The South Korean mobile games market…what every dev looking to localize there should know
Back in August we sat down with Josh Burns to talk about opportunities in Japan for mobile game developers. Josh is a consultant with extensive experience helping leading mobile gaming companies expand their reach into Asian markets. This week I tapped his expertise on the South Korean market, which is one of the largest in the world.
What’s particularly compelling about the South Korean mobile gaming market?
Compared with many other countries, South Korea has incredibly high smartphone penetration — the highest in the world, at about 88 percent, whereas other APAC countries like China it’s about 58 percent and in Japan it’s 39 percent. It also has super high speed mobile networks, with strong coverage, so games with a 1GB download size are not an issue (case in point: Marvel Future Flight, which is a 1GB file size and has been downloaded 30 million times). More than 80 percent of the market has LTE access. The mobile content market is also dominated by iTunes and Google Play, also to the tune of 80 percent. Then there’s the fact that relative to its population, the mobile market size is huge: $2 billion, placing it in the top five mobile gaming markets, despite the fact that it’s barely in the top 30 countries by population. So there’s enormous opportunity there.
So what are the challenges in South Korea?
The Kakao platform, which has an entire suite of products ranging from social networking to taxi service, is still fairly dominant, although its strength has waned significantly over the past few years. Nearly everyone there uses it as a mobile messaging tool, and historically developers had to integrate their their games with Kakao to climb in the charts due to its incredible reach. But in recent years, more and more developers have moved away from Kakao, especially those with non-casual games, because there are so many games on the platform that the market is saturated, Kakao demands a substantial revenue share, and the fact that the integration requires additional development support. Many of the top grossing games in the South Korean market are still connected to Kakao, though. The challenge for Western developers is that building a strong relationship with Kakao can be difficult from abroad, as just integrating into the platform is not enough: you must also work to get featuring and visibility once you’re integrated.
The South Korean market is also dominated by local companies, many of which focused exclusively on building games for local users. Netmarble, for example, is estimated to capture nearly half of all of the mobile games market revenue, and the top 10 games in the market capture nearly 75 percent of the overall market revenue. So it’s not so unlike the West in that respect: local games have a stranglehold on the top grossing charts.
Then there’s the fact that mobile game marketing budgets are huge in South Korea — more on the order of what we would see for console games in the West, with a heavy focus on bus and subway ads, as well as TV. When you ride the subway there, the majority of ads you’ll see will likely be for mobile games — nearly all of the country’s population is centered around Seoul, making in-person marketing such as subway ads quite effective. Millions of dollars are spent at launch — Clash of Clans is estimated to have spent nearly $20 million to enter the top grossing charts, but only after spending more than a year researching the market.
Finally, local tastes in terms of art style are very different than they are among Western mobile gamers. As you can see from this list of top games in South Korea from AppAnnie, the aesthetic is very different.
Are there particular types of games that are successful there, and are there particular habits or tastes that characterize South Korean mobile gamers?
In South Korea, it’s all RPG, all the time. Action RPGs are particularly popular, including those with synchronous multiplayer battles. The robust cellular networks there can support that.
South Koreans test a lot of games, and they don’t play for long periods of time but rather consume them in “bite-sized pieces” of under an hour. Timing for communications is also key for South Korean mobile gamers: local devs tend to send push notifications during commute hours or during the lunch break, and in-game sales often occur around payday (24th-26th of every month). Also, devs have leveraged in-game subscriptions for awhile now, so players are accustomed to that monetization strategy.
As I mentioned above, the art in mobile games is really distinctive there — the realism used in Western games isn’t appealing to South Korean gamers. Moreover, South Koreans tend to like games that are deep and complex. Even casual games have deep character collection and leveling systems that you would find in an RPG.
We previously covered how to localize a game in Japan. Are any of the steps different in the South Korean market?
The same general framework I outlined for Japan works in South Korea as well, so you can follow those steps. That will take most studios fairly far in terms of expanding their reach into South Korea considering the more limited potential of their game(s). It’s important to note though that South Korea has some local Android app stores that are cumulatively meaningful, but that isn’t really a concern for smaller studios with minimal resources.
Western devs looking to expand into the South Korean market should be aware that local devs have had great success with monetization techniques such as the VIP system (special in-game rewards when players’ lifetime spending reaches a certain level), first-time purchase bonuses (special in-game items), and monthly subscriptions (in-game items given every day for 30 days).
If you’re a dev considering localizing in South Korea, what do you need to know about partnerships?
To date, interest in Western content by local South Korean publishers has been low, with only a few “boutique” publishers still looking for Western content to import; nearly all Western devs should focus on taking their own steps to localizing the game and exploring local marketing opportunities. The biggest opportunity now for Western companies lies in exploring global publishing deals with some of the larger South Korean companies that can effectively bring their games to both Asia and the West. Also, many South Korean companies are quite interested in expanding outside the South Korean market because it is so competitive, so there are definitely M&A opportunities. For example, Netmarble invested $130 million in SGN, and Nexon acquired Big Huge Games. You can expect to see more transactions of this sort the rest of this year and into 2017.
There’s significant opportunity in the South Korean market for Western devs for several reasons, not the least of which is the fact that smartphone penetration there is the highest in the world. Succeeding there, though, takes an awareness of how local tastes and habits differ, as well as consciousness that marketing alone is incredibly competitive. Keep your eyes on what happens over the next few quarters in terms of M&As and you’ll have a good sense of what the South Korean market is looking for from the West.