As the investment market freezes and even new releases underperform, the survival environment for small and midsize game companies is deteriorating. There are also signs of a sense of crisis that the country may not be able to regain its status as a "gaming powerhouse." Large game companies are posting high sales, but because results are based on existing intellectual property (IP), some say game diversity is diminishing.
According to the small and midsize business community on the 24th, casual game developer BI Games effectively completed its legal liquidation process recently through a court decision to close the bankruptcy case. It means the company disposed of its remaining asset and concluded the creditor dividends process, bringing the case to an end.
Founded in 2010, Antique Game World failed to submit a rehabilitation plan by the court-designated date, and its simplified rehabilitation procedure was terminated. Antique Game World developed the massively multiplayer online role-playing games (MMORPG) Pantheon and Legend of the Demon World. It also distributed the mobile action RPG Knight of the Universe, which features robots, a theme rarely seen in Korea.
Rising game development costs and declining chances of a hit are cited as the main difficulties for small and midsize game companies. User expectations have risen, and they must compete with not only domestic but also overseas companies, yet with limited manpower and capital it is becoming harder to release games that attract market attention. As popular titles released in the past continue to win users' choices, opportunities to gain a foothold in the market have also decreased.
On top of that, investment in games is also decreasing. Last year, venture investment in the game sector was 271 billion won, accounting for 2.0% of total venture investment (13.6244 trillion won). The investment ratio was the lowest among nine industries. Looking at first-quarter venture investment by industry this year, games received 6.3 billion won, down 90.9% from the first quarter of last year (69 billion won). It accounted for just 0.2% of total investment (3.3189 trillion won).
Because of this, some are voicing concerns that securing game diversity is becoming more difficult. Small and midsize companies have long served as the "idea warehouse" of Korea's game industry. Many of the games that changed market trends started at small and midsize developers.
From Devsisters' "Cookie Run" to Pearl Abyss' Black Desert and Krafton's Battlegrounds, which won fans with their distinctive worlds and gameplay, all were introduced when the developers were relatively small, not the large companies they are today.
Major domestic companies such as Krafton and Nexon are also putting effort into new titles, but they remain highly dependent on popular games released in the past. Krafton saw results as its new titles "Enjoy" and "Mimesis" each sold more than 1 million copies, but Battlegrounds still accounts for a significant portion of overall performance.
Nexon likewise saw success with its new title "ARC Raiders," but without core IP such as "MapleStory" and "DUNGEON & FIGHTER," it would be difficult to maintain its current revenue structure. NCSOFT has no IP beyond Lineage and Aion that can be considered a hit.
The industry believes the successive slump among small and midsize companies may not be a temporary phenomenon. A game industry official said, "If failures in new development, shrinking investment, and talent outflows repeat, the entire industrial ecosystem will contract," adding, "Investment or policy finance for indie and small developers must be strengthened so creative game development can emerge."