泥中蟠龍's Game愛歌
[A love song for games of the dragon waiting for an opportunity]
Video game and fund (Part.2)
In Part.2, 'd like to talk about not the influence of the world capital market but the global video game market on the domestic gaming industry. The Korean gaming industry is highly interlinked with the global games market. In the early 2000s, many local video games—mostly PC games—generated a lot of revenue since they made inroads into the global market, which helped some of the companies to list on KOSDAQ at that time and they are now estimated between hundreds of billions to trillions won worth of valuation. Also, Korea's mobile-game developers were in high demand worth of between tens of billions to hundreds of billions won of valuation across the world based on their advanced technology in time for the initial growth of the smart-phone market throughout the world. It could not have happened without large foreign capital in accordance with the high valuation of the national mobile game makers. China, which was emerging as a powerhouse in the field of the mobile game, particularly tried to find potential developers with state-of-the-art technology to put its money on.
However, Korea's mobile game companies are not attractive investment destinations to foreign investors any more than before. It's because of the closed technology gap between local game developers and foreign game makers. If there is a relatively lower valuated company within a neighboring country, it's natural for a foreign investor to move its capital to the new attraction.
A corporate is a product in the investment market. Of course, prices depend on demand and supply. A company, which was worth about thousands of millions won just three or four years ago, is now valued to be approximately 1 trillion won of valuation and vice versa. In recent years, while new mobile game studios have popped up around the globe, developers in their early days are appreciated way below than expected on the whole. It is because the supply and demand are not well balanced. However, in spite of a glut of video game companies all over the world, most domestic game makers are not satisfied with a lower valuation than they hope to obtain. Decreased demand results in lower prices. The narrowed technology gap and way too high valuation won't attract not only overseas investors but also domestic investors. And in fact, that's what has been happening since last year.
I don't mean that local mobile game developers should unconditionally lower their valuation to get funding from investors. But, as I mentioned earlier, people make a video game and money is essential for the employees. It's time to prevail over hard times. Only survival is ever really strong. Surviving means that firms adapt to a changing business environment. However, many local developers still cling to false hope. I suspect that it's time for them to seriously consider to survive in the overheated mobile game market.
※ This is from Kyunghyang Games column by 泥中蟠龍 since September 2013.
(http://www.khgames.co.kr)
Translation by Kim Ki-hui
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