Chinese game developers drive $20 billion in market capitalization wiping out Korean rivals

Pressure from Chinese rivals has wiped $20 billion off the market value of Korea’s top game companies, with a globally successful developer Anonymous Player’s Battlefield led the decline.

The poor performance of new releases has led Korean game makers to shift their focus to “play for money” games with digital currency and non-fungible tokens to generate revenue. collect.

The new business model is crucial to counter Chinese rivals pouring into Korea after Beijing launched it technology suppression in China, the world’s largest online game market. The top three grossing games worldwide last year were Chinese games, according to Sensor Tower.

According to market researcher FnGuide, the aggregate market capitalization of 29 Korean game companies listed on the Korean stock exchange has fallen by 25.2 billion won ($21 billion) this year, down 30. % compared to the end of last year.

The slide was led by Kraftonthe Tencent-the support team behind the global hit game PUBGwas announced in August in the country’s largest initial public offering last year.

The stock is currently trading for almost half its IPO price, after its fourth-quarter operating profit fell short of market consensus by more than 80%. The next generation version of Battleground New state failed to gain traction after its launch in November.

To drive growth in the market, many game makers are racing to release digital currency to fund their expansion and launch P2E games using the technology. blockchain and NFT to attract new users.

“The declining income has forced them to rethink their current ‘pay to play’ business model as an overcharged MMORPG [online role-playing] Angela Hong, analyst at Nomura, said.

South Korean gaming shares rose late last year on high expectations for the industry’s new P2E games business model, but they “failed to live up to the hype” and generate revenue, Hong added.

WeMade, South Korea’s first P2E game developer, saw its share price skyrocket by 362% last year following its overseas launch. Mir4, a fantasy role-playing fighting game. It cannot release the game domestically because of the ban on speculative games.

But Mir4Its global revenue fell short of market expectations, although the company made a sizable net profit of 25 billion Won in the fourth quarter in part from selling its own WeMix digital currency.

Following WeMade’s lead, many game developers like Kakao Games, Netmarble and Com2uS are rushing to create their own digital tokens and to ensure a P2E ecosystem where players can Earn money in various ways in the game using blockchain technology.

Netmarble plans to introduce a series of blockchain-based games this year, starting with A3: Still alive next month, to revive sluggish revenue growth.

NCSoft, the publisher behind the popularity Lineage plans to generate user traffic by launching the first NFT-based Lineage W in North America and Europe.

Game developer earnings are also impacted by growing costs as a result of more spending on attracting and retaining talent. The pandemic business boom leads to a shortage of developers in South Korea.

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