[News Focus] Is China reopening to Korean games?

Expectations are running high among South Korean game developers after China recently granted a business license to another Korean game, just the third since 2017, but experts warn that the unexpected approval does not signal an overall shift in China’s hostile licensing policy concerning Korean games.

On Monday, Chinese authorities issued a business license to Black Desert Mobile, a mobile version of Pearl Abyss’ hit game of the same name. The news was met with surprise, coming some 28 months since March 2019, when Pearl Abyss announced its intention to launch the game in China.

Korean game developers welcomed the news, viewing it as a sign of China slowly reopening its 47 trillion-won ($41.6 billion) game market to Korean games.

Kwon Young-sig, chief executive of Netmarble, one of the top three Korean game developers, said, “I always wondered when China will start issuing licenses again. Now, I’m positive.”

From March 2017 to November 2020, not a single Korean game was issued a business license from Chinese authorities, in apparent economic and diplomatic retaliation against Korea for deploying a US-led missile defense system called THAAD on the Korean Peninsula in 2017, despite China’s strong protest.

A breakthrough came last December with Com2Us’ mobile game Summoners War: Sky Arena. Two months later, another Korean game, Rooms, made by indie developer Handmade Game, also received a license. This makes Black Desert Mobile the third Korean game to recently obtain a license.

Black Desert was a big success in Korea. It was ranked the third most anticipated mobile game release at 17173, China’s largest game-related website, according to Pearl Abyss. The third-largest company by market cap on Korea‘s secondary Kosdaq market saw its stock price soar 20 percent Tuesday to 74,400 won from the previous trading day. The figure stood at 75,000 won at 2:30 p.m. Wednesday.

Meanwhile, experts are in a wait-and-see mode, warning that Korean game developers should not get their hopes up too high.

“China’s strategy is to throw out a license every once in a while and wage the Korean government’s response. Depending on diplomatic circumstances, China can always close its door again,” said Wi Jung-hyun, professor of Chung-Ang University Business School and president of the Korea Academic Society of Games.

“To compare, while Korean games earned three licenses, American and Japanese games received more than 100 approvals, respectively. Blindly waiting for China’s approvals like waiting for Prince Charming is ridiculous,” added Wi, calling for the Korean government’s intervention.

While China has been blocking the entry of Korean games for years, the Korean government has taken no action, leaving its market wide open to Chinese games. Last year, Chinese games made $15.4 billion globally, with $1.3 billion coming from Korea.

As to why China issues licenses to year-old Korean games, industry officials say that it’s a well-crafted strategy to protect its local market by blocking the release of new Korean games until users’ hype dissipates. At the same time, China can make an excuse that it hasn’t entirely excluded Korean games.

“Localizing games for the Chinese market takes as much effort as releasing a new game. Korean game developers feel pessimistic over spending that much money and resources, so even if a license is issued, Korean games can’t get enough momentum to target local users,” an industry official said.

By Kim Byung-wook (kbw@heraldcorp.com)