The latest games market research from IHS shows that the consumer spending on PC online games in South Korea decreased by 5.3 percent in 2014 to $2.92 billion (KRW 3,078 billion) compared to a year ago.
This weak performance resulted from both enhanced regulations to limit spend and gameplay hours on online board games and an increasing industry appetite to divert investment to the mobile games opportunity.
The market is now forecast to remain flat in 2015 at $2.93 billion (KRW 3,085 billion) based on the upcoming release of titles in the more traditional segments of the market, including first person shooters and role playing games, which are expected to offset further declines in the online board game segment.
IHS Technology views:
“With a backdrop of increasing mobile consumption and enhanced government regulation, it is clear that the PC online games market is unlikely to experience the growth rates enjoyed in previous years.”
“The PC segment has been specifically targeted by government regulation to protect younger gamers, but mobile games have so far been left untouched driving industry investment towards these new platforms.”
Heavy-handed regulation accelerates industry shift towards mobile
The largest operators in the online board games segment, including NHN Entertainment, CJ E&M and Neowiz, saw their shares of the PC online games market decline during 2014 as enhanced regulations to curb monthly spending on certain genres of games started to bite.
As such, the less regulated and rapidly growing mobile games market proved to be increasingly attractive to major South Korean PC game publishers. With an increasing focus on smart platforms, Nexon, NHN Entertainment, and CJ E&M achieved year-on-year mobile games revenue growth of 747 percent, 35 percent, and 32 percent, respectively. They showed growing ambition in the mobile space with rich content pipelines and strategic partnerships.
Additionally, in early 2015, leading massively multiplayer online games publisher NCSOFT formed an alliance with Netmarble to enter the mobile games market more significantly, a reflection of the strategic importance of mobile platforms to the PC-game incumbents.
Regulatory impact overshadows PC games outlook
Our five-year forecast for South Korea's PC multiplayer online games market is sedate reflecting the regulatory climate, the maturity of the market, and the increasing role of smart devices in games consumption in the country. IHS expects the market to be worth $3.1 billion in 2019 and enjoy a five-year compound annual growth rate of a minimal 1.3 percent.
Key to maintaining the size of the market is the release of some highly anticipated new titles, including NCSOFT's Lineage Eternal and Nexon's Sudden Attack 2. IHS expects the new titles to offset the decline in parts of the market impacted by regulation and of long-serving games services which are entering the end of their lifecycle.