Korea Game Whitepaper 2013

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1. 2013 Guide to Korean Games Industry and Culture WHITE PAPER ON KOREAN GAMES 2. Korea Creative Content Agency stands beside those aiming for the promotion of the…
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  • 1. 2013 Guide to Korean Games Industry and Culture WHITE PAPER ON KOREAN GAMES
  • 2. Korea Creative Content Agency stands beside those aiming for the promotion of the content industry of Korea Korea Creative Content Agency(hereafter kocca) was established on May 7, 2009 to efficiently support the growth of the cultural industry by combining Korea Broadcasting Institute, Korea Culture and Content Agency, Korea Game Industry Agency, Cultural Contents Center, and Digital Contents Business Group of Korea IT Industry Promotion Agency according to Article 31 of the Framework Act on Cultural Industry Promotion. kocca is an agency dedicated to promoting all areas for content. We establish a comprehensive support system to nurture the content industry, and aim to develop Korea as one of the world’s top 5 contents powerhouses. kocca conducts various support businesses to help Korea’s content industry grow into a global leader in the creative economy. First, we promote human resource development projects to acquire valuable human resource that form the basis of creativity and develop policies for the promotion of the content industry. We also support the development of specialized culture technologies from design to production, the commercialization of contents, and the promotion of various overseas expansion projects to develop the content industry into an export industry. Furthermore, we encourage digital broadcasting projects, promote game distribution, and carry out digitalization projects aimed at strengthening cultural content which can be used as a subject matter. kocca will proactively respond to the content convergence environment, and focus on developing carefully selected killer contents to lead the global content market.
  • 3. 2013 Guide to Korean Games Industry and Culture WHITE PAPER ON KOREAN GAMES
  • 4. 2013 White Paper on Korean Games 3 1. Industry Trends 1.1 Industry Trends The scale of the domestic game market in 2012 was estimated at 9.752 trillion won, up 10.8% from the previous year (8.804 trillion won). This shows that the domestic game market, which switched to growth in 2008 and has maintained a growth rate of at least 12% annually, has slowed. It is forecasted, however, that the scale of the domestic game market will be able to exceed 10 trillion won in 2013, and that its growth will be stably sustained. The scale of the online game market was calculated to be 6.736 trillion won, accounting for 69.6% of the domestic game market. While the proportion of the total game market taken up by online games has increased each year, the share decreased slightly relative to the previous year (2012). The share of online games in 2011 was 70.8%. Excluding the retail sector and calculating only the game production, the proportion of online games in 2011 was 88.9%, but this decreased slightly to 86% in 2012. Only the online game market’s share of the total game market decreased, however, and the online game market revenue itself increased. In the domestic market, online games still have many users based on its stable infrastructure, and has also managed to stay in the second place in the overseas markets. Therefore, it is expected that the growth of online games will be sustained for the time being.
  • 5. 4 1. Industry Trends |Figure 1| Total Scale of the Domestic Game Market and Growth Rate Trends(2003-2012) (Unit: 100 million won) 97,525 86,798 101.1% 39,387 74,489 65,806 51,436 43,156 15.8% 88,047 9.6% 74,312 56,047 9.0% 17.4% 12.9% 18.5% 2009 2010 2011 10.8% -14.2% -30.9% 2003 2004 2005 2006 2007 2008 2012 The sector with the largest revenues after online games is the PC room market. The revenues in 2012 recorded 1.793 trillion won, accounting for 18.4% of the total game market. While the total revenues of the PC room market have steadily decreased over the past few years, there was 4.5% growth in 2012 relative to 2011. This phenomenon is considered to be due to the influence of the increases in the number of users due to the launch of blockbuster games such as <Diablo 3> and to games such as <League of Legends>, which are maintaining solid popularity. The mobile game market in 2012 grew by about 89.1% relative to 2011, recording 800.9 billion won in revenues, and the market share recorded 8.2%, up 3.4% from 4.8% in 2011. For now, with the expanded supply and improved performance of smart devices, and with the growth of the mobile advertising industry, the infrastructure and business models that form the foundation of mobile game development are forecasted to continue their progress. Accordingly, mobile games are forecasted to sustain growth. The video game revenues recorded 161.9 billion won, down about 40.1% from 2011. The market share in the game market recorded 1.6%. As for standing video game consoles, follow-up models were not launched, and as for portable video game devices, the sales were low as they lost out in the competition with smartphones. Therefore, no factors that can drive the growth of the video game market were found, and as a result, the recession in the video game market worsened. Arcade game revenues recorded 79.1 billion won, with a market share of 0.8%. Also, the arcade game room (including video game room) revenues were calculated at 66.5 billion won, and were found to have a market share of 0.7%. While the
  • 6. 2013 White Paper on Korean Games 5 arcade game revenues are slowly increasing, they are lagging behind the growth of the total game market and are unable to increase their market share. As for arcade game rooms, the closing down of road shops, etc. is leading to the continued shrinkage of their market size. The PC game market, which recorded 9.6 billion won in revenues in 2011, showed great growth in 2012, reaching 68 billion won, and was shown to account for 0.7% of the total game market. This is attributed to the influence of the temporary increases in game purchases due to the popular games that became a worldwide sensation, but it is seen that this will not be able to continually drive PC game market expansion. It is expected that the PC game market will again decrease in size in the future. |Figure 2| Market Share by Sector in the 2012 Domestic Game Market Online Games Video Games Mobile Games PC Games Arcade Games (Unit: %) PC Roomes Arcade Game Rooms 0.7 18.4 0.8 0.7 8.2 1.6 69.6 1.2 Prospects In 2013, the domestic game market is forecasted to record a market size of 10.718 trillion won, up 9.9% from 2012. For online games, 8.1% growth relative to 2012 is expected, and mobile games are forecasted to reach 1.212 trillion won, up 51.4% from 2012. Also, the arcade game market is forecasted to record 80 billion won, up 1.2% from 2012. Video games are forecasted to record 151.8 billion won, down 5.6% from 2012; and PC games, 19.8 billion won, down 70.9%. As for game retail, PC rooms are expected to record 1.861 trillion won, representing 3.8% growth; and arcade game rooms, 59.6 billion won, down 10.3%. As for the total game market in 2014 and 2015, it is forecasted that the online
  • 7. 6 1. Industry Trends and mobile game growth will continue, and that video games will begin new growth. Here, the growth of online and mobile games is expected to somewhat stabilize from 2014 onwards, with the size of the video game market beginning to grow but with limited impact on the growth of the total game market due to the large previous decreases in market size. Therefore, it is expected that the margin of growth for the game market will decrease relative to the previous years. 2014 is expected to record 11.334 trillion won, up 5.7% from the previous year; and 2015, 11.913 trillion won, up 5.1%. As for online games, which account for a large part of the domestic game market, the market size is expected to surpass 7 trillion won in 2013. Also, the 2013 market size for mobile games is forecasted to surpass 1 trillion won. |Table 1| Size of and Forecasts for the Domestic Game Market (2011-2015) 2011 Year Revenue 2012 Growth Rate Revenue 2013 (E) Growth Rate Revenue (Unit: 100 million won) 2014 (E) Growth Rate Revenue 2015 (E) Growth Rate Revenue Growth Rate Online Games 62,369 30.8% 67,839 8.8% 73,333 8.1% 78,759 7.4% 83,642 6.2% Video Games 2,684 -37.1% 1,609 -40.1% 1,518 -5.6% 2,055 35.4% 2,903 41.3% Mobile Games 4,236 33.8% 8,009 89.1% 12,125 51.4% 13,119 8.2% 14,050 7.1% PC Games 96 -19.7% 680 608.3% 198 -70.9% 402 103.0% 144 -64.2% Arcade Games 736 3.0% 791 7.5% 800 1.2% 811 1.4% 821 1.3% PC Rooms 17,163 -2.5% 17,932 4.5% 18,613 3.8% 17,663 -5.1% 17,097 -3.2% Arcade Game Rooms 763 -0.7% 665 -12.8% 596 -10.3% 535 -10.1% 481 -10.0% Total 88,047 18.5% 97,525 10.8% 107,183 9.9% 113,344 5.7% 119,138 5.1% 1.3 Import-export situation The overseas exports of the domestic game industry in 2012 were calculated at USD 2.6 billion in 2012, up 11% from the previous year. The game imports have grown steadily from 2006 onwards. While the margin of increase for exports varied slightly each year, the exports of the domestic game market finally surpassed USD 2.5 billion in 2012. The imports of the game industry in 2012 recorded USD 179.13 million in 2012, down 12.6% from the previous year. Continuing from 2011, the imports dropped greatly in 2012 as well, the main cause being the decreased revenues for the existing and new models of the major overseas video game companies, which account for most of the domestic game industry’s imports. Due
  • 8. 2013 White Paper on Korean Games 7 to the increased exports and decreased imports, the difference between the exports and imports slightly increased to around USD 2.4 billion from approximately USD 2.2 billion in 2011. The key characteristics of the import and export sector for 2012, as in 2011, were the intensive online game exports and the large growth in the mobile game exports. The exports for the single platform of online games surpassed USD 2.4 billion, and those for mobile games were also found to far surpass USD 100 million. It is forecasted that the size of the exports by the domestic game industry will continue to grow in 2013 as well. The market, however, was shown to have slightly slowed down in terms of the penetration of the Chinese online game market, which can be said to be the largest export market, and with the increase in small mobile games in the South Korean game market, the exports are forecasted to maintain similar levels as in 2012. The exports in 2013 are forecasted to reach approximately USD 2.9 billion, up 11.2% from the previous year. |Table 2| Exports and Forecasts for the Domestic Game Market (2007-2013) Year (Unit: USD 1,000) 2008 2009 2010 2011 2012 2013 (E) Export Amount 781,004 1,093,865 1,240,856 1,606,102 2,378,078 2,638,916 2,934,474 Growth Exports 2007 16.2% 40.1% 13.4% 29.4% 48.1% 11.0% 11.2% As for the size and share of exports by platform, first, online game exports recorded USD 2.4 billion, accounting for 91.4% of the total game exports. Online game exports still lead the overseas exports of domestic games. The online game imports, on the other hand, were found to be USD 49.61 million, accounting for 27.7% of the total imports. USD 92.85 million video games were imported, accounting for 51.8% of the total imports, making them the leading imports. With decreased video game imports, however, the overall proportion of imports in the game industry was found to have slightly fallen. The video game exports amounted to USD 2.18 million, only 0.1% of the total exports. The mobile game exports recorded USD 168.98 million, close to fivefold growth from the previous year, and the imports, at USD 8.32 million, also slightly increased relative to the previous year. The arcade game exports slightly increased to USD 56.83 million, and the imports were shown to have slightly decreased relative to the previous year, at USD 6.92 million. As for PC games, the imports decreased from the previous year at USD
  • 9. 8 1. Industry Trends 50,000, and the imports, at USD 21.41 million, a more than twofold increase. |Figure 3| Export/Import Size by Platform in the 2012 Domestic Game Industry (Unit: USD 1,000) Exports Imports 2,638,916 2,410,856 49,616 2,18792,859 168,982 8,327 56,8396,922 52 21,411 Online Games Video Games Mobile Games Arcade Games PC Games 179,135 Total Based on the 2012 revenues, the size of the domestic game market was calculated at USD 7.63 billion, accounting for 6.3% of the USD 111.75 billion world game market. This represents 0.4% growth relative to the 5.9% recorded in 2011. Meanwhile, the total size of the world game market decreased by 0.4% from the previous year. The South Korean game market’s share of the world game market is still steadily increasing. Considering the somewhat sustained growth in online games and the rapid growth trends of the mobile game market, it looks as if South Korea’s share of the world market could slightly increase. As for the South Korean market’s share of the world market by platform, the domestic online game market ranked second in the world, accounting for 28.6% of the world market. The first place in the world online game market continues to be held by China. Its market share in 2012 grew by more than 10% relative to the previous year, cementing its position as world number 1. As is evident, the gap between China and South Korea in the online game market is increasing, as ever. South Korea, however, managed to widen the gap with the U.S., which maintains the third place in the world online game market, and is forecasted to solidly hold on to the second place for the time being. The market shares of the South Korean video and arcade games in the world game market are still very small. The proportion of the world game market accounted for by the domestic video game market was found to be 0.3%, even lower than that in 2011. As for the proportion of the world game market accounted for by the domestic arcade game market, it was maintained at 0.5% from the previous
  • 10. 2013 White Paper on Korean Games 9 year. While the size of the video and arcade game markets are trending downward in the world game market, considering the fact that the two platforms have maintained the first and second positions in the world market, more aggressive efforts are required for the expansion of these markets. The South Korean mobile games continue to expand their share of the world market. Slight growth from 2.8% in 2009 to 3.2% in 2010 was seen, and the increase continued to 3.9% in 2011. The rate of expansion slightly increased in 2012 relative to 2011, and as a result, the world game market share was calculated to be 5.1%. With the great market success of the games distributed through Kakaotalk gaming, countless more games were developed, and it is believed that this energized the mobile game market in general, with subsequent growth in its size as well. The South Korean PC game market’s share of the world game market was found to be 0.8% in 2012, up 0.5% from 2011. With the sales from digital downloads included in the PC game market figures from 2012, some adjustments were made to the estimation of the size of the world PC game market. In 2012, <Diablo 3> launched by Blizzard became a worldwide sensation, and it was shown that the inclusion of its sales led to a large increase in the size of the South Korean PC game market. The effects of these factors are judged to be transient, however, and it is forecasted that in the long term, the PC games’ share of the world and South Korean game markets will steadily decrease. |Table 3| World Game Market Share of the 2012 Domestic Game Industry(Based on Revenues) (Unit: USD 1 million) Year Online Games World Game Market 21,083 Video Games Mobile Games 44,315 13,968 PC Games Arcade Games All 7,077 25,307 111,750 Domestic Game Market 6,020 143 711 60 129 7,063 Market Share 28.6% 0.3% 5.1% 0.8% 0.5% 6.3% Based on revenues, the country to which domestic games were exported most in 2012 was China, accounting for 38.6% of the total exports. Recording 0.4% growth from 2011, China maintained the position of South Korea’s largest export country. The country with the most domestic game exports after China was Japan, accounting for 26.7% of the total exports, although its share of the total exports decreased by 0.7% relative to the 27.4% figure in 2011. Following Japan in exports was Southeast Asia, accounting for 18.8%. Compared with the 18.0% figure in 2011, the share of
  • 11. 10 1. Industry Trends the Southeast Asian region increased by 0.8%. Following Southeast Asia were North America at 7.7%, Europe at 6.0%, and other regions at 2.2%. While the exports to North America slightly increased, the share of exports to Europe and other regions were shown to have slightly decreased. As for the proportion of exports to each country by platform, for online games, as was the case for the overall export market, the exports to China and Japan were the greatest. Unlike online games, for the mobile game exports, the U.S., with 58.0%, was the largest export country, with Japan following at 25.1%. While the mobile game exports to Europe slowly increased in 2010 and 2011, recording 9.7 and 9.9%, respectively, the 9.9% figure, identical to that in 2011, was found to have been maintained in 2012. |Figure 4| Proportion of 2012 Domestic Game Exports Accounted for by Country(Based on Export Amount) (Unit: %) China Japan Southeast Asian Countries 6.0 North American Countries European Countries Other Countries 2.2 7.7 38.6 18.8 26.7 1.4 Situation of the game industry workers The game production/distribution companies in normal operation in 2012 numbered 957. This represents a decrease of 60 from the 1,017 recorded in 2011. As for the number of PC rooms, the number was 14,782, down approximately 1,000 from 15,817 in 2011. Meanwhile, 450 arcade game rooms were found to be in normal operation. The total number of workers in the 2012 game industry was found to be 95,051. The workers at the game production and distribution companies numbered 52,466, up 1.2% from the previous year, accounting for 55.2% of the total number of game industry workers. The game retail and consumption business workers, numbering 42,585, accounted for 44.8% of the total number of game industry
  • 12. 2013 White Paper on Korean Games 11 workers, down 4.2% from the previous year. |Table 4| Number of Game Industry Workers (2010-2012) (Unit: Persons) Year 2010 2011 2012 2011-2012 Rate of Change from Previous Year 2010-2012 Average Annual Rate of Change Ratio Game Production and Distribution 48,585 51,859 52,466 1.2% 3.9% 55.2% PC/Arcade/Video Game Rooms 46,388 43,156 42,585 -1.3% -4.2% 44.8% Change 94,973 95,015 95,051 0.0% 0.0% 100.0% The average number of workers per company in the game production and distribution field in 2012 was found to be 54.8 persons. This was a 3.8 person increase from 51.0 persons in 2011. As for the ratios by work type, graphic design had the highest ratio (19.9%), followed by game programming development (17.8%), management (11.1%), game planning (9.7%), game administrator and QA (8.7%), and customer centers (5.2%). As for the overall gender composition of the workers, the males were almost triple the females (73.7% vs. 26.3%). This gender composition was similar to that in 2011.
  • 13. 12 2. The 10 Issues in the Korean Game Industry 2. The 10 Issues in the Korean Game Industry during 2012 and the First Half of 2013 Korea Creative Content Agency collected the opinions of key game industry figures from the industry, government, and academic circles and conducted surveys to select the 10 major game industry issues from 2012 to the first half of 2013. First, for the game-industry-related issues, most were associated with the stimulation of mobile games and the growth of their market. Mobile games were the topic of the day so much so that from 2012 to the first half of 2013, no prominen
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