[Regulatory Republic] The Trendy 'Money-Making Game (P2E)' Can't Run Fast in Korea

Uncertainty in Domestic Operations Due to Gambling Regulations
NC and Wemade Turn Eyes Overseas
'Bada Iyagi' Trauma Hinders Innovation

#"Complete the daily quest and earn 50 coins." Office worker Kim Hyunjae (33) recently earned an average of 30,000 KRW per day through a game called Infinite Breakthrough Samgukji. The game mainly involves characters defeating enemies, and completing missions rewards players with Mudol Coins. Mudol Coins can be converted into Klay, Kakao's cryptocurrency, via ClaySwap, and then cashed out at coin exchanges. Some players enjoy the game as a form of investment. However, the industry has been stirred up recently as this 'Mudol Samgukji' began facing sanctions from the Game Rating and Administration Committee.

'Sudden Blow' to Blockchain Games

According to the gaming industry on the 12th, 'Infinite Breakthrough Samgukji' is operating precariously. The game recently received a 'rating cancellation' from the Game Rating and Administration Committee. The developer, Natriss, filed an injunction to suspend the execution of the rating cancellation decision with the court, allowing temporary operation until the 14th. The Committee also sent official letters to 10 self-rating businesses, including Google and Apple, requesting them to preemptively block the distribution of blockchain games.

Regarding this, a Committee official explained, "Based on Article 28, Paragraph 3 of the Game Industry Promotion Act, we decided to cancel the rating of this game." The current law prohibits promoting gambling by providing prizes, etc. 'Mudol Samgukji' is not the only game to receive a rating cancellation notice. SkyPeople's 'Five Stars for Clayton' is in the same situation as Mudol Samgukji. Although globally, blockchain-based 'Play to Earn (P2E)' games are emerging as a new trend, domestic companies are distressed due to business uncertainties.

Marked as Future Growth but Only Overseas

Leading domestic game companies such as NCSoft, Netmarble, Com2uS, and Wemade have identified P2E model games as future growth engines. However, the business remains uncertain domestically. NCSoft, which plans to launch NFT-based games this year, is focusing more on overseas markets than domestic ones.

Wemade's 'Mir4' global version succeeded with the P2E model but is not available domestically. The global version of Mir4 turned 'Black Iron,' a currency used for item enhancement in the game, into NFTs and converted them into the utility coin 'Draco,' which can be traded on the WEMIX platform. However, domestic users cannot access this game. A farcical situation has arisen where domestic users bypass restrictions using virtual private networks (VPNs) to play domestic games. Wemade also released its new P2E model game 'Galaxy Tornado' on the 31st of last month in 174 countries excluding Korea and China.

Wemade CEO Jang Hyun-guk said, "No one and no company can stop the P2E game trend, and the challenge is how to turn that trend into quality growth. In Korea, the regulation is not about whether the game itself is gambling, but if the game's economy or currency flows outside the game, it is regulated as gambling. The gambling regulation itself needs to change."

Experts Say "Regulations Must Be Lifted"

Some compare P2E games to the 2006 'Bada Story' incident. However, experts worry that the 'trauma' from over 15 years ago could hinder innovation. Moreover, converting game items into cash is already common among users. Although game companies do not officially provide cash exchange functions, users buy and sell game items on sites like 'ItemMania' and 'ItemBay.' There are even high-priced items worth hundreds of millions of KRW.

There are also claims that if gambling concerns had not blocked P2E games, domestic companies might have produced success stories like 'Axie Infinity' first. Vietnam-based game company Sky Mavis's 'Axie Infinity' is a pioneer of NFT-applied P2E games. The small company Sky Mavis grew to a corporate value of 3 billion USD (about 3.5 trillion KRW as of 2021). Professor Kim Jung-tae of Dongyang University's Game Department advised, "The game industry has grown hundreds of times despite regulations, and if creativity regarding new technologies had been recognized, the US and Korea could have been on par or better. If immediate legislative amendments are difficult, at least clear guidelines should be provided."