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Trends in the Asia Online PC Game Market

October 5th, 2013

PC Gaming in AsiaGame consoles (such as Nintendo’s systems) and package game software do not have much of a presence in the South Korean and Chinese game markets. The main game format in these markets is online PC games, downloaded via the Internet and played on the user’s PC. This is the case in Korea mainly because game console adoption has been slower than in Japan and in China because of legal restrictions on the distribution of game consoles. [Mobile Gaming Trends in Asia is covered here]

In markets where game consoles are not widespread, it is only natural for gaming on PCs (the closest electronic device to hand) to be high. However, the rapid development of online PC games in South Korea and China is also attributable to the ecosystems in these markets, in particular the presence of Internet cafés. Even before PCs and the Internet started being adopted by households in these countries, Internet cafés provided users a venue for playing online games

StarCraft was warmly received for its gameplay as well as its superior game services, including a free-of-charge network (Battle.net) with a proprietary ranking system. StarCraft became a major hit in South Korea, with over 3mn copies sold through 2004. As a result, demand for Internet cafés capable of providing a high-quality network environment rose sharply, as they were indispensable for fighting-style network games. Since then, playing games at Internet cafés has become widely and firmly entrenched in South Korea as the one of the most affordable forms of amusement.

The free-to-play (F2P) or “freemium” model, first seen in Nexon’s QPlay (1999), has become widespread, and by eliminating the financial barrier to participating in a game, this model has contributed to the spread of online PC games. We note that the ratio of freemium game accounts to monthly payment game accounts at present is estimated to be 65:35 in Korea and 75:25 in China.

Since the dawn of PC online gaming in the latter half of the 1990s, RPGs, and in particular MMORPGs, have driven the market. MMORPGs are RPGs that bring together users connected through their individual PC into a virtual world where they cooperate or fight with other users. They have become the most popular type of PC online game. The popularity of MMORPGs is attributable, we believe, to the existence of in-game communities.

PC-based online games are already extremely popular in South Korea, but we think moderate growth is still possible via continued roll-out of new titles. Although the popularity of League of Legends is a risk, we think the impact on highly distinctive Nexon titles will be limited. We believe DotA2, which is more focused on core gamers than League of Legends, will be a hit.

We think high growth will continue for the PC-based online game market in China, as more people gain Internet access and incomes rise. Tencent dominates China’s online game market. Nexon’s Dungeon & Fighter a hit in China—careful localization is one reason for this. We do not think the popularity of Dungeon & Fighter will decline given strong loyalty among players accessing from home and the lack of a major rival.

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