Korea Online Games

I've had several requests for more information about the ruling by Korea's Supreme Court in the matter of virtual currencies being convertible.

I've not been able to get a copy of the ruling in either Korean or English.

If anyone can help, I'd appreciate it.

Thanks,

Steve "PlayNoEvil" Davis

Korea's Supreme Court has ruled that game currencies can be converted back into real money, unless the game is an online gambling game, such as poker or other card games.

Now, you can play games for a living!

In some sense, the Korean Supreme Court would seem to be using the same "preponderance of skill" standard found in many states in the US for skill games.

(Comments from Korea welcomed!)

At a minimum, this has very serious customer service and security implications. After all, if currency is valuable, than a game company has an obligation to its integrity and security.

The upside for game companies...

Now, you can play games for a living!

This should also increase the attention of law enforcement to "virtual asset" theft.

Will this happen in the US?

Probably, but it will take a while. The rise of Free-to-Play games and proliferation of virtual currencies will likely accelerate the trend as players will want a refund for unused currency - just as they get now with gift cards.

Interesting days ahead.

UPDATE: Players cannot cash in if they used bots or macros (good luck detecting that!).

UPDATE 2: The article also notes that Korea passed a law that the government will collect a VAT of 10 percent on these types of transactions... given the alleged trading volume of $1 Billion or more per year, that is real money in these fiscal hard times (thanks for the reminder, David). This may have even more impact on game companies in terms of record keeping and reporting.

Park Si-soo (2010), "Ruling to Boost Sale of 'Cyber Money'", http://www.koreatimes.co.kr/www/news/nation/2010/01/116_58775.html

Choe Sun-uk (2010), "Supreme Court acquits two in cyber money game case", http://joongangdaily.joins.com/article/view.asp?aid=2915126

Korea's tax authorities are looking into online gaming... not really interesting. However, Nexon, operator of Maple Story and one of the largest Free-to-Play (F2P) companies, doesn't tend to disclose its revenues.

... which were 437.4 Billion Won (US$ 337.4 Million) in 2008, if I read things properly.

Chosun Ilbo (2009), "Tax Service Probes Online Game Makers", http://english.chosun.com/site/data/html_dir/2009/11/25/2009112500640.html

Korea's national commitment to leading the world in telecommunications helped create its billion dollar online game industry as well as spurring huge business for its telecommunications companies around the world (I had an intern from Mongolia who was getting his much faster Internet access - 100 Mbps thanks to a Korean carrier).

They're at it again.

Korea is now pushing to give everyone in the country 1 Gbps Internet access by 2012.

... it is embarrassing living in a Third World Country (by telecommunications standards).

AWESOME!

I'm sure this will spur further business for its carriers and equipment companies AND unlock entire new online businesses.

I think the only thing that has held other Korean online and software companies back is their heavy use of proprietary plugins (a LOT of ActiveX controls) and software development and business culture (this is not helping their online game companies either).

M. Horton (2009), "All Koreans to Have 1Gbps Broadband by 2012", http://techfragments.com/news/359/Tech/All_Koreans_to_Have_1Gbps_Broadband_by_2012.html

(via Slashdot)

Digital Chosun Ilbo (2008), "Korea’s Online Games Exports to Surpass W1-trillion", http://english.chosun.com/w21data/html/news/200810/200810170019.html

NCSoft is certainly well on its way to profitability for Aion with a $30 Million initial licensing fee and $20 Million in guaranteed royalties from Shanda for the license to run the game in China.

Woof.

(via JLM Pacific Epoch)

If you want to know what the "State of the World" is for Korean Online Games, Gameangel.com is the perfect source.

Google's translation is suitably bizarre - "World of Warcraft" is translated as "World ohbeuwo Kraft"????

But the chart does give a good, comprehensive picture of Korean gaming. The site is particularly interesting because it includes non-MMOs. Hangame Tetris is #7 in November 2008 and Blizzard's Starcraft is #13.

Except for NCSoft's Aion (Ahyion), most of the titles seem pretty darn old.... though I am intrigued by "Prius Online" .

Now, if I could only find a similar site for China and the US (and countries in Europe.... while I'm making my Christmas wishes).

via Korean Insight

Korean police busted the leaders a money laundering group for a Chinese Gold Farming ring (the relationship between the two groups is unclear) which targeted Korean online games. The group smuggled $38 Million over 18 months (!) from Korea to China (I think this is what they were prosecuted for - they made false purchases to a Hong Kong paper company to expatriate / launder their funds). Apparently the organization had a pool of IP addresses that made the gold farming group appear to be located at a Korean internet cafe.

The money launderers took a modest 3 to 5 percent commission (which seems pretty low... I think this would imply that they are involved in the gold farming business as well as money laundering).

Charges were also filed against 11 Korean citizens who provided bank accounts to help move the money.

Money laundering is an interesting problem for these groups, it would seem... but it is probably easier to move dollars around the world rather than other currencies which are often more carefully controlled.

"`Online Game Ring Smuggled Out $38 Mln to China` ", http://english.donga.com/srv/service.php3?bicode=040000&biid=2008102291528

Original Korean Article - http://english.donga.com/srv/k2srv.php3?biid=2008102291528 - Corrections welcome!

Fun mobile gaming numbers out of China:

+ 110 Million RMB in revenues in 2007
+ 380 Million RMB in revenues projected in 2008

+ 16 Million players in 2007
+ 154 Million players projected by 2010

Overall Mobile Metrics:
+ 400 Million mobile users
+ 530 Million mobile phones

+ 24 percent of China's 210 Million Internet users use the mobile Internet access.

via TradingMarkets.com

Cindy Geng of Interfax in China has an interesting article on Korean Gaming in China with useful data provided by Park Yong Seok, chief representative for the China Game Business Center of the
Korea Game Industry Agency (KOGIA).

+ In the past 5 years, Korea's market share for online gaming in China has shrunk from 70 percent to 20 percent.

+ In 2007, Korea generated $781 million in revenue from game exports 95.5 percent of which was for online games (I'd guess the remaining numbers would be tied to Hellgate: London and NCSoft's games like Guild Wars?). This is up from $672 Million in 2006 (Brandon Walcutt in The Korea Times).

+ This is a 16 percent growth rate for Korea's export gaming business (this may be high in real terms as the dollar weakened notably against the Won from 2006 to 2007).

+ 31 percent ($250 Million) of that $781 Million was from China game licenses.

+ China's total online game market was $1.55 Billion in 2007... which puts Korea's share of China's market closer to 16 percent, by my estimate.

++ The last number I have for Korea's gaming market (which may include both domestic and international) was 1.8 Trillion Won ($1.6 Billion) in 2006.

++ No numbers for Korea' domestic gaming market in 2007 that I have been able to find.

AsiaPulse is reporting that NHN is buying Webzen. It is not surprising that there is going to be serious consolidation in Korea's online game industry.

By the way, Research & Markets (via Gamesindustry.biz) is claiming that Korea's (domestic?) online game industry is going to be worth $1.7 Billion in 2009... has the Korean government released any numbers since 2006? ? Any numbers on the export market?