[The Korean Game Scene Dominates in China] Only One Korean Game in China's Top 20... Subculture Takes a Direct Hit

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Chinese games have not only launched a capital offensive but also improved their gameplay, spreading a widespread sense of 'crisis' within the domestic gaming industry. Whereas Chinese games were once seen as challengers, they are now considered to have surpassed domestic games in the online and mobile sectors. There is growing support for the argument that instead of direct competition, innovation should be pursued to pioneer new genres.

The growth of Chinese games can be confirmed by the export share of mobile games, which is higher in countries with relatively high user standards such as the United States, Japan, and South Korea. According to data from the China Audio-Video and Digital Publishing Association, last year the share of Chinese mobile game revenue was highest in the U.S. at 32.51%, followed by Japan at 18.87%, and South Korea at 8.18%. The combined share of these countries approaches 60%.

The growth of Chinese games is also evident through developer migration. An industry insider said, "It is safe to say that there is no longer demand for domestic developers within China." The situation where domestic developers were favored for finalizing game work is already a thing of the past.

As a result, even if a game obtains a foreign-invested publishing license (waizha panhao) to operate in China and is released, success is no longer guaranteed. In the past, market entry guaranteed success, and the term 'panhao jackpot' was even coined. However, with policies promoting domestic games and rising quality standards, it is easy to find domestic games that perform poorly even after entering the market. From December 2022 to December last year, a total of 15 domestic games obtained foreign-invested publishing licenses and entered the market, but only MapleStory M maintained a top 20 sales ranking three months after release.

Earlier in 2021, Pearl Abyss’s Black Desert Mobile, which had ranked third in mobile game expectations even before its release in China, fell out of the top 100 sales rankings within about a month, effectively marking it as a failure. An industry insider said, "With the quality of Chinese games improving and domestic game promotion policies added, it is difficult for domestic games to survive."

Domestic game companies with genres similar to Chinese games have been hit hardest. They compete not only in role-playing games (RPGs) and mobile games but also in the subculture sector characterized by Japanese animation-style graphics. While domestic companies once held the advantage, recent assessments suggest China is taking the lead. For example, HoYoverse’s Genshin Impact was initially dismissed as a copycat of Nintendo’s The Legend of Zelda: Breath of the Wild when first revealed. However, subsequent updates demonstrated high completeness and led to global success. Preferences of domestic and Chinese users are similar, and especially in South Korea, where cash payments are high, Chinese companies deliberately focus on the Korean market.

As the gap with Chinese games disappears and domestic games fall into the 'challenger' position, voices calling for innovation to survive are emerging. There is growing support for pioneering the console sector among various genres. This is because console games are popular in large and affluent markets such as the Americas, Europe, and Japan.

It is worth noting that Neowiz’s console game P’s Falsehood surpassed one million global sales. However, the console genre requires not only game development but also hardware development, making short-term achievements difficult. Additionally, console game development demands more manpower than mobile games, so only financially strong game companies can engage in development, resulting in fewer attempts overall.

Professor Kim Jeong-tae of Dongyang University’s Game Department explained, "The console genre has high and solid entry barriers, and without continuous investment and effort, there will be limits. The government needs to strengthen networking and provide support such as research and development so that small and medium-sized game companies can also enter console game development."

Since console game development is expected to take considerable time, there is a suggestion to strengthen the arcade sector, where Chinese games are relatively weak. Professor Kim added, "We have strong technological capabilities in arcade games and even export to Japan. In this field, China still seems to be behind us."

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