K-Games Turning to Exports... Half of Total Sales from Overseas Markets [Population Decline Impacting Industry]

Major Customer Demographics Aged 10-30
44% in 2010 → 34% Last Year
Exports Surpassed Domestic Sales in 2019
Focus on Developing Games Targeting Overseas Markets

"Fifteen years ago, I believed that if things continued as they were, most game companies would go bankrupt within 10 years."

This is the remark of an executive who has been in the gaming industry for a long time. There is no industry more directly affected by the low birthrate issue than gaming, as the core consumer base of games is people in their teens to thirties. Game companies, already sensing a crisis 15 years ago, sought ways to survive and found answers overseas.

No More Growth in the Korean Market

Game companies unanimously agree that the Korean market will no longer grow. The main customers are young people aged 10 to 30, whose population decreased from 22.1 million in 2010 to 17.5 million last year. Their share of the total population also dropped from 44% in 2010 to 36% in 2020. As of September last year, the proportion of people aged 10 to 30 fell further to 34%.

The gaming industry is turning its eyes to exports. Game export revenue surpassed domestic sales for the first time in 2019. At that time, out of total sales of 15.575 trillion won, exports accounted for about 7.9 trillion won, exceeding half. In 2022, game exports reached 11.51 trillion won, making up 55% of total sales.

Hiring Foreign Employees and Establishing Overseas Corporations

Among domestic game companies, Nexon is the most aggressive in targeting overseas markets. Nexon established its Japanese subsidiary, Nexon Japan, in 1999. Japan was the first country to face the low birthrate issue, but unlike Korea, it has succeeded in a rebound. The birthrate, which fell to 1.26 in 2005, rose to 1.45 in 2015 and maintained 1.26 in 2022. The United Nations (UN) expects Japan's birthrate to slightly increase to the 1.5 range by the 2060s. Korea is the exact opposite of Japan.

Nexon was once part of the "3N" (Nexon, NCSoft, Netmarble), but it is considered ahead by aggressively targeting overseas markets including Japan. Nexon's overseas sales account for more than 80%.

In 2022, Krafton's overseas sales also accounted for 95% of its total. It has subsidiaries worldwide, including in the Netherlands, the Czech Republic, North America, and India. Pearl Abyss is also one of the game companies generating most of its revenue overseas, with overseas sales making up 80%. Pearl Abyss established a "Localization Center" in 2018 to carry out localization work so that overseas users can enjoy games made in Korea without discomfort. More than half of the employees there are foreigners.

Devoting Efforts to Game Development for Overseas Markets

Domestic game companies are naturally developing games that cater to the tastes of overseas users. Instead of mobile-based MMORPGs popular in the domestic market, they are developing PC and console-based games preferred in Europe and North America.

Nexon's sub-brand Mintrocket released the PC and console game "Dave the Diver" in June last year, which surpassed 1 million cumulative sales by July of the same year. Neowiz also launched the console game "P's Falsehood" at the end of last year.