Korea wins on game exports

Games now account for over 40 per cent of Korea's exports of entertainment and cultural products

South Korea's booming online games industry generated half a billion dollars in exports this year, and continues to expand rapidly, an industry body says.

Games now account for over 40 per cent of Korea's exports of entertainment and cultural products, according to data from the Korea Culture & Content Agency (KCCA).

The majority of this revenue is generated by Massively Multiplayer Online Role Playing Games (MMORPGs), which typically involve thousands of players competing and cooperating in a persistent online fantasy world.

Korea's games industry has benefited from an aggressive government and industry driven campaign that provided broadband internet access to almost all of the country's urban residents in the late 1990s, eventually reaching over 70 per cent of the population.

This provided perhaps the most fertile ground in the world for online game developers. The industry has expanded almost 40 per cent per year since 2000, according to data quoted by the Korea Times.

Leading online games developer and operator NCsoft Corp is forecast to earn about $38m in foreign royalties this year, according to Hyundai Securities.

And royalties alone don't tell the whole story: the company says it generates additional revenue overseas from joint ventures and subsidiaries. NCsoft reported net profit of of $76m in 2004, on total operating revenue of $243m.

The company's Lineage and Lineage 2 are the world's most popular online games, with up to four million players worldwide, according to the KCCA.

NCsoft's portfolio of popular games includes City of Heroes, Guild Wars and City of Villains in the US and Europe; and two versions of Lineage, played mainly in Asia.

In the second quarter of 2006, NCsoft's overseas sales "will get a boost from the commercial launches of Guild Wars 2 and Auto Assault", Hyundai Securities predicts in a company report published last month.

The highest earning Korean game export, Gravity Co's Ragnarok Online, earned $37.31m overseas from mid-2004 to mid-2005, the KCCA said.

NCSoft's best performer, Lineage 2, earned $22m in royalties overseas in 2005, according to the Korea Times.

The two MMORPGs are extremely popular in several Asian nations. About 88 per cent of Korea's overseas game earnings are generated in Asia, two thirds of that in China and Taiwan.

Such has been the dominance of Korean-developed games in Asia that online game operators like China's Shanda Entertainment bemoan their lack of home grown games and consequent inability to easily add their own expansion content to products.