Research Notes

Virtual Machine Games In South Korea Has An Advantage Which Is Not Taken Advantage Of

– Both Operators And Content Providers Lose And No One Wins the Wons.
In South Korea there is a big focus on electronic games of all different kinds and the South Koreans are very active in the development of new games for the Arcade, Console, PC and mobile platforms. Today, 78% of the market value for games in South Korea comes from Arcade games, while mobile games only accounted for 1.2% of the total games market. However, it is the mobile game market that delivers the highest growth figures – here at the end of 2002 the value of the mobile games market will be around $52.3 million – 576% more than the mobile games market made in the year 2000!

The value of the mobile games market today could have been even higher – if multiplayer and location based mobile games had taken off, but again – as we have seen before – the mobile operators reluctance to open up for revenue sharing on data traffic has for now put an effective brake on the development of multiplayer and location based games.

The three South Korean mobile operators are of course well aware of the interest in mobile games and already saw in 2001 that almost 30% of the mobile services being used were games or game related. The most used service is actually still ringtones and logos, but games are catching up.

This – and many other developments – in the South Korean mobile platforms has been analysed and commented on in Strand Consults new report about mobile services in South Korea “The Korean market for mobile services – a window to 3G”, which describes and analyses in detail a great number of the different types of mobile services that are now available on the South Korean mobile market.

One of the main reasons for the increase in the popularity of games on mobile phones is that these games are now being offered to the 2.5G users as Mobile Applications. A mobile application can be downloaded and kept on the mobile phone. Once resident on the phone, a Mobile Application can be used without going online again. When you get tired of a mobile application on your phone, you can either delete it or replace it with another mobile application that you simply download.

Some mobile games that are offered as Mobile Applications have multiplayer and/or location based possibilities. The actual game is still downloaded and resident in the mobile phone, but when using the multiplayer or location based feature the mobile phone connects to the mobile operators network, thereby putting the user online with fellow gamers. The mobile phones connect at a speed of around 80Kbps and users pay for datatraffic and not the time they are online.

Mobile games on the mobile application platforms are much more attractive than their old counterparts based on WAP or ME (Mobile Explorer), not only are the graphics and user interface vastly improved, but the whole payment system becomes much more flexible allowing from many more types of different payment options. For example you can pay to be allowed to play a number of times, pr day or week or month, or pay to download new levels, and so on. At the end of 2002 around 85% of all mobile games being used in South Korea were based on Mobile Applications.

One of the many conclutions in the report “The Korean market for mobile services – a window to 3G”, is however that the mobile games market could be a lot bigger if multiplayer and location based mobile games become more attractive to develop and sell. The problem is that none of the three South Korean mobile operators offer any incentive to game developers to develop multiplayer and location based mobile games. A multiplayer game is more expensive and time consuming to develop, but the developer still only gets a content fee for the game. However the game generates data traffic on the operators network every time the user plays the game as the user most be online to play against others. Unfortunately, as there is a limit to how big a content fee the developer can ask for a multiplayer game, few game developers can see any reason why they should develop multiplayer games until they get some sort of revenue sharing deal on the actual data traffic that their games create.

Mobile games are not the only application that would benefit from revenue sharing of data traffic, the list is endless and the many new types of services and content that could create data traffic would probably be quite successful, as the users would not feel they are being “charged” every time they use them, but the developers and content owners would still be making money – sharing data traffic revenue with the mobile operators.

In the comprehensive report about the South Korean mobile services market, Strand Consult looks at some of the different options there are to solve situations like the lack of interest in developing multiplayer mobile games and some of the many other issues that could be handled differently than they actually are today. The South Korean mobile market is without a doubt the most advanced in the world and even though there is room for improvement in some areas, the lessons that can already be learned from the 16 million 2.5G mobile users in Korea are invaluable to all the other mobile markets that are looking at how to successfully move forward into 2.5G and 3G mobile services.
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