Last week Latis was pleased to accept a speaker invitation at Pocket Gamer Connects Helsinki to talk about using Korea as your gateway into North East Asia. This week we are happy to be able to share the presentation with you and provide a summary of our key points.
Four Take Away Lessons
Point #1: Korea is wrongfully overlooked because of China and Japan
China is like the great whale of the mobile market. It’s a behemoth, high profile market and country in genera, and offers a lot of potential. Problematically, we are not always capable of seeing the total picture of that potential due to extreme market fragmentation. Chasing down China without a well refined strategy is a good way to get swallowed up.
When we think about Japan, at least where the game industry is concerned, the thing that generally comes to mind are the titans of the industry – Nintendo, Capcom, Square Enix, Gungho, etc. Japan is home to some of the most well-known IPs in the world. To compete in Japan and do well is to earn credibility for your talent in the world’s biggest gaming market.
Compounding this is the general perception that the Western world has of Japan due to its cultural exports. There are a lot of silly game shows, manga, and films that are well-known in the west and there is a general appeal to going to Japan because of them.
But what about Korea?
Even though it is the third biggest mobile market, it’s being over looked in favor of China and Japan. It has a strong and thriving mobile game market and, if you are serious about being an international game company, you can’t afford to ignore it. Along with Japan, Korea is a major driver of Google Play revenue and many of its characteristics make it the best of the three major North East Asian markets to enter first.
Point #2: Korea is easier to do business in than China and Japan
The first factor that makes Korea a great entry point is simply ease of business. This includes things like, how many loops do you have to jump through to do business? How easy is it to find an honest partner? How tight are business regulations? Can you expect transparency? The answer to these questions are going to greatly impact your ability to be successful business in any country you go to, but are often forgotten by developer-focused, or younger companies.
Where North East Asia is Concerned, Korea wins the contest hands down.
The world bank does an assessment of ease of business and has created an index to examine these factors. It includes: procedures, time, cost, and minimum capital to open a new business, protection of investors, enforcing contracts, resolving insolvency, strictness of regulations, transparency, entrepreneurship, entrepreneurial activity, good practices and government regulations, and transparency of business regulations.
South Korea ranks 7th on that index, with Japan coming in at 27th, and China lagging way behind at 96th. This ultimately means that South Korea has a more open business environment with less risk. For those that already have a lot of experience and a network in one of the three big markets, it might not mean much. But particularly for first timers or mid-level companies with not a lot of capital to risk, these are
Point # 3: Korea’s market factors mean less investment, less risk
Some of these market factors include:
- Korea has one of the best mobile networks in the world with ~91% 4G coverage. Japan hovers around 68% and China lags far behind on network infrastructure with 4G only available in major cities.
- Korea is one of the first smartphone markets to reach near saturation with around 73% of people owning a smartphone. Korea is a great test case for how consumers will act in a near-saturated market.
- Korean and Japan both far out perform China in buying power. Where Korea and Japan have similar rates for unlimited data plans, Chinese mobile users are looking at $100 USD for 5GB of data.
- Though CPI data shows Japan is by far the best country for profit margins, those numbers do not include extra marketing budgets such as television spots and subway ads. Those upfront costs are considerably more expensive in Japan than they are in Korea.
Point #4: Korea’s soft power influence is supplanting Japan
For over a decade now, Korea has been taking over the importance of Japan’s cultural exports. Korean dramas became big in China first, then moved to Taiwan, Hong Kong, and Japan. They got huge in South East Asia, and now the Korean wave is firmly planted throughout Indonesia, Malaysia, Thailand, and even Myanmar. Music, fashion, television, movies, and games coming from Korea tend to do well in South East Asia, so performing well in Korea may open doors for you there as well.
There is also the soft power and recognition that is slowly building in the West with people like Psy. He represents a slow changing shift in the way that Korea is perceived by the West, and the relationship will only continue to grow. Over time this means both cultures will be more open to new types of content.