Korean Games Reentering the Chinese Market... Mixed Expectations and Concerns
by Lee Seungjin
Published 03 Apr.2023 07:38(KST)
Korean games are heating up the Chinese market once again. The Chinese government has eased regulations on games and has begun issuing game licenses (approval for game services within China) to domestic games one after another.
China's attitude, which used to treat games as "spiritual opium," has recently changed 180 degrees. This is because the Chinese gaming industry has shrunk for the first time in eight years. Last year, the Chinese game market revenue was 265.884 billion yuan (approximately 48 trillion KRW), a 10.33% decrease compared to 296.5 billion yuan recorded in 2021.
As a result, the Chinese government has started to unlock the restrictions it had placed on the gaming industry. On the 20th, the National Press and Publication Administration of China announced on its website that it would issue 27 foreign game licenses for paid services. This included five Korean games such as "Blue Archive" and "Cookie Run: Kingdom." In December last year, licenses were also issued to numerous foreign games.
Game companies that received licenses are accelerating their services. Nexon Games has started pre-registration for the official Chinese release of its developed game "Blue Archive." "Blue Archive" received its license from the National Press and Publication Administration of China on the 16th. Smilegate Megaport, which services and Super Creative, which developed "Epic Seven," have also started pre-registration.
There are also many games waiting to target the Chinese market after receiving licenses. In December last year, six domestic games including Netmarble's "The Second Country" and "A3: Still Alive," Nexon's "MapleStory M," and Smilegate's "Lost Ark" received licenses. Wemade is negotiating service contracts for "Mir 4" and "Mir M" with local distributors.
The market evaluation is favorable. Upon news of license issuance, the stock prices of each company rose significantly. Some increased by nearly 20% compared to before the license issuance. Netmarble, which turned to a deficit last year, is widely expected to return to profitability this year by leveraging its entry into China.
However, concerns remain. In 2017, China implemented the "Hanhanryeong" (Korean Wave ban), abruptly blocking services of domestic game companies without notice. Domestic game companies were unable to enter the Chinese market for five years thereafter.
Another concern is the improved game development capabilities of Chinese game companies. In the past, simply entering the Chinese market meant a so-called "big hit." However, Chinese games now occupy many spots within the top 20 in domestic game market revenue, demonstrating their high development capabilities.
Additionally, the fact that games receiving licenses have already started services in countries excluding China several years ago also hinders their success. For example, Nexon Games' "Blue Archive," which has begun pre-registration, was released in 237 countries excluding China in 2021. Chinese users, who have a strong interest in games, have already accessed games not released in China through alternative routes.
A game industry official explained, "There are frequent cases where games were well serviced in China but suddenly lost their suppliers and were forced out. Nevertheless, expectations remain high as it is the largest game market in the world."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.