泥中蟠龍's Game愛歌 _ If Kakao market is opened

泥中蟠龍's Game愛歌

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

 

If Kakao market is opened

 

December.12.2013

Recent news about KakaoTalk's acquisition of T store has become a hot issue in the gaming industry. KaTalk and SK Communications both stated that there was no foundation for the report, however, where there's smoke, there is fire. I carefully guess that there should have been general ideas about it. I don't want to discuss whether it is true or not here. As the old saying goes, "You hold the memorial service at a chance to see the rice cake", I just pictured what it would be like if Kakao market is actually opened.

In fact, people have already talked about the possibility since summer that KaTalk would manage the store itself. But it's not easy choice. The reason why it's hard to directly operate it is very simple. Because there is a possibility of failure of the market like T store or Olleh Market with poor market share. And it also needs to learn knowhow required to run it and accept initial cost by trial and error. Therefore, the buyout of T store can be a suitable alternative if KakaoTalk manages it firsthand, regardless of whether it's true or not.

Then, What does it mean for KaTalk to directly run the market? To begin with, it can boost sales. The IT company forecasts to earn sales of 100-200 billion won this year. Over half of the income is expected from video game division. It means that video game companies have paid commission, about 100-200 billion won a year, to the other stores where charge 1.5 times higher the fee than KaTalk does. Since T store's current annual sales is predicted to reach 20-30 billion won, the tech company partnered with KakaoTalk can expect an additional revenue from the new market.

In addition, it will generate more revenue with lower commission than now. KakaoTalk get a 21% commission on game sales at present, while the other markets charge 30% for the transaction fee. As a result, game companies consequentially have 49% of revenue. But if KakaoTalk runs the market itself, it can expects 1.5 times the current sales with just commission. Furthermore, if it charges 40% of market commission and platform fee in total, it can anticipate generating 2 times the present figures. Either is acceptable for game developers and there is no reason for them to object to the lower service charge. Of course it won't be easy for KaTalk to persuade customers to use its service.

Lastly the competitive factors in the domestic market will benefit the developers. There must be new attempts in the area where competition is fierce. KaTalk has attracted so many users and its proven ability will reasonably force the other competitors not to create revenue as they get now once it opens its market. When they get to that point, the rivals will inevitably try to change this difficult reality in many different ways and any attempts can have positive influences on the game developers.

'Dinosaur', 'Mobile giant', or 'Unstoppable force' became to call the mobile messenger application company of late. These epithets indicate that it is considered as big business and people think its commission is too expensive. But KakaoTalk is only a startup company with 100-200 billion won of sales a year. I give the startup a big hand which has helped to expand to local mobile game market and I hope that it will be a flagship of the Korean IT industry to win recognition overseas based on consistent growth. 

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

   (http://www.khgames.co.kr)

    Translation by Kim Ki-hui

泥中蟠龍's Game愛歌 _ The Exodus in the gaming industry

泥中蟠龍's Game愛歌

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

 

The Exodus in the gaming industry

 

November.26.2013

It was at this time two years ago. Nexon, the best video game publisher in Korea, went public on the Tokyo Stock Exchange on December 14, 2011 and Nexon Korea Corporation became one of its subsidiaries. Now Nexon is seen as a Japanese company rather than a Korean company. 'The stroke of genius' of Kim Jung-ju, the chairman and CEO of NXC Corporation, is much talked about nowadays, and the atmosphere in the gaming industry is self-deprecation.

I've got a chance to visit "G-STAR 2013" recently. It's not merely the biggest game exhibition in Korea but the international trade show for computer and video games industry which a lot of famous foreign game makers take part in. The event has become bigger every year, but it was looked be less splendid this year. As a lot of large-scale gaming firms gave up to join in, many booths were filled with local governments and even law firms. I was heard of an unexpected news in such a situation. In 'Korean German Business Seminar for the Games industry', Germany made great offers free office and software and 100,000 euros per a game project to a startup-to-be which will set up a NRW(North Rhine-Westphalia)-based corporation. And it also stated that the German government don't see video games highly addictive and companies will be on the inside track to enter overseas markets because there are no regulations for game development in Germany.

We have read an article where there are some concerns over the issue of overseas relocation of a local firm whenever chairman of the conglomerate is under investigation by the public prosecutors' office and the business circumstance is worsened. But I've never read about an article where the high-value added gaming companies which get 20-40 percent of net income, in comparison with 10 percent or less of net profit of many domestic firms including conglomerates, relocate their firms to overseas.

There's a saying, "Hollowing Out". It is the deterioration of a country's manufacturing sector due to rising costs in developed nations when producers look to less-developed countries to set up low-cost manufacturing facilities in hopes of reducing costs and these developed nations are being "hollowed out". Digital content industry is high value-added and the gaming industry is located at the very end of it. Which industrial fields in Korea achieve world first or second in the area? Korean Gaming industry ranks number one or two in the world and is among the best in the world. The government's policies about game regulation running against time are very much disappointing. In the remarks about South Korea's Game Addiction Law of Michael Morhaime, the founder of Blizzard Entertainment, who is widely considered to be upgrading a game to an art, I think the law is embarrassing for the country.

Last year I saw that a lot of game developers wanted to release 18+ games by rating systems of GRAC (Game Rating and Administration Committee) to circumvent the minor-related regulations. If the new law is passed, gaming employees have nowhere else to go. As with the nation's largest game publisher Nexon moved its head office to Japan, there is also the possibility of the next Nexon. Korean game companies between America and Japan; the current big players, and China; the new emerging force to catch up with them, may leave for some countries in Europe or Southeast Asia where the governments have done a lot of work to boost the gaming industry. Remembering now a few years later, I don't want to write a column about the gaming industry compared to some light industries have been closed.

 

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

   (http://www.khgames.co.kr)

    Translation by Kim Ki-hui

泥中蟠龍's Game愛歌 _ Hunger for new challenge

泥中蟠龍's Game愛歌

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

 

Hunger for new challenge

 

November.12.2013

Recently I received an investment offer for, what is called, a 'run style' game. I found nothing special except just a little bit of differences from another running games while I was playing game. I suddenly felt hunger for new challenge at that time. Looking at lots of mobile games newly released, there are too many running games and TCG (Trading card game) or CCG (Collectible card game). Is good to place too much disproportionate emphasis on the specific genres? I'd like to talk about it this time.

The future of the mobile gaming industry is uncertain. There are not only the external factors but also internal factors. Where is the unclear future coming from? It has many different causes. Some of reasons are quantitative and the others are qualitative. I can list the factors as many as I write a thesis on. But the reason why I mentioned about the market, market uncertainty is partially responsible for the circumstances. When the market is uncertain, game developers definitely want their products to generate steady sales. Game makers inevitably prefer a particular genre which is already guaranteed to make a certain amount of money.

But I want to talk about another story here. Is it possible to make steady figures with the specific genre of game which would assure a certain amount of money? I don't agree with that. Because the games don't meet the expectations of users. In spite of lots of constantly-released games, common games are certainly one of biggest factors to lower expectations of consumers about the newly released games. Mobile games have evolved quantitatively in the 21st century. And there have been plenty of fine games in the center of it. They are a large number of old feature phone games and newest smartphone games as well which people, who have only a little interest in the gaming, have heard of the names. For example, there are good games like Bungeoppang Tycoon by Com2uS; the first instance of tycoon games, Hulk by Com2uS; the action game which is still very much talked about among developers, Nom by Gamevil; the most typical one button game, Rule the Sky by JCE; the game which contributed to promoting social network games, Wind Runner by Wemade; the beginning of the craze over running games. Unfortunately, they were the basis for making many other games that are similar. There is a saying, "Imitation precedes creation." And benchmarks are also needed to make good games. Imitation with deep thought and consideration definitely create something entirely new. But imitation without effort and preparation is just an poor remake. Game users no longer look forward to bland names like “OOpang or OOrun". The games, which are already familiar with and never exceed players' expectations, give customers only a little satisfaction. This enables a vicious cycle in the circumstances where the insecure market induces developers to make similar games, and further, the scissors-and-paste games aggravate the market. An industry remaining stagnant is inevitability moving backward as it says, "Stagnant water is bound to corrupt." Now it's time to do something new to break the vicious cycle. Brand-new games following the aforementioned masterpieces consistently need to be released. The vicious circle won't be broken out of unless developers rise to new challenge. Because they cannot continuously come up to users' expectations with only external factors.

There is a saying that "the butterfly effect" which means that the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state. Every single challenge of developers now will have a huge influence on development of the mobile gaming industry later. They should see many foreign developers making entirely-new games full of new challenges. And they must compete in the highly volatile market by creating more individual and witty games. In order to do so, I would like to stress again that we need to stop making uniform games and should explore new possibilities. 

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

   (http://www.khgames.co.kr)

    Translation by Kim Ki-hui