SEOUL, Sept. 9 (Korea Bizwire) – A recent report by the Korea Creative Content Agency (KOCCA) revealed that the volume of Chinese capital invested in the Korean videogame industry – apart from back-door listings and securing intellectual property purposes – has plummeted to almost zero, after years of aggressive M&A efforts that shook up Korean businesses.
In particular, no investment has been made by China’s Tencent, the fourth largest Internet company globally, since 2014, which is an indication that Korea is currently lacking in videogame developers that are appealing to foreign investors, said KOCCA.
Tencent invested large sums in 15 Korean tech and gaming companies from 2006 to 2014, including Kakao ($65.4 million) and Netmarble Games, formerly CJ Games, ($484.2 million).
According to the report, China’s recent development of videogame technology, which is almost on par now with Korean developers, and the stagnation of Korea’s gaming industry in general are among the major factors contributing to a lack of Chinese investment.
“A large number of Korean mobile game enterprises have imitated each other on popular videogame genres (with little innovation), thus losing consumer trust,” said the report. “And with success no longer a foregone conclusion, overall investment in the gaming industry has quickly diminished.”
Although some Chinese companies have made investments in Korean videogame developers, KOCCA said it wasn’t necessarily technological development that attracted them. For instance, the Ourpalm purchase of 19.24 percent of Webzen’s shares for $185.5 million was more in line with the Chinese company’s intention to use the intellectual property owned by Webzen for its mobile game business in China.
Jacaop Kim from JK Cube Ventures, a venture capital firm for startups, also said in the report that there’s “no longer a reason for investment in Korean companies”, now that Chinese companies have sufficient technological expertise to develop their own videogames, and anticipated that investment would continue to decline in the future.
“It’s true that the quality of Chinese (videogame) products has significantly increased, to the point that Korean companies are now importing them for release (in Korea),” said an industry official. “The Chinese government has also been offering its support to help foster the nascent gaming industry, giving Chinese companies fewer reasons to invest in Korean businesses.”
By Lina Jang (email@example.com)