Resilient or fragile - Inside the shifting dynamics of Korea’s games industry

• A selection of expert speakers announced for Pocket Gamer Connects’ inaugural Korea summit on October 31st discuss the state of the Korean and APAC games industry.
• With global competition intensifying and user habits evolving, experts share insight on Korea’s market strength.

One of the world’s top five games markets, Korea is home to giants like Krafton, Nexon, NCSoft, Netmarble, Wemade, Com2uS, Pearl Abyss and Kakao Games.

Over a couple of decades, these companies have turned Korean games into a major global export industry, especially for PC and mobile. 

Korea has also been a pioneer in game monetisation, with its players accounting for some of the highest average revenue per user (ARPU) globally.

Ahead of Pocket Gamer Connects’ inaugural event in the Goyang region of the Seoul Metropolitan Area on October 31st, we’ve spoken to industry experts for deeper insight into the Korean and wider East Asia and APAC games market.

“South Korea is an extremely developed gaming market with global relevance, and to overlook it is to forgo substantial revenue and a large player base”, says Yannik Hellmish, the founder and product management lead at Germania Game Studios. 

“I have helped publish multiple titles in Korea with previous companies and current clients. In my experience, if approached correctly, South Korea consistently ranks as a top five, if not top three, market.”

This success, he says, is evident in niche live-service games that focus on regionally relevant content such as South Korean history, resulting in remarkable numbers across both revenue and retention.

Fragile or resilient?

Dreamloop Games CEO, Joni Lappalainen, has worked with multiple European and American studios as a co-developer, and is now eyeing the Korean market too. 

“Korea has shown great innovation and quality recently in the PC and console space, in which we excel as a technical partner”.

He credits its relative success and resilience compared to other regions to strategic investments, noting that these have been key, with “great M&A successes to tackle a more global approach”.

However, NCSoft SVP and head of game strategy Taewon Yun has a more nuanced view. “I don’t think the Korean games industry has been more resilient than other geographies. It does have MMORPGs, such as Lineage, which are a unique game genre that thrives in Korea and Taiwan, which created a moat for Korea based developers”. 

That strength aside, however, he believes the Korean games industry has been as fragile as the rest of the world.

Indeed, the Korean games market struggles with the same issues as everyone else, he says, particularly pointing out “discovery problems” such as “how to compete with TikTok and YouTube for audience attention”.

A newfound confidence

Lappalainen sees a growing global appetite for games coming out of the country, mentioning the likes of The First Berserker, Lies of P and Stellar Blade. These feed into a trend more widely defined by the APAC region. 

“There's a new growing niche of visually stunning action games coming from other APAC countries, not only from Japan”, he says, also recognising Wukong from China.

This shift comes down to a refocus, with native studios looking to global rather than domestic markets growth, “especially in the PC and console segments” Hellmish explains. Whereas before these would often look to Western studios for inspiration, they now emerge as rising stars with global ambitions. 

“We are seeing continued expansion of NetEase and Tencent's mobile releases, alongside PC and console successes developed without Western studio input. This newfound confidence was evident at Gamescom, which featured a significantly larger presence of Eastern studios than in previous years,” he adds.

But while the games industry is still growing, its declining pace is notable. Except for console games, which have experienced accelerated growth, the overall industry remains in the trenches. 

Success redefined

One of the major changes facing developers, according to Lappalainen, is “the shift in the player base, with fragmentation of PC platforms like Steam and Roblox; micro-transactional games dominating playing time; and the US market's decline in individual purchase power.”

Hellmish predicts continued downsizing and tighter budgets, especially in terms of large Western studios and major publishers, which he says will “redefine what success means as the inflated budgets of recent AAA titles no longer make sense.”

Inevitably, however, out of challenges come opportunities. While funding from large publishers is drying up, there will be market gaps to fill for other companies, says Hellmish, mentioning that Eastern publishers are seeking expansion in North America and Central Europe while small to medium-sized publishers and game developers are catering to more niche interests.

He concludes, saying, “I have dedicated the last few years to cracking the code for Western studios to move into Eastern markets and vice versa, but I have yet to be present at any games event. PGC Korea is the perfect opportunity to network with relevant industry colleagues.”

Gain more industry insight from expert speakers at Pocket Gamer Connects Summit Korea on October 31st. You can register today.