The Koreas | Economy | East Asia

Can South Korea Boost Its Economy by Turning to Gaming?

South Korea is hoping to cash in on the coronavirus-driven boom in mobile gaming. But critics say it needs to address problems in the industry first.

Tae-jun Kang
Can South Korea Boost Its Economy by Turning to Gaming?
Credit: Pixabay

South Korea has laid out a new plan to nurture its gaming industry to boost the economy. Measures include easing regulations on the industry, increasing subsidies for start-ups, revamping the industry structure, and promoting both the industry and e-sports league.

The country’s decision comes amid the rapid growth of both the domestic and global gaming industry, boosted by the outbreak of COVID-19 across the world.

In the first quarter of 2020, global mobile game sales rose 5 percent from the fourth quarter of last year, according to App Annie, a mobile application market analysis company. The number of game app downloads stood at 13 billion, and consumer spending was $16.7 billion in the first three months of 2020.

The number of game downloads in Google Play grew 25 percent year-on-year to about 10 billion. Apple’s iOS also saw a 25 percent year-on-year increase in the number of game downloads, achieving 3 billion downloads.

“There were 13 billion downloads of game apps, accounting for 40 percent of the total 31 billion downloads of all apps,” App Annie said. “In particular, weekly mobile game downloads increased by 30 percent in March compared to the fourth quarter of 2019.” The company noted that the upward trend began with the coronavirus spreading around the world, as people began to engage in social distancing.

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South Korea was among the top three countries that saw the largest growth in both the number of downloads and spending on mobile games, according to App Annie.

In particular, Lineage 2M, a mobile game developed by South Korean firm NC Soft, saw dramatic growth. The game ranked sixth in the global mobile game sales rankings in the previous quarter, up 31 notches from 37th, and it is currently the top seller of Google Play in South Korea.

Considering such signs, it is understandable why the South Korean government is eager to nurture the gaming industry further and leverage it to boost the national economy.

However, not everyone is happy with the government’s plan and announced measures. Some critics believe the government is ignoring an important issue: domestic mobile game developers’ practice of encouraging players to spend excessive money on games, and the absence of any regulations to stop it.

A boycott movement in South Korea over Lineage 2M is a good example.

Lineage 2M has been dubbed a “game that cannot be played without money.” This is mainly because users can only obtain rare in-game items through a raffle. To enter the drawing, users need to pay money. Millions of won can be spent to acquire one item.

Players buy expensive packages or pour money into raffle entries because of the game’s nature, which requires stronger and rarer items to get ahead of other players.

Some players flocked to the official petition channel managed by South Korea’s Presidential Blue House to ask the government to regulate mobile game developers and operators so that they cannot encourage users to spend excessive money on games.

The petitioners compare mobiles games in the South to gambling. They argue that it is addictive for many game users, and that such elements should be regulated in the same way the government regulates gambling.

The Korea Game Society points out that the issue has a long-term negative impact on the overall mobile game industry in South Korea.

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Wi Jung-hyun, a professor of business administration at Chung-Ang University and head of the Korea Game Society, said users who simply want to enjoy the game and release stress will eventually leave if they have to spend money to continue.

This will lead to a drop in the number of users and sales, which is not ideal for the gaming industry, he lamented.

Signs of damage are already emerging. Amid boycott and petitions, the number of users for Lineage 2M dropped by 68.9 percent, from 775,524 in November last year to 240,572 in April. Monthly sales are estimated to have fallen 26.8 percent, to 3 billion South Korean won ($2.458 million) from 4.1 billion during the same period.

The game operator NC Soft, however, has maintained silence over both the boycott movement and petitions.