Category: Editorials

Ruling of the Forceful Game Shutdown Law, and what now?

The recent policy on ‘forceful shutdown of games’ for gamers of 16 years of age or lower has been ruled constitutional.  This ruling is significant for many different matters.

It has been said that the court’s ruling was based on the fact that internet gaming does, in fact, have a high tendency for causing addiction and that the reasons behind the shutdown policy were valid.  With the passing of this policy, other similar policies such as game addiction policy cannot help but be affected.

 

‘Gaming Addiction,’ the words that spoken during the passing of the shutdown policy

The Constitutional Court of Korea (CCourt) has announced its reasoning behind the passing of the policy to be that ‘internet gaming has rather high addiction rate and with it being a service that can be used anywhere with a network connection, there is a high chance of it being used for extended amount of time.’  Additionally, they commented that ‘it is hard to see this policy (limiting the playing of internet gaming from midnight to 6 am for anyone under 16 years of age) as being excessive due to the fact that internet gaming addiction is difficult to cure.’

The ruling of this policy is indicative of CCourt’s approving view of the game addiction related policies that are in debate recently.  Currently, there are a total of 3 game addiction related policies and bills.

Starting with Senator Shin’s ‘4 Great Addictions’ bill that aims to combine gaming along with alcohol, drugs and gambling, there is Senator Son’s ‘1% Collection of Sales’ bill and ‘Preventions for Internet Gaming Addiction.’

Unsurprisingly, all these policies have their foci in ‘addiction.’  So far, the gaming industry has been able to use the lack of substantial and scientific evidence that labels gaming as an addictive material to resist such policies.  Hence, it can be assumed that the current and further policies from now will use CCourt’s admittance of internet gaming addiction as its weapons.

Here are some of the excerpts from CCourt’s ruling:

“Also internet gaming are usually designed around concurrent users that make it easy for social interaction, ultimately increasing its addictive appeal.  With these games available for play wherever a network connection is allowed, there is a high risk of extended playtime.”

“These limitations will only be carried out after confirming whether the game industry affected are domestic based or foreign based, and therefore it is difficult to see this policy as invasive of the equal rights.”

 

Shutdown policy on mobile games?  High possibility of the shutdown policy to be enhanced

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InChun Son who proposed bills about the game addcition

There is a possibility of the policy being enhanced.  Senator Son In Chun’s ‘Prevention for Internet Gaming Addiction’ bill’s contents contain the policies to increase the age limit from 16 to 19, and extending the limitation time to be from 10 pm of the previous day to 7 am of the following day.

Some of the comments of the party in opposition of this bill were expressing the ‘need for further inspection with the usefulness of the shutdown policy in question.’  However, with CCourt’s admittance of the need for the shutdown policy, it may be fairly easy for the bill to receive the consent for extensions.

The outlook for the mobile shutdown policy currently in deferment seem chaotic as well.  The mobile shutdown policy was not passed with the reasons being that mobile gaming is less addictive than internet gaming, and has been put on deferment until May 19th, 2015.  However, with the internet shutdown policy passed by the CCourt, it seems likely for the mobile shutdown policy to also pass when the deferment duration is over.  If such events were to happen, the mobile industry will have to develop a new system that prevents teenagers from playing the game during late hours.  This new requirement may be uncomfortable news for many in the mobile game business due to the fact that the industry has many small to medium sized developers.

 

Senator Chun Byung Hun’s counter-policy, will it become invalid?

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ByungHun Chun attended Nexon Arena in December 2013

Senator Chun Byung Hun’s counter-policy to the shutdown policies is now cornered.  Back in January of 2013, Senator Chun had offered a counter-policy that required parents’ consents in limiting the children’s playtime and had removed mobile games from the list included in the shutdown policy.

However, CCourt has decided in the recent rulings that Ministry of Culture’s selective shutdown policy lacks effectiveness.  The court has ruled that the selective shutdown policy and the forceful shutdown policy fall under double regulations, and because of this, Senator Chun’s parent consent shutdown policy cannot help but lose its standing.

With CCourt’s decision to enforce the new policy only on the domestically serviced games, Senator Chun’s opinion that mobile shutdown policy is useless now loses its standing.  While this counter-policy had nothing to worry about in terms of its standing if the shutdown policy were to get declined, with it approved by CCourt now, further debates may be required.

 

There may be less to no immediate changes, but bad for future development

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The shutdown policy has actually been active in all internet games since November 20th, 2011.  The developers have these systems already implemented and there will be little to no changes in the industry.

However, if the above said policies do indeed get approved, the game industry will receive a lot of pressure.  The more policies get approved and passed, the more negative views internet gaming will receive from the general public.

Also, the internet gaming addiction prevention bill includes the requirement for all internet games to properly analyze and gauge the addictive nature of the games for submission before the launch.  Furthermore, in the case of underage members, they will be required to submit the game’s highlights, rating, playtime, and rate of addiction to their legal guardians and home room teacher.

In the case that such bills get approved, the developers only have more pressure in having to build new systems around the addictive ratings and the information submissions.  All in all, not only will the developers work under much more pressure and restrictions, the game industry will lose its face in the general public.

What Tencent Let CJ Games, Netmarble, and Bang Do

JoonHyuk Bang returned to Netmarble as its largest shareholder for the first time in 10 years. He has received investments totaling up to $500M from Tencent, and has managed to use this to merge Netmarble into CJ Games.

Just what kind of progress has been made so far, and what kind of future can we expect from this big surge of change? We have organized the situation with Bang , Tencent, CJ Games, and the merged CJ Netmarble(assumed).

  • Advisor JoonHyuk Bang Reclaims Netmarble with Tencent Investments
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JoonHyuk Bang

CJ E&M’s advisor JoonHyuk Bang drew out Tencent’s investments of $500M.  Among those, he used about $330M on the acquisition of shares of Netmarble, MediaWeb, N2Play, and YJM Entertainment.

As one of the most common methods in transfer of management rights, acquisition of shares represents the selling of the shares from within the company.  Simply spoken, Bang used $330M out of the investment in order to purchase the shares and the right of management of all 4 companies.

 

  • CJ Games Escapes from the Subsidiary Law with the Change in the Largest Shareholder Position

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In actuality, it is easier to say that CJ E&M has handed the full management rights of CJ Netmarble to Bang.  Before Tencent’s investment, CJ E&M had 51.4% (100,000 shares) and Bang had 48.2% (96,393 shares) of CJ Games’s shares. However, CJ E&M has sold 3,564 of its shares and added 83 shares to Bang to bring Bang just above the line for the largest shareholder position.

The reason behind their decision for the transfer of shares is to resolve their sub-sub-subsidiary’s ‘shares holdings’ issue.  According to the Fair Trade Act, a sub-subsidiary can establish its another subsidiary only when it holds 100% of its subsidieary’s(sub-sub-subsidiary) shares. As CJ Games is already a sub-subsidiary of CJ(CJ E&M is the subsidiary of CJ), it must hold 100% of the shares of CJ Games Lab, AniPark, etc.

However, with Bang becoming its largest shareholder, it was able to rid itself of the limitations put on by the FTA.

 

  • Is CJ Netmarble Worth $1.9 Billion?

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Tencent has invested a total of $500M to CJ Games. With this investment, Tencent received 75,289 of CJ Games’s shares, equaling up to 28% of the total shares. Calculating this in reverse results in the conclusion that Tencent regards the value of entire CJ Games to be around $1.9B.

While it is difficult to do a simple comparison due to the fact that up-pricing of the shares is so common in the case of foreign investments, the $2B value exceeds that of both NHN Entertainment (around $1.4B) and CJ E&M (around $1.1B). This signifies Tencent’s high evaluation of CJ Games.

 

  • CJ E&M Lowers Its Risks with Gaming and Profits

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With the transfer of shares, CJ E&M takes another step away from the gaming industry. Since it, however, still holds 35.86% of the shares of CJ Games, it is still within the boundary of taking profits from the industry while lowring any risk.

Back in 2004, CJ E&M purchased 18% of Netmarble’s shares from Bang at $75M.  Considering the current 35.86% of CJ Game shares that CJ E&M possesses along with Tencent’s recent investment, it results around $650M.

Plus it also has received $330M from CJ Games in the process of separating Netmarble and the other related 3 companies, resulting $1B in total. In conclusion, CJ E&M has profited 10 folds in just 10 years.

 

  • So What Now for CJ Netmarble?

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JoonHyuk Bang was the leading force behind the current Netmarble’s mobile business.  CJ E&M’s decision to make the change from online gaming to mobile gaming was also his decision. With Bang as the largest shareholder and without the regulation by the FTA, a more progressive action in the mobile gaming business is expected in the future.

Even with the $330M expense spent in merging of the companies, there are still $170M left.  CJ Netmarble has more than enough funding to begin their new era of investments. For Tencent, it can enjoy the privilege of being able to take Netmarble’s games to the Chinese market in priority.

As Bang has commented in the press conference, this recent investment and business changes ultimately allows CJ Netmarble to make its progress into the global market.

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[Editorial] Why Some Games Just Do Not Translate Well?

This is a guest posting written by reformedgamer. You can learn more about reformedgamer at the bottom of the posting.

I will continue to encourage my colleagues in the field to share their empirical knowledge and data with us here. If you have something to share, do not hesitate to write me an email at pr@thisisgame.com

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Looking for the Big Bucks:

Regardless of whoever’s statistics you use (DFC, PWC, Screen Digest, etc.), the North American (NA) online gaming market is one of the 3 largest in the world.? As a result, various groups have looked to this segment as a means to expanding their revenue.? Traditional US retail publishers see the NA online market as an additional platform to grow their revenue; entertainment companies like Disney see it as an additional way to reach and expand their consumer base; while international online game stalwarts such as NC Soft, NHN, and Nexon see this market as a natural place to leverage their online gaming expertise.

Unfortunately, success has been very elusive to most.? For every, World of Warcraft, Runescape, Dofus, or MapleStory, there have been hundreds of games that have failed.?? This is particularly true with the “Free2Play” market.

Many see the “Free2Play”?market as next big thing.? Some even say that the “Free2Play”? market will replace the console market entirely.? Like many of you, I have my own opinion on this, but what I wanted to discuss today is why so many so-called “Free2Play”?experts who enter this market fail.? Many companies trying to enter this market are either importing Asian “Free2Play”?games or using Asian expertise developed by partnering with a “Free2Play”?developer or learned by developing games for Korea and/or China.?? The reason why people who enter the US market using these methods have a 90%+ change of failing is because a slight cultural differences that make a HUGE impact on the “Free2Play” market.? Success in Asia does not necessarily translate to success in the US and vice versa as many US companies have already found out.

US and Korean Cheaters Follow Different Rules!

One important cultural difference that has been pointed out to me by many different Asian Operators in the US is how widespread cheating is.? The reason why cheating is more widespread in the US is not because Americans are smarter or Koreans are more honorable, but it is because Americans like to share their cheats while Koreans do not.

Let us take a look at how this one small fact has a large impact on how a company would operate in Korea versus US.? For example, a handful of customers discover that you could exploit the game by doing “XYZ.” In the US, these customers would actually share this information to either gain the respect of their peers or just be popular.? In a few days, this exploit would be in the forums and be abused throughout the community.? Because this has become a widespread problem, the game team must develop a patch to fix this issue as soon as possible and must make the customer support team monitor this issue.? If this issue is completely widespread, the customer support team would have to go though the logs of every player suspected of cheating.

On the other hand, in Korea, these customers would try to exploit this issue for as long as possible and keep the information to themselves.? The game team and customer support team will have a more difficult time to find this issue, but once they do, the damage will limited and easier to control.? Of course, if this does become widespread, the Korean game company will have the same issues as a North American game company does.? Game logs and the ability of customer service to analyze them quickly and accurately is the only to correct widespread cheating.

“Free” is a Free Pass to Cheating!

Exploiting the “Free”?in “Free2Play” games is easy in the US versus Korea.? Any time a US subscription based game does a “Free Trial” program; the company must create restrictions on the “Free Trial” account for this reason, to prevent cheating.? For example, 4 years ago I was working on an MMORPG that decided to do a “Free Trial” program to boost the user population.? After the first day, Marketing declared it a success, but it was actually a customer service nightmare.? Thousands of new accounts were being created because a few people figured out you could make as many free accounts you want and “gift” yourself the “in-game” money you get for creating an account.? This became widespread knowledge overnight as it was posted on all the forums and talked about in-game.

Furthermore, hackers have exploited the “Free”?in “Free2Play”?games by making thousands of accounts with illegal credit cards.? Even if you ban accounts used by hackers and exploiters, they can always make another free account.? In Korea, this exploitation will never occur because by law every game account is tied to one unique personal identifier which is similar to your SS# in the US.? When Korean companies come to the US, they are normal victims of these “Free” account schemes.? To combat these issues, publishers of “Free2Play” games have implemented the following solutions:

  • Limit gifting by either limiting the items that can be gifted, limiting the level when one can start gifting, or limiting gifting to paying players.
  • Limit spending by transaction amount and or volume of transactions
  • Limit account functionality until it is verified

Do not forget that every game is unique and every game needs its own form of regulations to correct for these issues.

Practice! Practice! Practice!

Another issue that many Asian companies fail to notice or address properly is the importance of a tutorial or single player experience for Americans. ? Many “Free2Play” games in Korea are player versus player such as Audition, KartRider, Gunbound, Dungeon Fighter, and others.?? In?Korea, a lot of companies say that it is okay for newbie’s to get beaten by superior players, and some have ventured to say that free players are cannon fodder for good players to pawn.? In the US, this considered poor match making design and a horrible customer experience.

Unfortunately, most online players actually do not like competitive multiplayer experiences.? I have seen a lot of statistics on this, and one person I talked to mentioned that 80% of WoW players like to play by themselves.? In fact, most studies show that players do enjoy the social aspects of the multiplayer games such as chat and guilds, many prefer to quest by themselves and at their own pace. Some players us online games as a way to stay connected with their friends, but prefer to not play with people they meet “in-game”. ? Ironically, the must successful “Free2Play” games in the US are very single player based.? MapleStory, Runescape, Dofus, and Club Penguin does not require you to play with other but rather you kill npcs or play mini-games.? According to research I have conducted, the majority of players playing multiplayer games would like to be able to learn how to play the game first before playing with or against other players.? They do not want to get embarrassed or pawned over and over.

One of the keys to being a successful multiplayer game in the US is the ease of transition from actually learning to play to competing.? Another key is proper matchmaking system or skill-based match making system that a lot of Korean games do not employ.

Discuss?

The online game market is rapidly changing, but companies sometimes tend to repeat the mistakes of others.? Hopefully, this editorial helps people start to share their experiences.? If you completely disagree with what I said please say so or if there is another topic that interest you please e-mail the general e-mail list and hopefully we can address that top.

Editorial: About me, I have been working in the video game industry since 2002 and have specialized in the online space by chance.? Having worked in many different business functions of gaming from marketing, research, finance and business development and having talked with many different companies from start-ups to the big publishers, I have developed my own unique perspective regarding the online games market in North America.? Anything that I write is based on my own opinion and does not represent any company or group that I may or may not be affiliated with.