Here’s a snapshot of the South Korean online games industry in 2013. Annual revenue is about to hit US$2.5 billion, its highest total ever after a decade of rapid domestic growth. Locals love MMORPGs so much that some spend nearly all their free time and disposable income playing them. Competition from console and smartphones games barely exists. South Korean consumers are spending more per capita on virtual goods than anyone else in the world.
A year later, the situation has changed drastically. Local companies no longer cater to local tastes. They have turned to China to find growth. The South Korean government’s decision to cap a person’s spending in online games provided some of the impetus for this change. But it wasn’t the only factor. An influx of competition – from the West and smartphone game developers – as well as a shift in demand combined to make the domestic market less attractive to South Korean developers. All of this was on display at the recent industry exhibition in Busan called G-Star, where attendees flocked to titles developed outside South Korea.[external-link]