泥中蟠龍's Game愛歌 _ Video game development and investment

泥中蟠龍's Game愛歌

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

 

Video game development and investment

 

I have mainly written about domestic video game developers hoping that they will be able to commercially successful with a good-quality game. But, it may sound like an excuse, I'd like to make harsh comments for game makers this time. Recently I went to a conference-like meeting for content producers and developers. There were a large number of manufacturers and content providers complaining about investors. In short, the complaints can be summed up in four ways.

Firstly getting investment is no different from taking out loans with high-interest rates due to overly conservative investment conditions. Secondly, in spite of detailed explanations, investors cannot well understand a good point of the content because they lack the ability to evaluate it. Thirdly investment firms mostly refuse to invest in new content whose sales performance is hardly expected. Lastly, they don't willingly use their funds in the interest of the public, although a large portion of the fund is from government money.

I'd like to give them convincing explanations about the above in my defense.

First of all, investing in a small business is high-risk so that an investee can think that investment conditions are too conservative. To be honest, the reason a developer raises money from a venture capitalist is not to make a lot of money for the investor but to find a new way for the studio which has encountered difficulty in securing loans. In spite of the investment seen as being conservative according to the internal regulations and conditions, investors often make great losses in a considerable proportion of cases. And the more strict conditions the investee is offered, the less the investment earnings rate the investor take when the company is doing great. If it is visa versa, they will probably complain about a little profit.

Furthermore, most VCs are veterans who have been involved in a particular activity for a long time. I also had ten-year experience in the gaming field as CEO of a game studio for three years, game designer, project manager, and worker for a video game publisher. Most investors actually have much longer experience than I do. If an investee can't win an investor to consent with the beauty of the product regardless of a period when the VC has left the gaming industry, he/she is not good at explaining or the game has no merit to invest in.

Thirdly a venture capitalist externally evaluates the possibility of investment, however, he/she internally have to persuade the people in charge. In the investment committee, VC should convince the insiders to see a chance of success from the point of view of the developer. Unpredictable performance means that it's difficult for the investor to convince the other VCs on behalf of the game maker. The case that the investor is less certain about is very likely to be rejected.

Finally a venture capital investment runs public funding, however, it's a financial company which has to create revenue. The government doesn't leave the management of assets up to the venture capital firms to promote public interests. Each branch of the government uses a fund, named what is called a support project, to serve the common good. And the investment firms cannot run the public funds anymore if profit margin falls. Therefore a developer shouldn't expect a venture capital to invest in it for the common good.

In conclusion, venture capital is a company that invests money in a profitable business and expects to generate more returns than it has invested in. I hope that developers can understand the investment world better and they will get investment with high-quality content. They complain about the difficulty of getting an investment, however, investors also struggle to find a good company.

※ 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 _ Korea's game industry in crisis

泥中蟠龍's Game愛歌

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

 

Korea's game industry in crisis

 

The United States and the Soviet Union had always been rivals in many areas since World War II and the two superpowers put securing German rocket technology, the best one of those days, on the top of the list. Of course, it was possible because of Nazi Germany's defeat. America recruited German scientists, engineers, and technicians before Germany was defeated and collapsed under a secret program named Operation Paperclip. Soviet Russia, which was fallen behind the competition, secured production facilities. As a result, the Soviet Union stayed ahead of the competition for aerospace industry based on its infrastructure, however, it was beaten by the United States which had the world's best space technology.

In recent years, the Korean gaming industry has developed in a difficult situation. Government has regularly imposed regulations to reduce the teenagers' playing time under the pretext of protecting the right to study and sleep of youths and recently there is a discussion of a Game Addiction Law to regulate video games such as drugs. Some people in the gaming industry call themselves as 'drug manufacturers' and other ones think about parental roles because their children might be ashamed of what their parents do.

Recently Chinese big companies have successively invested in domestic video game companies. Even some people say that huge capitals from China are taking over Korean game studios like shopping. The gaming industry is mostly based on gaming industry workers because there are very little manufacturing facilities. Eventually, there might be left local game firms and employees that are subordinate to Chinese capitalists.

It usually takes at least a few years up to more than a decade to bring qualified professionals after being aware of a shortage of workers. Now a lot of game developers prefer overseas companies to domestic ones and many of them regret being members of the gaming industry. Also, a large number of game studios are going broke daily. The recent Korean gaming industry, in spite of its poor industrial base, has maintained the growth relying on foreign capital. But the gaming market is becoming more dependent on overseas capital. There should be the drain of the domestic industrial base into foreign countries and the local companies would disappear due to a shortage of new workers when it will be incessant a few more years.

A flower in a flowerpot grows as much as the size of the pot. I don't mean that the gaming industry should be the beneficiary over the other field. But we should not stand in the way of the industry's advancement at least. The local gaming industry is mostly dominated by overseas firms and they might take full control of the whole industry in which more than 100,000 workers are engaged. The continuously tightened regulations, aside from support from the government, is not much different from confining the domestic gaming industry in a small flowerpot.

Many local game developers are seduced to shift their companies overseas with various benefits in a bad situation where there are higher marketing costs, excessive government restrictions, and increased competition, etc. It seems like an Operation Paperclip for Korean game companies somewhere. The local game industry hasn't collapsed yet. But I cannot help thinking of a cup of soju because of tens of thousands of employees who are called drug manufacturers. With due respect to a great number of workers in the gaming field, I deeply hope that the Korean gaming industry will not be German rocket technology.

※ 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 _ Looking back on 10 years in the mobile gaming industry

泥中蟠龍's Game愛歌

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

 

Looking back on 10 years in the mobile gaming industry

 

I have worked in the gaming industry since a cold winter day in January 2002. Looking back, writing a column related to a game, it seems as if ages had passed since then when I was an amateur gamer who had no background in the field.

The reason I give a long-winded explanation is to mention what I felt during a recent meeting for investment with a developer about the constraints of a mobile device for a mobile game. The developer, who has played an online game for a long time, talked about mobile computer device bringing about inconvenience: small screen, low specification, and difficulty of customization due to various devices.

Listening to him, it brought back the moment when I just set foot in the gaming industry, which made me be lost in the old memories. Mobile phones featuring color displays, one of the technologies that phone manufacturers were evaluated by, were first introduced in 2002. Phone makers also competed for a better sound such as 16 or 40 poly sound. And it was the time when flip phones were commonly used. A slide phone, which is rare to find these days, however, was considered as one of the most innovative technologies, was released in 2002 and its commercial formed attractive subjects of conversation in those days.

Let's back to the point. There have been many changes in most industries in the last 10 years and the mobile gaming industry is at the forefront of those changes. Early mobile game developers used to stay up all night to reduce storage space like 1-2 kB due to poor device environment. Given my first game with 127 kB, the recent environment, in which mobile games of over 100 MB are common, is quite different just like independent films and Hollywood blockbusters. I do remember and I was deeply impressed when a first mobile game of 1 MB was released 10 years ago. It is still fresh in my memory about the MB-capacity mobile game which was finally come out. The earliest mobile game developers had to make dozens of different versions in accordance with image resolution, mobile device, and mobile carrier, which is compared to today's slightly different versions depending on the producer and wireless carrier.

Mobile game market, as I mentioned in the beginning, is the fast-growing industrial field. It is needless to that it will move ahead for quite some time. It seems hard to expect what is coming out in 10 years because I cannot help laughing at mobile games released 10 years earlier. Picturing a local mobile game as the leader in the global market, I hope that I will enjoy talking about memories with device constraints and game-making difficulties, etc.

 

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

   (http://www.khgames.co.kr)

    Translation by Kim Ki-hui