Its gaming-design smarts and mega-following have given South Korea major clout in the worldwide online games business

 

Electronic Arts' (ERTS) $105 million purchase this month of a major stake in Neowiz underscores the growing global clout of South Korean design houses in next-generation online gaming. Gadget-happy South Korea is one of the most wired societies on the planet currently, and its avid young gamers represent the perfect global laboratory to try out new game concepts that will drive future growth in the $28.5 billion global video

Last year, the combined revenues of some 1,200 online gaming companies in Korea reached an estimated $1.94 billion, up from $1.54 billion in 2005, according to the state-funded Korea Game Development and Promotion Institute. The institute forecasts the industry's overall revenues will grow more than 20% to about $2.35 billion in 2007.

Neowiz and other leading Korean gaming companies such as NCsoft and Nexon already dominate in the MMORPG games, but they are also trying to muscle into the larger market for software that plays on game consoles. In recent years, they have been diversifying into more casual games such as racing, shooting, sports, and Web board games as well as card and chess games (see BusinessWeek.com, 3/26/07, "The New Avatar In Town").

Nexon's go-cart racing game, KartRider, for instance, has enjoyed a fanatical following in Korea since it made a debut in 2004. A third of Korea's population of 48 million has registered to play it at least once. It also has wild fans in China, where as many as 800,000 players log on at a given time to join the race (see BusinessWeek.com, 7/24/06, "China's Online Gaming Craze").

Of course, Korea is not giving up its MMORPG games. NCsoft, the largest Korean gaming company, is already a contender in wealthy Western markets with its role-playing games such as City of Heroes, City of Villains and Guild Wars Factions. Of NCsoft's revenues of $362 million in 2006, $97 million came from North America or Europe. "Korea represented almost two thirds of our revenues last year, but we expect some 70% of our sales to be generated

"With console games trying to add networking functions, online games are bound to take on greater importance in the global gaming industry in years to come," says Kang Kyung Seog, senior researcher at the Korean game development institute. "Online games are still a relatively small segment of the Western video games market, but I believe they have the potential to be as big there as in Asia."

Research firm DFC Intelligence expects the global online market to grow to $13 billion in 2011 from $3.4 billion in 2005. North America, Europe, and Japan, where most gamers grew up playing on consoles, are expected to offer a significant growth and to account for $9 billion in online game revenue in 2011.

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