82% of Korean Game Companies Have an Annual Revenue of Less Than $87.000 USD

South Korean gaming companies had a reported revenue of more than $9.3 billion USD dollars in 2015 and surpassed $9.5 billion in 2016, according to KOCCA (the Korea Creative Content Agency). In 2017, this revenue is expected to exceed $10.4 billion dollars (or 11.5 trillion in Korean Won). South Korea represents the fifth largest market globally and the third largest in APAC, behind only China and Japan, with mobile gaming taking the largest share of the market ($ 2 billion USD in 2017, according to Newzoo).

Together with this promising numbers and results, however, here comes the downside of it: most of the gaming companies are actually struggling to compete in the market. Most of the generated revenue comes from large gaming companies. According to a 2016 survey conducted by KOCCA of 885 domestic games companies, results showed that 82% of the firms’ yearly sales were under $86,964. This is a staggering revenue gap.

Nexon

Nexon placed in 1st place in 2016 with $1.6 billion in revenue (Image Credit: Nexon)

The survey highlighted how the growth rate of the Korean market was 0.3% in 2013, 2.6% in 2014 and 7.5% in 2015. Most of the companies continue to deteriorate, while a few large ones keep growing. If we take a look at the revenues of the major gaming companies, it becomes obvious and quite staggering evidence that only three large companies like Nexon, Netmarble Games and NCSoft accounted already for 35% of the total revenue.

The numbers (provided by KOCCA and PocketGamer.biz, are expected to grow further this year):

Top 10 revenue Korea

If this phenomenon will become widespread, the small and medium sized companies will become smaller, while the barriers of entry for new companies trying to emerge in the market. Several commentators are now worrying that there will be an increase in the market of games only focused on financial results, rather than fun. The government, many commentators say, should work hard in order to start developing a more balanced growth focused on improved policy and deregulation. At the moment, the scenario looks like the most classic Pareto principle, with around 20% of the company generating 80% of the revenue: can we define this almost state of oligopoly sustainable for the Korean gaming business in the long term?

Source: This is Game for Pocket Game.biz

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