March 2000 and proved that game possesses great industrial value.
The success of NCsoft Corp. and 'Lineage' attracted a great number of investors into the game market, and the Korean game market witnessed its great boom in the early 2000s. Games such as 'MIR II', which achieved 500,000 simultaneous logins in the Chinese market, 'Ragnarok Online', which became popular not only in Japan and Taiwan, but also in the United States, as well as 'MU Online', which opened the era to 3D online games, followed suit behind 'Lineage' to lead the MMORPG market. Just as well, casual games including 'Fortress 2′ and 'Crazy Arcade' enjoyed wide popularity to support the foundation.
Only at a size of 16 million dollars in 1999, the Korean online game market grew to one worth 171 million dollars in 2000 and 263 million dollars in 2001. Accomplishing a market size of approximately 1 billion dollars for the first time in 2004, the Korean online game market did not seize to grow despite the worst recession of the game market in 2007. The reason as to how the Korean online game market could grow so rapidly is due to its swift attempt to advance overseas without dwelling in the domestic market.
Searching for the Land of Promise
The Korean online game market was at its golden age from the late 1990s to the early 2000s. The market was on a straight road to growth, and developers had dreams and hopes in developing games with passion. There were around 30 online game developers in Korea in 1999, but the number multiplied with the advent of the 21st century, opening the floodgate to games. The problem was that the Korean game market was not as big enough to accommodate so many games.
The online game market preoccupied by 'Lineage', 'MU Online' and 'Ragnarok Online' did not allow the new entries to pursue so easily. Ultimately, unable to find a penetration point in the domestic market, games headed elsewhere: to overseas. Just as Europeans set sail on a voyage for wealth and honor in the 16th century, Korean online games sought overseas in search of a new blue ocean.
The first to accomplish success in the overseas market was 'MIR II'. Based on the motif of martial arts, the MMORPG 'MIR II' reaped great popularity in the Chinese market and recorded 500,000 simultaneous logins. Afterwards, stimulated by its success, numerous domestic games began knocking on the door to overseas markets. Yet, the course was not to be smooth.
Foremost, the overseas network infrastructures were not developing as quickly as in Korea, and it was taking time for the online games to settle down. Next, Korean game developers had no experience advancing to overseas markets and faced difficulties in conducting business due to their inexperience in the local markets. Above all, the Korean online games were starting to come out in batches, but had completely stopped growing in quality. The numerous game developers and investors that jumped into the market in light of Lineage's success had failed to create anything more than its imitation.
Reorganization of Market and Taking a New Leap
By the mid-2000s, the Korean game market faced its crisis. Numerous games that challenged the market without thorough preparation had disappeared without even publicizing their names, and large-scale projects committing tens of millions of dollars had consecutively admitted defeat. The decisive hit was Blizzard's 'World of Warcraft', officially serviced in the end of 2004. Before 'World of Warcraft', no overseas online games could overcome the high barrier of the Korean market, but Blizzard was different. 'World of Warcraft' gradually drove successful Korean games out of the market.
As the MMORPG-oriented market structure began to shake, games of new genres came into the light. Contrary to the MMORPG genre requiring complex systems and long investment periods, casual games that could be enjoyed over short periods of time became the mainstream of the market. Games such as 'Kartrider', "Audition" and 'Freestyle' raked in popularity to quickly reorganize the stagnant online game market. In particular, 'Special Force' was a perfect establishment of online FPS games and greatly influenced the market by starting an online FPS game development fever.
From 'Dungeon & Fighter' to 'Maple Story', 'Sudden Attack' and 'AION', the online game market turned the recession around by strengthening game diversity and also accomplishing qualitative growth. Acquiring market competitiveness, Korean games once again began to receive the limelight in the global market. In 2009 alone, the sales scale of Korean online games was aggregated at approximately 3.255 billion dollars, among which export handled 41.7% at approximately 1.36 billion dollars.
The topic of entertainment these days is the Korean Fever. Idol groups representing Korea enjoy great popularity overseas and lead the way to propagating Korea. It is no different in the game industry. Korean games are currently serviced in most global regions including Southeast Asia (e.g. China, Japan and Taiwan) and the United States, Europe and South America. Global users enjoying Korean games are unknowingly coming in contact with Korea.
Korean Games in the World
Korea was once the largest online game exporting country. Although forfeiting the position to China now, it is still the most influential country in the world in regard to online games. As for Taiwan, 7 out of the Top 10 games are made in Korea. The Southeast Asian market, too, is also strong areas of Korean games. Even in the largest market, China, numerous Korean games are ranked on the top including 'Dungeon & Fighter' and 'Cross Fire'.
Still, Korean games have yet to achieve stable performance in the United States and European markets. Nonetheless, a substantial number of local publishers are interested in Korean games and are steadily making contact. There are many cases where games currently under development have concluded service contracts in the United States or European regions instead of in Korea. Greatly awaited games such as 'Blade & Soul', 'TERA' and 'Kingdom under Fire II' were exhibited in the recent international game exhibition, 'G-Star 2010′ and are receiving great attention from the United States and European markets.
Above all, we must be attentive to the newly forming game markets. The game markets in Russia and South America starting from Brazil have begun to move. Both markets have just been born, and the size itself is small. Yet, in view of the local market conditions and potential, the regions have high potential for forming secondary markets following China. It is no longer surprising that Korean games are situated in the heart of the formation and development of these game markets.
Game&Game, to be continued
Currently, large-sized Korean developers and publishers such as NEXON, NCsoft and NHN Games are directly launching business with overseas local corporations. Even companies without local corporations are contracting with local publishers to service their games overseas. Still, many small and medium sized game developers are unaware of the methods or are short-handed, and are facing difficulties in advancing overseas. Accordingly, the Korean government is developing a variety of supporting projects to help develop the game market and the small-sized game developers.
The aforementioned GNGWC competition is one of such projects. Started in 2006, GNGWC is an international game competition designating several official games to coordinate local tournaments by continent and ultimately to decide on the world champion. Aiming for the global publicizing of participating games and services to the users, GNGWC is now utilized as the plaza of international exchanges between participating users. GNGWC is proving that people can exchange through games despite their differences in region or language.
The Global Service Platform (GSP) project, which aids overseas publishing, is yet another project promoted by the Korean government. The government selects companies applying for participation in GSP and provides foreign language translation and game servers. Furthermore, the game portal site operated by the Korean government, 'GNG (Game&Game)', is also promoting publishing of designated games. Also, various benefits such as the 'Global Hub Center' are provided to help small-sized developers focus on developing games in a better environment.
Amidst such sturdy support, the Korean game market is now ready to greet its renaissance once again by shucking off from its transition period and acquiring a stabilized development environment. Korea is currently the world's 2nd largest online game exporting country, and also one of the world's top online game consuming markets. It is now the time to pour effort in correcting social problems occurring from games, and for the industry, related institutions and users to settle down as a proper entertainment culture, instead of focusing entirely on the one-sided structure of industrial growth. It is when we acquire the maturity fit for a massive market size that the games will evolve, once again.
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