Decreased Game Consumption... Challenges Expected Next Year [Click e-Stock]

Losing Ground to Other Content;
The Rise of Chinese Games Presents Additional Challenges

The gaming industry, which has struggled throughout this year, is expected to face another challenging year in 2026. This outlook is due to ongoing structural changes that are reducing overall game consumption, as well as intensifying competition from overseas games.

On December 10, SK Securities projected that domestic mobile game revenue this year would be around 7.6 trillion won, maintaining a sideways trend since reaching 8.1 trillion won in 2021. This is attributed to a shift in user content consumption patterns toward short-form videos-such as those on YouTube Shorts, TikTok, and Reels-following the COVID-19 pandemic, which has led to a decline in demand for long gaming sessions.

According to SK Securities, the average daily viewing time for short-form content on platforms like YouTube, TikTok, and Reels among domestic users has steadily increased to between 40 and 140 minutes, while mobile game usage has stagnated at around 40 to 60 minutes per day. As a result, the proportion of non-game content consumption within limited leisure time has grown.

Additionally, games with shorter playtimes have recently gained popularity. The top-performing genres in mobile game revenue growth are strategy, puzzle, and simulation-genres centered around short sessions. Furthermore, as Chinese games have significantly improved their development capabilities, overseas games are capturing a larger share of the already reduced game usage time. Given these trends, it is considered difficult to expect a positive shift in consumer behavior for the domestic gaming industry in the near future.

Reflecting these trends, the gaming sector recorded the lowest returns among all sectors this year. Stock prices have continued to decline since October. This is due to a combination of worsening industry conditions caused by structural changes in content consumption behavior, as well as the increasing difficulty of achieving success with new releases.

SK Securities advised that, since a dramatic improvement in industry conditions is unlikely next year, investors should selectively invest in companies preparing to launch highly anticipated titles. Notable examples include Pearl Abyss's "Crimson Desert," Netmarble's "The Seven Deadly Sins: Origin" and "Monster Arena: Star Dive," Krafton's "Palworld Mobile" and "Subnautica 2," and Kakao Games's "ArcheAge Chronicle."

There are also expectations for improved performance within the gaming sector through cost reduction. In particular, the five-year-long lawsuit between Google and Epic Games has ended with a comprehensive settlement, leading to changes in the global platform environment such as lower in-app payment fees and the allowance of external payment systems. Nam Hyoji, a researcher at SK Securities, explained, "Starting next year, domestic game companies will gradually introduce their own payment systems and benefit from reduced payment fees," adding, "The reduction in platform fees will be especially significant for NCSoft, Netmarble, and DoubleUGames."