South Korea: Tap Into the Online Games Market
While China has received substantial attention with its gaming market, South Korea is still a market leader in online games. Pearl Research forecasts the online games market in South Korea will exceed $1.7 billion by 2009, driven by new releases and a fervent gaming culture.
One of the fastest growing segments is casual games, that are free-to-play, easy-to-learn and can be played in “micro-slices” of time of ten minutes or less. Pearl Research’s key findings published in our “Games Market in Korea” study include:
- South Korea has a sophisticated information technology [IT] infrastructure with 80% of households connected to the Internet.
- South Korea has one of the highest adoption rates of purchasing virtual items and micro-transactions. Approximately 67% of those in the 20-30 age cohort purchased online paid content. Of those who have purchased digital content, 91% purchased music while 39% purchased community and avatar items from online services.
- A common strategy in Korea is the operation of large game portals that provide a wide selection of games, including massively-multiplayer online role-playing games (MMORPGs), casual, and web board games all within one convenient site. Top game portals such as CJ Internet’s Netmarble, NHN’s Hangame, and Neowiz’s Pmang can attract 500,000 to 1 million unique visitors a day. More than 10 million Korean adults visit game portals every month, according to estimates by Pearl Research.
- Notable companies include CJ Internet, operator of game portal Netmarble, which recorded the largest sales gains with revenues up 51.9% YoY in 2007. One of the main reasons for this substantial increase was from the steady growth of its games portal, Netmarble, combined with a stream of game releases which covers a broad consumer audience. CJ’s Netmarble is one of the top five Internet game portals in Korea with 8.5 million unique visitors per month.
Another notable company is NHN, operator of online game portal Hangame and top Internet search portal Naver. It had particularly strong year-on-year growth driven by an increase in the number of games and portal services, with revenues of $259.8 million.
While South Korea has a robust games market, critical challenges include intense domestic competition; prevalence of “me-too” or derivative titles; challenges in expanding overseas to the US and China; and rising development costs.
Investors seeking to tap into the digital entertainment market might consider adding Korea as a market in their portfolio.
Disclosure: none
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