泥中蟠龍's Game愛歌 _ Is there a crisis of mobile game?

泥中蟠龍's Game愛歌

[A love song for games of the dragon waiting for an opportunity]

 

Is there a crisis of mobile game?

Recently, I was asked to present on the subject of a crisis of the Korean mobile-game industry. I have mentioned the gaming-market crisis in my column over several times, however, I'd like to talk about it from an investor's point of view this time.

Speaking as the venture capitalist, a good investment target includes high-profitability industry, fast-growing industry, undervalued industry, and strategic-investment-partnership -based industry, etc.

There were massive investments in the local mobile-gaming industry around 2013 to 2014. But the result of the investment was not that good. Dozens of cases of investment failure brought about drastically reduced investment and investors maintain a wait-and-see attitude now.

The domestic mobile-gaming industry was increased unprecedently in history in 2013. It had made explosive growth of 190.6 percent since KakaoTalk Game Platform service was launched in 2012. But the growth has sharply declined as you can see from an estimated 4.2 percent in 2014 and the domestic mobile-game industry has become mature in a relatively short period time predicting 1.8 percent year-on-year growth in 2015.

Much anticipation had been building amongst local mobile-game developers in 2014 when many of them had received an investment proposal from Chinese companies obtained large-scale funding. Talking about conditions from Chinese investors, a good number of game makers expected domestic investment firms to invest two to three times the size of the existing company valuation. It threatened to dampen Korean domestic investment and Chinese companies attained predominance in the local game-investment field. But unlike the negotiation process of Korean companies, Chinese investors unilaterally terminated an agreement with frequency, which put many local game companies in an awkward position.

A small number of publishers are currently taking over the Korean mobile-game market allowing their cost to spend on strategic investments. Now, in a situation where domestic investment firms are unwilling to invest money in the gaming sector, a handful of strategic direct investors are of great importance supporting its industry. However, the currently unbalanced situation depending upon a few numbers of firms will be forced to deepen industrial polarization among game developers and distort our industrial habitat anytime.

The local mobile-game market is not attractive compared to two to three years ago. Growth has been drastically slowed and company valuation is too high from investor's viewpoint. Now, the whole sector depends on the minimum number and the market polarization is severe.

But the free play of market forces naturally creates new opportunities throughout the domestic mobile-game industry without mentioning a hackneyed axiom "Never let a good crisis go to waste". I hope that I'll be able to write how Korean mobile-game industry overcame the crisis at this time next year.

 

※ This is from Kyunghyang Games column by 泥中蟠龍 since September 2013.

   (http://www.khgames.co.kr)

    Translation by Kim Ki-hui