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Review of the Online game market 2011
         and Forecast of 2012




                Jack Lee
                Gala Inc.
Agenda

  1. Review of the Global market in 2011.
     1)   US market
     2)   Chinese market
     3)   Japanese market
     4)   European market
     5)   Korean market


  2. Analysis of the Korean market change in 2011.

  3. Forecast of the Changes of Korean market in 2012.




                                                         2
1. Review of the Global market in 2011.

       1. Market size of game industries.

                     Sales of game industries (estimated), 2011-1025                                             Global Online Games Revenues, 2006-2011
                                                                                                              30000

                  Gaming hardware                                                                             25000




                                                                                        Millions of Dollars
                                                                                                              20000
                  Gaming software
       Platform




                                                                                                              15000

                    Online gaming                                                                             10000

                                                                                                               5000
                            Total
                                                                                                                  0
                                    0          30,000    60,000      90,000   120,000                                 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

                                                    Millions of Dollars                                                                     Year

                                        2011      2013    2015




             ■ Sales of gaming hardware and software were hit $74bn last year, up 10.4% from the 2010 figure of $67bn.

             ■ Mobile gaming to become ever more important: driven by the rise in popularity of smartphones and tablets,
             its share of the sector will grow from 15% in 2010 to 20% in 2015.


Source: Global market trend report by Korea Creative Content Agency                                                                                                       3
1. Review of the Global market in 2011.

     2. US market
                                    Number and percentage of gamers per platform                                                     Money spent on games by platform, Billion USD
                           140                                                                                           25


                           120    115
                                                                                                                                                        1.8
                                                                                                                         20
                           100                                                                                                                          1.8
      Number in millions




                                             82
                                                       76          75                                                                                   2.1                     Social game
                           80                                                  73         71
                                                                                                                         15
                                                                                                                                                        2.5                     PC package




                                                                                                           Billion USD
                           60                                                                        52
                                                                                                                                                                                Mobile game
                                                                                                                                                        2.6
                           40                                                                                            10                                                     PC download expect for
                                                                                                                                                        2.8                     MMOG
                                                                                                                                                                                MMOG
                           20
                                                                                                                                                                                Browser game
                                                                                                                          5
                            0                                                                                                                           7.9
                                 Browser   Console Social game   Mobile        PC      PC package   MMOG
                                  game                           game       download
                                                                            expect for                                    0
                                                                             MMOG
                                                                                                                              2009      2010           2011            2012
                                                                 Platform
                                                                                                                                                Year




                           ■ Market size of MMOG is lowest among the platform. But spending money is not that small.

                           ■ Around 37% of US gamer spend their money on Console market .


Source: Newzoo                                                                                                                                                                                           4
1. Review of the Global market in 2011.

     2. US market
                          TOP 30 reach rate of 2010 in US market
          0.10
          0.09
          0.08
          0.07
          0.06
          0.05
          0.04
          0.03
          0.02                                                                     Country      Color
          0.01                                                                         USA
          0.00                                                                       China
                                                                                     Korea
                                                                                     Japan
                                                                                   German
                                                                                    French
                                                                                   Thailand
                                                                                    Taiwan
                                                                                       HK
                                                                                    Finland
                             TOP 30 reach rate of 2011 in US market                   Gala
                                                                                    Russia
          0.06                                                                        India
                                                                                       UK
          0.05                                                                    Philippines
          0.04                                                                      Turkey
                           Only 5 companies has grown compare to the last year.    Bulgaria
          0.03                                                                     Portugal
                                                                                     Island
          0.02
          0.01
             0




<Source: Alexa ranking>                                                                                 5
1. Review of the Global market in 2011.

      3. Chinese market
                                                                 Growth rate of the China game market, 2006-2010
                                                 400                                                                      75%

                                                 350

                                                 300
                       hundred of millions CNY




                                                                                                                          50%
                                                 250

                                                 200                                                                            Mobile game
                                                                                                                                Online game
                                                 150
                                                                                                                          25%   Growth rate
                                                 100

                                                 50

                                                  0                                                                       0%
                                                       2006   2007             2008             2009               2010

                                                                               Year


        ■ China's game industry has increased rapidly.

        1. Industry scale 115.8bn yuan, total games sale including pc games, pc network games, mobile games surpassed
        44.6bn yuan and a year-on-year growth rate being 16.4%

        2. That rate of growth is faster than the online game industry in the U.S. and it shows that it’s not so crazy to think
        that China could rule the new age of online games,


Source: Chinese market report by iResearch                                                                                                    6
1. Review of the Global market in 2011.

      3. Chinese market
                                                               Overseas sales of Chinese game market, 2006-2010 (hundred of millions CNY)
                                                  250                                                                                       2

                                                                                                                                            1.8

                                                  200                                                                                       1.6

                                                                                                                                            1.4
                        hundred of millions CNY




                                                  150                                                                                       1.2

                                                                                                                                            1
                                                                                                                                                  Oversea sales
                                                  100                                                                                       0.8
                                                                                                                                                  Growth rate
                                                                                                                                            0.6

                                                   50                                                                                       0.4

                                                                                                                                            0.2

                                                   0                                                                                        0
                                                        2006             2007             2008              2009             2010

                                                                                           Year




        ■ Total sales from 131 of their own developed games went abroad arrived $3.6bn in 2011, a year-on-year
        growth rate being 56.5%.

        ■ The major companies (Tencent, Shanda, The9) established subsidiary company in many parts of the world.
        Tencent Korea launched the webgame in Korean market and Shanda established the service company in Europe.


Source: Chinese market report by iResearch                                                                                                                        7
1. Review of the Global market in 2011.

      3. Chinese market
      ■ A major trend in China is the growth of social networking sites such as QZone, Renren and Kaixin001, all of which host social gam
      es. These games are starting to cannibalize some of the advanced casual games on the market.




      ■ One of the most talked-about trends is the emergence of Sina’s Weibo microblogging platform, which is similar to Twitter, in that
      it allows online and text posts of 140 Chinese characters. Weibo’s registered users grew more than 25 times in 2010 and surpassed 1
      00 million in February 2011. The company has said it plans to expand including launching a gaming platform
                                             Millons of users




                                                                     Month
Source: Chinese market report by iResearch                                                                                                  8
1. Review of the Global market in 2011.

      3. Chinese market
      ■ Game operators in China experienced strong revenue growth in 2011. Top game operators, in descending order, are Tencent with $1.4 billion
      in revenue in 2011, Netease (NASDAQ: NTES) with $749 million in revenue, Shanda Games (NASDAQ:GAME) with $680 million, Perfect World
      (NASDAQ: PWRD) with $374 million and Changyou (NASDAQ: CYOU) with $327 million in revenues.

      ■ In 2011, MMORPG game operator Shenzhen ZQ Game completed an initial public offering (IPO) on the Shenzhen Stock Exchange, becoming
      the first China-based online game company listed domestically in China. The company was established in 2003 and has 700 employees.



                                               Market cap of China game companies                    2011 2Q sales of China game companies
                                     $50,000
          Billions of millions CNY




                                     $45,000                                                                       Kingsoft Inc.
                                     $40,000
                                     $35,000
                                     $30,000                                                       Giant Interactive Group, Inc.
                                     $25,000
                                     $20,000                                                                     Perfect World
                                     $15,000
                                     $10,000




                                                                                    Company
                                      $5,000                                                                    Changyou.com
                                          $0
                                                                                                              SINA Corporation

                                                                                              Shanda Interactive Entertainment

                                                                                                                  Netease.com

                                                                                                                       Tencent

                                                                                                                                   $0 $200 $400 $600 $800$1,0001,2001,400
                                                                                                                                                              $    $

                                                                  Company                                                                   Millions of CNY



Source: Chinese market report by iResearch                                                                                                                                  9
1. Review of the Global market in 2011.

     4. Japanese market

                                                                Market size of Japanese game market, 2006-2011 (hundred of
                                                                                        millions JPY)
                                                         4500
                                                         4000
                                                         3500
                               hundred of millions JPY




                                                         3000                                                   2100
                                                         2500
                                                                                                         2080
                                                         2000                                                                Online game
                                                         1500                                                                Social game
                                                                                                  2095
                                                         1000             1750      1910                        2000
                                                                 1550
                                                          500                                            1120
                                                           0       0       4.5       40           255
                                                                 2006      2007     2008          2009   2010   2011
                                                                                           Year



     ■ Japanese game market is increasing steadily. Especially, social game market the company has doubled in terms of
     sales and It takes 50% of the whole market.

     ■ On the other hand, Online game market is showing little change.


Source: Japan Online Game Association                                                                                                      10
1. Review of the Global market in 2011.

     4. Japanese market

                                           Revenus sales of DeNA, GREE and mixi, 2008-2011                                                           ARPU of the Gree and DeNA, 2008-2011
                                                                                                                                                                  (Yen/month)
                                   400
                                                                                                                                     600
                                   350                                                                345 350
                                                                                                320                                  500
                                   300                                                                      305
                                                                                          290                                                         Social gaming
         hundred of millions JPY




                                                                                    275
                                   250                                                                                               400
                                                                                                                                                      boom
                                                                              240




                                                                                                                         Yen/month
                                                                                                      210
                                   200
                                                                        190                                       DeNA               300
                                                                                                160                                                                                                        DeNA
                                   150                                                    145                     GREE
                                                                                    125                                              200                                                                   GREE
                                                                  115         110                                 mixi                                                                      Smartphone
                                   100       96   102
                                                        85
                                                                        95                                                                                                                  Monetization
                                                             80   80
                                                             65                                                                      100             Slump in                               Kicks in
                                    50                  50                                45
                                             35   42
                                                  38    35   32   34    38    35    36          42    34    35                                       avatar business           iPhone 4
                                                                                                                                      0
                                                                                                                                                                               launching
                                    0
                                          4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q                                                               3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
                                         2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011                                       20082008200920092009200920102010201020102011201120112011

                                                                   Quater                                                                                             Quater




     ■ GREE is catching up DeNA as far as revenue sales and GREE has outperformed DeNA in ARPU regarding this metric
     for the first time in September last year.

     ■ Opening the platform for social games didn’t have much of an effect on mixi


Source: earning release of each company                                                                                                                                                                           11
1. Review of the Global market in 2011.

      5. European market
                                                                               Money spent on games by platform 2011
                                 5000
                                 4500
                                 4000
                                 3500                                                                                                                    Social game
                   Billion USD




                                 3000                                                                                                                    PC package
                                 2500                                                                                                                    Mobile game
                                 2000
                                                                                                                                                         PC download expect for MMOG
                                 1500
                                                                                                                                                         MMOG
                                 1000
                                                                                                                                                         Browser game
                                 500
                                                                                                                                                         Console
                                   0
                                        UK             GER              FR               RU                IT                  NL                 BE

                                                                                       Country


                                        TOP 3 online game of each countries
                                                   Germany              France          United kingdom           Italy                   Spain               Poland
                                         1     League of legends        Dofus          World of warcraft   League of legends             Dofus          League of legends
                                         2     World of warcraft   World of warcraft   League of legends   World of warcraft        League of legends       Metin 2
                                         3      Runes of magic     League of legends     World of tanks      Combat arms            World of warcraft     World of tanks


                                        TOP 3 browser game of each countries
                                                   Germany             France           United kingdom             Italy                 Spain              Poland
                                         1        Farmerama            Habbo            Moshi monsters            Travian               Comunio          Farmerama
                                         2         Comunio            Equideow           Club penguin           Farmerama                Habbo             Stardoll
                                         3          Habbo              Travian            Bin weevils             Hattrick            Club penguin      Moviestar planet




Source: Global market trend report by Korea Creative Content Agency, Newzoo                                                                                                            12
0
                                                                                           0




                                            0.001
                                            0.002
                                            0.003
                                            0.004
                                            0.005
                                            0.006
                                            0.007
                                            0.008
                                                                                       0.005
                                                                                        0.01
                                                                                       0.015
                                                                                        0.02
                                                                                       0.025
                                                                                        0.03
                           Travian games                            Travian games
                          Bigpoint GmbH                                       Aeria




<Source: Alexa ranking>
                              Inno games                           Bigpoint GmbH
                              Tribal Wars                               Gameforge
                              Riot Games                                       Gala
                                                                                                France




                                                        Poland
                            Playa Games                          Activision Blizzard
                                Erepublik                              Inno games
                              Gameforge                                Riot Games
                                 Frogster                                  Ankama
                                                                                                           5. European market




                              Quake Live                                   Gamigo




                                                0
                                                                                           0




                                            0.005
                                             0.01
                                            0.015
                                             0.02
                                            0.025
                                             0.03
                                                                                       0.005
                                                                                        0.01
                                                                                       0.015
                                                                                        0.02
                                                                                       0.025
                                                                                        0.03
                                                                                       0.035




                          Travian games                             Bigpoint GmbH
                              Gameforge                              Travian games
                          Bigpoint GmbH                                 Gameforge
                           SHR Interaktif                              Playa Games
                              Inno games                                Inno games
                                                        Turkey
                                                                                                 Germany




                              Tribal Wars                        Activision Blizzard
                               2K Games                                     Gamigo
                                     Gala                               Tribal Wars
                                 burda:ic                               Riot Games
                                  Joymax                                Kongregate
                                                                                                                                1. Review of the Global market in 2011.




                                                    0
                                                                                        0




                                                0.001
                                                0.002
                                                0.003
                                                0.004
                                                0.006
                                                                                    0.005
                                                                                     0.01
                                                                                    0.015
                                                                                     0.02
                                                                                    0.025
                                                                                     0.03
                                                                                    0.035




                                                0.005




                                Kongregate                        Travian games
                          Activision Blizzard                        Gameforge
                                     Disney                      Bigpoint GmbH
                             Travian games                           Inno games
                                                        UK
                                                                                                 Italy




                                       Jagex                                Aeria
                                Riot Games                           Kongregate
                                      Evony                         Playa Games
                                Inno games                             Erepublik
                              Perfect world                               Sulake
                                      Sulake                         Tribal Wars
                                                       UK
                                                       HK
                                                       USA




                                                      Gala

                                                      India
                                                     China

                                                     Japan
                                                     Korea




                                                     Island
                                                    Russia



                                                    Turkey
                                                    French

                                                    Taiwan

                                                    Finland




                                                   Bulgaria
                                                   German
                                                   Country




                                                   Portugal
                                                   Thailand




                                                  Philippines
                                                                                        Color




       13
1. Review of the Global market in 2011.

     6. Korean market
           1) Market size and growth rate


      Entire Korean game market measures up to 10.821billion USD 2012 (estimated). It grows
       19.2% than last year’s revenue sales. Online game occupies around 56.4% of entire game
       market. which proves that the online game market is becoming the most significant booster
       for the growth of Korean game market.

      Market share ranking per platform is biggest in the order of “Online game> PC cafe> Console
       game> Mobile game> Arcade game center> PC package game”.


                                                  Billons of USD




Source: White paper of Korean game market 2011.                                                      14
1. Review of the Global market in 2011.

     6. Korean market
          2) Online game ranking                                                                                   2012.3.23.
            Rank                  Title        Genre     M/S     Playing time     Status         Developer         Publisher
              1                   Aion          RPG     14.76%     714,753      Commercial         Ncsoft           Ncsoft
              2           League of Legends     RTS     13.73%     664,754      Commercial      Riot games        Riot games
              3             Sudden Attack       FPS     9.23%      446,860      Commercial        Gamehi        CJ E&M/Nexon
              4                Starcraft        RTS     5.76%      279,046      Commercial        Blizzard          Blizzard
              5                 Lineage         RPG     4.96%      240,288      Commercial         Ncsoft           Ncsoft
              6              Fifa Online 2     Sports   4.91%      237,851      Commercial   EA/Neowiz games    Neowiz games
              7               Warcraft 3        RTS     4.10%      198,562      Commercial        Blizzard          Blizzard
              8           World of Warcraft     RPG     2.84%      137,698      Commercial        Blizzard          Blizzard
              9                Lineage 2        RPG     2.78%      134,605      Commercial         Ncsoft           Ncsoft
             10                   Tera          RPG     2.64%      127,877      Commercial    Bluehole studio        NHN
             11              Special Force      FPS     1.80%       87,266      Commercial       Dragonfly      Neowiz games
             12          Dungeon and Fighter    RPG     1.68%       81,328      Commercial         Neople           Nexon
             13                 Cyphers         RPG     1.61%       78,026      Commercial         Neople           Nexon
             14           Freestyle Football   Sports   1.07%       51,762      Commercial           JCE               JCE
             15                Kartrider       Racing   1.01%       48,796      Commercial         Nexon            Nexon
             16              Maple Story        RPG     0.93%       45,178      Commercial         Nexon            Nexon
             17              Chaos Online       RTS     0.91%       44,125      Commercial         Neoact           Nexon
             18               Starcraft 2       RTS     0.88%       42,840      Commercial        Blizzard          Blizzard
             19             Special Force 2     FPS     0.88%       42,489      Commercial       Dragonfly          CJ E&M
             20                  A.V.A          FPS     0.62%       29,882      Commercial        Redduck       Neowiz games



          Various games had launched in 2011. But online game market is still dominated by MMORPG and FPS.
          Top 20 ranking hardly changes every year. But many changes occurred within 2011 thanks to the
           growth of RTS and sequels to already popular games.
Source: Gametrics.com.                                                                                                          15
1. Review of the Global market in 2011.

 6. Korean market
    3) Hottest news of 2011



    The collapse of           <Tera> was expected to grow the whole market size. But It didn’t keep users busy
       big title.             due to the lack of content.



   The popularity of          <League of Legends>, <Cyphers>, <Chaos online> were launched in 2011. The
      RTS genre.              popularity of these games contributed to the overall game market growth.



                              A government regulation started to take effect from 20th of November. So young
   Shutdown system            Korean gamers under 16 can not play all online games from 12:00AM to 6:00AM.


                              Nexon was suffering from these issues: <Sudden attack conflict between Nexon and Netmarbl
   An eventful year           e> , <Dungeon & Fighter manipulates user opinion> , <Mabinogi hero made a copy of in-game m
                              oney> , <Hacking of Nexon portal >. Nexon was happy about these issues:, Total CCU of <Maple
      for Nexon               story>, <Sudden attack>, <Dungeon & Fighter> surpassed the 1 million users during the summer
                              vacation, Nexon were listed Japanese stock market in December 2011.


                              Blizzard has revealed that <Diablo III> will allow players to trade in-game items for r
       Diablo III
                              eal money via an officially sanctioned auction house, integrated in the game. So <D
    auction system            iablo III> is obviously 18+ game in Korea.
                                                                                                                             16
1. Review of the Global market in 2011.

     6. Korean market
          3-1) The collapse of big title.


         <Tera> sharply decreased after commercialization due to the lack of contents.
         The other publisher (Ncsoft, XL games, NHN, Netmarble etc.) which observed this situation
          delayed the launching plan to 2012.

                                                                            Playing time variation
                                             Commercialization   1st   update                        2nd update F2P until 25 lv.
                                           1,800,000

                                           1,600,000
                                                                                                                                   PCCU 200K
                                           1,400,000

                                           1,200,000
                            Playing time




                                           1,000,000

                                            800,000

                                            600,000

                                            400,000

                                            200,000

                                                  0




                                                                                          Period


Source: Gametrics.com.                                                                                                                         17
1. Review of the Global market in 2011.

 6. Korean market
    3-2) The popularity of RTS genre.


      MOBA (Multiplayer Online Battle Arena) genre is one of the RTS genre came from DOTA. These genre
       games have gained in popularity over recent years.

             1st half
              <Cyphers 1 / Neople>
             2nd half
              <Chaos online / Sesisoft>
              <League of Legends / Riot games> - It ranked in #1 Xfire ranking with 32 mil register user and 1.3
              mil CCU.




            <Cyphers>                             < Chaos online>                         < League of Legends>
                                                                                                                   18
1. Review of the Global market in 2011.

 6. Korean market
    3-3) Shutdown system.

   Young Korean gamers under 16 can not play all online games from 12:00AM to 6:00AM. However, most of
    people have doubts about the effectiveness of the system with below reasons.

  1. there are still 5% of them playing online games until dawn according to the statistics because they are using
     not their own account, instead using parents’ account that created by their social security numbers.
  2. the system does not provide a clear guideline. For instance, young people still could play League of
     Legend(LOL) on NA server instead of Korean server. Classic Battle.net from Blizzard is another exception
     because it is free and does not have age verification feature within it.

             Title            Shut down
          Starcraft 1         Non-applied
          Starcraft 2           Applied
          Warcraft 3          Non-applied
       World of warcraft        Applied
       PS3 network (PSN)        Applied
           Xbox Live            Applied
              Wii                TBD
         Portable game        Non-applied
    Smartphone, Tablet game      TBD
         Mobile game             TBD
          Flash game             TBD
          Webgame               Applied
         Online game            Applied
                                                     Young Korean gamers under 16 can not play all online games from 12:00AM to
                                                     6:00AM.                                                                      19
1. Review of the Global market in 2011.

     6. Korean market
                       3-4) An eventful year of Nexon


         Nexon was suffering from may issues but they are surpassed their CCU record and Nexon went to the public in
         the end of the year.


                                             Gamehi’s new ceo   Dispute over sudden    Mabinogi heroic
                       1,400,000
                                              Blames ex-bod          attack user D/B   in-game money
                                                 in public           among Gamehi          cheating      <PCCU in August>
                                                                     and Netmarble.                      D&F: 290K
                       1,200,000                                                                         Sudden attack: 267K
                                                                                                         Maple story: 626K
                       1,000,000
                                                                                                         Total: 1,183K
        Playing time




                        800,000

                                                                                                               Dungeon and Fighter
                        600,000
                                                                                                               Sudden attack
                                                                                                               Maple story
                        400,000
                                                                                                               Mabinogi heroic


                        200,000


                              0




                                                                             Period

Source: Gametrics.com.                                                                                                               20
1. Review of the Global market in 2011.

 6. Korean market
      3-5) Diablo III auction system

  Blizzard has revealed that Diablo III will allow players to trade in-game items for real money via an officially
  sanctioned auction house, integrated in the game. It also require an internet connection to play at all times.

  There will be separate auction houses for each region and currency. Another separate, but functionally
  identical auction house will exist for players who wish to trade using in-game gold rather than real currency.

        Korean Game Rating Board(GRB) postponed rating Blizzard’s upcoming title <Diablo 3> due to short of
         auction material to review. After several times of postpone, GRB gave Blizzard the approval of Korea
         service.




                                <Diablo 3 Auction item list>

                                                                                          <Creating auction>


                                                                                                                     21
2. Analysis of the Korean market change in 2011.

     1. Analysis of the playing time change
             Market increased 16% of playing time compare to 2010.
             It is impressive that market is getting bigger thanks to the other genre, not MMORPG genre.




                                          16%
                                           UP
                         3%
                         UP




Source: Gametrics.com.                                                                                      22
2. Analysis of the Korean market change in 2011.

     2. Analysis of playing time variation compare to 2010.
        ■ MMORPG and Casual genre are sharply decreased compare to 2010.
        ■ Sports genre increased considerably thanks to the popularity of sports management game and Fifa online 2.
        ■ RTS genre increased 53% compare to 2010 because of the MOBA games.
        ■ Racing genre increased considerably but It appears to have little effect on whole game market due to the tiny size of racing genre.


                                                                playing time variation compare to 2010
                                           100%
                                                                                                                 86%      83%
                                            80%

                                            60%                        53%
                                                          40%
                                            40%
                 Percentage of variation




                                            20%

                                             0%
                                                    RPG   FPS          RTS           BOARD           CASUAL     RACING   SPORTS
                                           -20%    -11%                               -8%

                                           -40%

                                           -60%
                                                                                                         -56%
                                           -80%

                                           -100%
                                                                                      Genre



Source: Gametrics.com.                                                                                                                          23
2. Analysis of the Korean market change in 2011.

             Analysis of MMORPG playing time.
        ■ <Tera> sharply decreased after commercialization due to the lack of contents.

        ■ <Dungeon & Fighter> surpassed 290,000 CCU in July and <Maple story> surpassed 620,000 CCU in August.

        ■ <Rohan> changed commercialization policy from subscription to Free to play in September.

                                                                                             1,400,000



                                                                                             1,200,000
                                                                                                                   Aion
                                                                                                                   Lineage

                                                                                             1,000,000             WOW
       [Changes in playing time]
                                                                                                                   Dungeon and Fighter




                                                                      Playing time per day
                                                                                                                   Tera
                                                                                              800,000
                                   11% down                                                                        Maple story


                                                                             (hour)
                                                                                                                   Lineage 2
                                                                                              600,000              Fighters club
                   RPG
                                                                                                                   Myungpoom
                                              RPG
                2,895,620
                                                                                              400,000              Rohan
                  h/day                   2,564,932
                                            h/day                                                                  Country of baram
                                                                                                                   Gosu online
                                                                                              200,000
                                                                                                                   Warren
                                                                                                                   Cheonja hero
                   2010                       2011
                                                                                                    0              Genghis Khan




                                                                                                         Oct
                                                                                                          Jan




                                                                                                          Jan
                                                                                                         Mar




                                                                                                         Aug
                                                                                                         Jun




                                                                                                         Dec


                                                                                                         Mar
                                                                                                         May

                                                                                                           Jul




                                                                                                         Nov
                                                                                                         Feb

                                                                                                         Apr




                                                                                                         Sep




                                                                                                         Feb
                                                                                                           Month
Source: Gametrics.com.                                                                                                                24
2. Analysis of the Korean market change in 2011.

             Analysis of FPS playing time.
         <Sudden attack> decreased after changing publisher Netmarble to Nexon. But the playing time recovered quickly.

         <Special force 2> brought the cannibalization of <Special force 1>. Unfortunately, <Special force 2> didn’t gain the popularity

            as compared with <Special force 1>.

         Many games released in 2011, but there is no games to receive much attention.

                                                                                             1,200,000



                                                                                             1,000,000
     [Changes in playing time]

                                                                                                                                  Sudden attack
                                                                                              800,000
                                                                                                                                  Special force



                                                                        Playing time / day
                                                                                                                                  Special force 2
                                 40% UP
                                                                                              600,000                             Counter strike online
                                                                                                                                  Dizzel
                                            FPS
                                                                                                                                  A.V.A
                     FPS
                                          1,768,977                                           400,000                             Warlock
                                            h/day
               1,263,474                                                                                                          Soldier of fortune
                 h/day
                                                                                                                                  Battlefield
                                                                                              200,000
                                                                                                                                  S2
                     2010                  2011
                                                                                                    0




                                                                                                         Oct
                                                                                                          Jan




                                                                                                          Jan
                                                                                                         Aug




                                                                                                         Dec
                                                                                                         Mar

                                                                                                         May
                                                                                                         Jun
                                                                                                           Jul




                                                                                                         Mar
                                                                                                         Nov
                                                                                                         Feb




                                                                                                         Sep




                                                                                                         Feb
                                                                                                         Apr




                                                                                                           Month
Source: Gametrics.                                                                                                                                     25
2. Analysis of the Korean market change in 2011.

            Analysis of RTS playing time.
         Many AOS genre games launched and becoming increasingly popularity.

         <League of Legends> enter the TOP 10 right just after the launching.

         RTS genre led the growth of the market 2011.
                                                                                      800,000


                                                                                      700,000



     [Changes in playing time]                                                        600,000


                                                                                      500,000             Warcraft 3
                                 53% UP




                                                                 Playing time / day
                                                                                                          Starcraft

                                            RTS                                       400,000             League of legends
                                                                                                          Starcraft 2
                                          1,341,762
                 RTS                        h/day                                                         Chaos online
                                                                                      300,000
                                                                                                          Avalon
                875,337
                 h/day                                                                                    Loco
                                                                                      200,000
                                                                                                          Cyphers

                                                                                      100,000
                 2010                      2011

                                                                                           0




                                                                                                Oct
                                                                                                 Jan




                                                                                                 Jan
                                                                                                Mar




                                                                                                Aug




                                                                                                Dec


                                                                                                Mar
                                                                                                May
                                                                                                Jun
                                                                                                  Jul




                                                                                                Nov
                                                                                                Feb

                                                                                                Apr




                                                                                                Sep




                                                                                                Feb
                                                                                                  Month
Source: Gametrics.com.                                                                                                   26
2. Analysis of the Korean market change in 2011.

            Analysis of Casual playing time.
             Many casual game has launched in 2011. but market sharply decreased due to the no titles to success.

             <Getamped> increased after 9th year anniversary event.

             Many casual game user left to the Facebook games or Social games.
                                                                                       140,000


      [Changes in playing time]                                                        120,000
                                                                                                                     Audition
                                                                                                                     Kartrider
                                                                                       100,000
                                                                                                                     Talesrunner




                                                                  Playing time / day
                                                                                                                     Raycity
                                                                                        80,000                       Alicia
                                                                                                                     Getamped
              Arcade + Racing     56% down                                                                           Tetris
                                                                                        60,000
                  259,471                                                                                            Crazy arcade
                   h/day             Arcade + Racing                                                                 Elsword
                                         113,240                                        40,000                       Bubble fighter
                                          h/day
                                                                                                                     Lostsaga
                    2010                 2011                                           20,000                       R2beat
                                                                                                                     Lovebeat
                                                                                                                     Mstar online
                                                                                            0




                                                                                                 Nov
                                                                                                 Aug
                                                                                                 Apr


                                                                                                   Jul
                                                                                                 Mar




                                                                                                 Dec


                                                                                                 Mar
                                                                                                 May
                                                                                                 Feb




                                                                                                 Jun


                                                                                                 Sep




                                                                                                 Feb
                                                                                                 Oct
                                                                                                  Jan




                                                                                                  Jan
                                                                                                   Month                         27
Source: Gametrics.com.
2. Analysis of the Korean market change in 2011.

            Analysis of Sports playing time.
      <Fifa online 2> provides the opportunity to watch the matches of Premier league and Primera Liga for 100 users.

      There is no significant change compared to previous years in sports game genre.
                                                                                    600,000




                                                                                    500,000



   [Changes in playing time]
                                                                                    400,000                 Fifa online 2
                                                                                                            Freestyle football




                                                               Playing time / day
                                                                                                            Freestyle 2

                                                                                    300,000                 Freestyle
                               83% UP                                                                       Magumagu
                                         Sports                                                             Slugger

                                        1,050,293                                   200,000                 Probaseball manager
                Sports                    h/day                                                             FC manager

                573,987                                                                                     Shot online
                 h/day                                                                                      Fishing king
                                                                                    100,000

                 2010                    2011

                                                                                         0
                                                                                              Mar

                                                                                              May
                                                                                              Jun
                                                                                                Jul


                                                                                              Oct




                                                                                              Mar
                                                                                               Jan




                                                                                              Nov
                                                                                              Feb




                                                                                              Sep



                                                                                               Jan
                                                                                              Feb
                                                                                              Apr



                                                                                              Aug



                                                                                              Dec
                                                                                                Month
Source: Gametrics.com.                                                                                                           28
3. Forecast of the Changes of the Korean market in 2012.

      2012 market keyword
                         Ministry of Education, Science, and Technology(MEST) have submitted a special bill about
   Law to Ban minors     prevention and treatment of internet game addiction in minors and they asked complement in
                         game rating system so as to strengthen the rating for minors. And more, giving the industry an
    from online game     opportunity to take social responsibility on the game addiction by expanding and legalizing the
                         private fund.


                         Smartphone user getting bigger than last year and many game publisher
   Keen competition
                         (Nexon, Wemade, Hangame, Ncsoft, Mgame etc.) plan to enter the social game
    of social game       market.

  Many foreign games     KTH <Football Manager online>, Hangame <Winning eleven online>, Red5 studio
  are being launched     <Firefall online>, Blizzard <Diablo 3>, The9 <Planet side> will launch games in
       in Korea          Korea.

                         It looks like the popularity of MOBA genre will continue to rise.
                         7 more game will be launched in 2012: Dragonfly <Kingdom under fire>, <King of
      Popularity of
                         fighters online>, Ntreev <Heroes of Newerth>, Blizzard <Blizzard dota>, Valve
     AOS genre game      <Dota 2>, Bioware <Warhammer online: Wrathes of heroes>, Hi-rez studio
                         <Smite>

                         It is expected to increase the launch of martial arts games.
       Increase of
                         Ncsoft <Blade and soul>, Mgame <Scion of fate 2>, Wemade <Changchun 2>, XL
     martial arts game   games <Archeage>
                                                                                                                           29
3. Forecast of the Changes of the Korean market in 2012.

                    1. RPG                 2010                  2011                       2012 (estimated)
                                                                                                                             UP
                                         44.94%%                 34.25%                           40%



     Market size decreased about 10%, and now forecasts are for growth of 5 and 6% next year
          thanks to the launching of big titles.




             Most anticipated title

                 Title: Blade and soul       Title: Diablo 3              Title: Archeage                      Title: Rift




                Developer : NC SOFT      Developer: Blizzard        Developer : Xl games                Developer: Trion worlds
                Publisher: NC SOFT       Publisher: Blizzard        Publisher: Xl games                 Publisher: Netmarble
                Release date: 2012 3Q    Release date: 2012 4Q      Release date: 2012 2Q               Release date: 2012 1Q



Source: Gametrics.com.                                                                                                            30
3. Forecast of the Changes of the Korean market in 2012.

                    2. FPS                  2010                    2011                         2012 (estimated)
                                                                                                                                  DOWN
                                            19.61%                  23.62%                            21.4%



           Later FPS game released with different concept and fascinated graphics. But It’s not enough
                 to beat <Sudden attack>.
           Futuristic type of FPS/TPS games are planned to release.




             Most anticipated title

                  Title: Ground zero        Title: Mercury : red           Title: Born to fire                      Title: Firefall




                Developer: Anipark      Developer: Choirock games      Developer: Funtree                     Developer : Red 5 studio
                Publisher: Netmarble    Publisher: Choirock games      Publisher: Netmarble                   Publisher : Red 5 Korea
                Release date: 2012 2Q   Release date: 2012 1Q          Release date: 2012 3Q                  Release date: 2012 3Q


Source: Gametrics.com.                                                                                                                   31
3. Forecast of the Changes of the Korean market in 2012.

                    3. RTS                    2010                    2011                         2012 (estimated)
                                                                                                                                  UP
                                             13.59%                   17.92%                             20%



               RTS genre led the growth of the market 2011 and market getting bigger in 2012.




             Most anticipated title

               Title: Kingdom under fire   Title: Heroes of newerth    Title: King of fighters online           Title : Blizzard dota




                 Developer: Dragonfly      Developer: S2games            Developer: Dragonfly                  Developer: Blizzard
                 Publisher: Dragonfly      Publisher: Ntreev             Publisher: Dragonfly                  Publisher: Blizzard
                 Release date: 2012 2Q     Release date: 2012 3Q         Release date: 2012 1Q                 Release date: 2012 4Q




Source: Gametrics.com.                                                                                                                  32
3. Forecast of the Changes of the Korean market in 2012.

                  4. SPORTS                      2010                    2011                       2012 (estimated)
                                                                                                                                    UP
                                                8.91%                    14.02%                           18%



               Many famous IP based simulation games are planned to release in 2012.




             Most anticipated title

              Title: Winning eleven online   Title: MLB manager online   Title: Football manager online         Title: MVP baseball online




                 Developer: Konami            Developer: Sega               Developer: Sega/KTH                 Developer: EA Seoul studio
                 Publisher: Hangame           Publisher: Sega               Publisher: KTH                      Publisher: NCsoft
                 Release date: 2012 3Q        Release date: 2012 1Q         Release date: 2012 2Q               Release date: 2012 3Q



Source: Gametrics.com.                                                                                                                       33
3. Forecast of the Changes of the Korean market in 2012.

                  5. CASUAL                         2010                        2011                        2012
                                                                                                                                   DOWN
                                                   6.05%                        4.74%                       3.5%



               Many famous IP based simulation games are planned to release in 2012.
               A number of new games are smaller than the other genre.




             Most anticipated title

               Title: Power ranger online     Title: Ghosts’n Ghoblins online      Title: Rockman online           Title: Myungjang online




             Developer: Iron north / Ntreev       Developer: Seed9              Developer: Capcom/ Neowiz          Developer: The9
             Publisher: Ntreev                    Publisher: Netmarble          Publisher: Neowiz                  Publisher: Neowiz
             Release date: 2012 3Q                Release date: 2012 1Q         Release date: 2012 1Q              Release date: 2012 2Q




Source: Gametrics.com.                                                                                                                       34
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Review of the global game market 2011 and forecast of 2012

  • 1. Review of the Online game market 2011 and Forecast of 2012 Jack Lee Gala Inc.
  • 2. Agenda 1. Review of the Global market in 2011. 1) US market 2) Chinese market 3) Japanese market 4) European market 5) Korean market 2. Analysis of the Korean market change in 2011. 3. Forecast of the Changes of Korean market in 2012. 2
  • 3. 1. Review of the Global market in 2011. 1. Market size of game industries. Sales of game industries (estimated), 2011-1025 Global Online Games Revenues, 2006-2011 30000 Gaming hardware 25000 Millions of Dollars 20000 Gaming software Platform 15000 Online gaming 10000 5000 Total 0 0 30,000 60,000 90,000 120,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions of Dollars Year 2011 2013 2015 ■ Sales of gaming hardware and software were hit $74bn last year, up 10.4% from the 2010 figure of $67bn. ■ Mobile gaming to become ever more important: driven by the rise in popularity of smartphones and tablets, its share of the sector will grow from 15% in 2010 to 20% in 2015. Source: Global market trend report by Korea Creative Content Agency 3
  • 4. 1. Review of the Global market in 2011. 2. US market Number and percentage of gamers per platform Money spent on games by platform, Billion USD 140 25 120 115 1.8 20 100 1.8 Number in millions 82 76 75 2.1 Social game 80 73 71 15 2.5 PC package Billion USD 60 52 Mobile game 2.6 40 10 PC download expect for 2.8 MMOG MMOG 20 Browser game 5 0 7.9 Browser Console Social game Mobile PC PC package MMOG game game download expect for 0 MMOG 2009 2010 2011 2012 Platform Year ■ Market size of MMOG is lowest among the platform. But spending money is not that small. ■ Around 37% of US gamer spend their money on Console market . Source: Newzoo 4
  • 5. 1. Review of the Global market in 2011. 2. US market TOP 30 reach rate of 2010 in US market 0.10 0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 Country Color 0.01 USA 0.00 China Korea Japan German French Thailand Taiwan HK Finland TOP 30 reach rate of 2011 in US market Gala Russia 0.06 India UK 0.05 Philippines 0.04 Turkey Only 5 companies has grown compare to the last year. Bulgaria 0.03 Portugal Island 0.02 0.01 0 <Source: Alexa ranking> 5
  • 6. 1. Review of the Global market in 2011. 3. Chinese market Growth rate of the China game market, 2006-2010 400 75% 350 300 hundred of millions CNY 50% 250 200 Mobile game Online game 150 25% Growth rate 100 50 0 0% 2006 2007 2008 2009 2010 Year ■ China's game industry has increased rapidly. 1. Industry scale 115.8bn yuan, total games sale including pc games, pc network games, mobile games surpassed 44.6bn yuan and a year-on-year growth rate being 16.4% 2. That rate of growth is faster than the online game industry in the U.S. and it shows that it’s not so crazy to think that China could rule the new age of online games, Source: Chinese market report by iResearch 6
  • 7. 1. Review of the Global market in 2011. 3. Chinese market Overseas sales of Chinese game market, 2006-2010 (hundred of millions CNY) 250 2 1.8 200 1.6 1.4 hundred of millions CNY 150 1.2 1 Oversea sales 100 0.8 Growth rate 0.6 50 0.4 0.2 0 0 2006 2007 2008 2009 2010 Year ■ Total sales from 131 of their own developed games went abroad arrived $3.6bn in 2011, a year-on-year growth rate being 56.5%. ■ The major companies (Tencent, Shanda, The9) established subsidiary company in many parts of the world. Tencent Korea launched the webgame in Korean market and Shanda established the service company in Europe. Source: Chinese market report by iResearch 7
  • 8. 1. Review of the Global market in 2011. 3. Chinese market ■ A major trend in China is the growth of social networking sites such as QZone, Renren and Kaixin001, all of which host social gam es. These games are starting to cannibalize some of the advanced casual games on the market. ■ One of the most talked-about trends is the emergence of Sina’s Weibo microblogging platform, which is similar to Twitter, in that it allows online and text posts of 140 Chinese characters. Weibo’s registered users grew more than 25 times in 2010 and surpassed 1 00 million in February 2011. The company has said it plans to expand including launching a gaming platform Millons of users Month Source: Chinese market report by iResearch 8
  • 9. 1. Review of the Global market in 2011. 3. Chinese market ■ Game operators in China experienced strong revenue growth in 2011. Top game operators, in descending order, are Tencent with $1.4 billion in revenue in 2011, Netease (NASDAQ: NTES) with $749 million in revenue, Shanda Games (NASDAQ:GAME) with $680 million, Perfect World (NASDAQ: PWRD) with $374 million and Changyou (NASDAQ: CYOU) with $327 million in revenues. ■ In 2011, MMORPG game operator Shenzhen ZQ Game completed an initial public offering (IPO) on the Shenzhen Stock Exchange, becoming the first China-based online game company listed domestically in China. The company was established in 2003 and has 700 employees. Market cap of China game companies 2011 2Q sales of China game companies $50,000 Billions of millions CNY $45,000 Kingsoft Inc. $40,000 $35,000 $30,000 Giant Interactive Group, Inc. $25,000 $20,000 Perfect World $15,000 $10,000 Company $5,000 Changyou.com $0 SINA Corporation Shanda Interactive Entertainment Netease.com Tencent $0 $200 $400 $600 $800$1,0001,2001,400 $ $ Company Millions of CNY Source: Chinese market report by iResearch 9
  • 10. 1. Review of the Global market in 2011. 4. Japanese market Market size of Japanese game market, 2006-2011 (hundred of millions JPY) 4500 4000 3500 hundred of millions JPY 3000 2100 2500 2080 2000 Online game 1500 Social game 2095 1000 1750 1910 2000 1550 500 1120 0 0 4.5 40 255 2006 2007 2008 2009 2010 2011 Year ■ Japanese game market is increasing steadily. Especially, social game market the company has doubled in terms of sales and It takes 50% of the whole market. ■ On the other hand, Online game market is showing little change. Source: Japan Online Game Association 10
  • 11. 1. Review of the Global market in 2011. 4. Japanese market Revenus sales of DeNA, GREE and mixi, 2008-2011 ARPU of the Gree and DeNA, 2008-2011 (Yen/month) 400 600 350 345 350 320 500 300 305 290 Social gaming hundred of millions JPY 275 250 400 boom 240 Yen/month 210 200 190 DeNA 300 160 DeNA 150 145 GREE 125 200 GREE 115 110 mixi Smartphone 100 96 102 85 95 Monetization 80 80 65 100 Slump in Kicks in 50 50 45 35 42 38 35 32 34 38 35 36 42 34 35 avatar business iPhone 4 0 launching 0 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 20082008200920092009200920102010201020102011201120112011 Quater Quater ■ GREE is catching up DeNA as far as revenue sales and GREE has outperformed DeNA in ARPU regarding this metric for the first time in September last year. ■ Opening the platform for social games didn’t have much of an effect on mixi Source: earning release of each company 11
  • 12. 1. Review of the Global market in 2011. 5. European market Money spent on games by platform 2011 5000 4500 4000 3500 Social game Billion USD 3000 PC package 2500 Mobile game 2000 PC download expect for MMOG 1500 MMOG 1000 Browser game 500 Console 0 UK GER FR RU IT NL BE Country TOP 3 online game of each countries Germany France United kingdom Italy Spain Poland 1 League of legends Dofus World of warcraft League of legends Dofus League of legends 2 World of warcraft World of warcraft League of legends World of warcraft League of legends Metin 2 3 Runes of magic League of legends World of tanks Combat arms World of warcraft World of tanks TOP 3 browser game of each countries Germany France United kingdom Italy Spain Poland 1 Farmerama Habbo Moshi monsters Travian Comunio Farmerama 2 Comunio Equideow Club penguin Farmerama Habbo Stardoll 3 Habbo Travian Bin weevils Hattrick Club penguin Moviestar planet Source: Global market trend report by Korea Creative Content Agency, Newzoo 12
  • 13. 0 0 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.005 0.01 0.015 0.02 0.025 0.03 Travian games Travian games Bigpoint GmbH Aeria <Source: Alexa ranking> Inno games Bigpoint GmbH Tribal Wars Gameforge Riot Games Gala France Poland Playa Games Activision Blizzard Erepublik Inno games Gameforge Riot Games Frogster Ankama 5. European market Quake Live Gamigo 0 0 0.005 0.01 0.015 0.02 0.025 0.03 0.005 0.01 0.015 0.02 0.025 0.03 0.035 Travian games Bigpoint GmbH Gameforge Travian games Bigpoint GmbH Gameforge SHR Interaktif Playa Games Inno games Inno games Turkey Germany Tribal Wars Activision Blizzard 2K Games Gamigo Gala Tribal Wars burda:ic Riot Games Joymax Kongregate 1. Review of the Global market in 2011. 0 0 0.001 0.002 0.003 0.004 0.006 0.005 0.01 0.015 0.02 0.025 0.03 0.035 0.005 Kongregate Travian games Activision Blizzard Gameforge Disney Bigpoint GmbH Travian games Inno games UK Italy Jagex Aeria Riot Games Kongregate Evony Playa Games Inno games Erepublik Perfect world Sulake Sulake Tribal Wars UK HK USA Gala India China Japan Korea Island Russia Turkey French Taiwan Finland Bulgaria German Country Portugal Thailand Philippines Color 13
  • 14. 1. Review of the Global market in 2011. 6. Korean market 1) Market size and growth rate  Entire Korean game market measures up to 10.821billion USD 2012 (estimated). It grows 19.2% than last year’s revenue sales. Online game occupies around 56.4% of entire game market. which proves that the online game market is becoming the most significant booster for the growth of Korean game market.  Market share ranking per platform is biggest in the order of “Online game> PC cafe> Console game> Mobile game> Arcade game center> PC package game”. Billons of USD Source: White paper of Korean game market 2011. 14
  • 15. 1. Review of the Global market in 2011. 6. Korean market 2) Online game ranking 2012.3.23. Rank Title Genre M/S Playing time Status Developer Publisher 1 Aion RPG 14.76% 714,753 Commercial Ncsoft Ncsoft 2 League of Legends RTS 13.73% 664,754 Commercial Riot games Riot games 3 Sudden Attack FPS 9.23% 446,860 Commercial Gamehi CJ E&M/Nexon 4 Starcraft RTS 5.76% 279,046 Commercial Blizzard Blizzard 5 Lineage RPG 4.96% 240,288 Commercial Ncsoft Ncsoft 6 Fifa Online 2 Sports 4.91% 237,851 Commercial EA/Neowiz games Neowiz games 7 Warcraft 3 RTS 4.10% 198,562 Commercial Blizzard Blizzard 8 World of Warcraft RPG 2.84% 137,698 Commercial Blizzard Blizzard 9 Lineage 2 RPG 2.78% 134,605 Commercial Ncsoft Ncsoft 10 Tera RPG 2.64% 127,877 Commercial Bluehole studio NHN 11 Special Force FPS 1.80% 87,266 Commercial Dragonfly Neowiz games 12 Dungeon and Fighter RPG 1.68% 81,328 Commercial Neople Nexon 13 Cyphers RPG 1.61% 78,026 Commercial Neople Nexon 14 Freestyle Football Sports 1.07% 51,762 Commercial JCE JCE 15 Kartrider Racing 1.01% 48,796 Commercial Nexon Nexon 16 Maple Story RPG 0.93% 45,178 Commercial Nexon Nexon 17 Chaos Online RTS 0.91% 44,125 Commercial Neoact Nexon 18 Starcraft 2 RTS 0.88% 42,840 Commercial Blizzard Blizzard 19 Special Force 2 FPS 0.88% 42,489 Commercial Dragonfly CJ E&M 20 A.V.A FPS 0.62% 29,882 Commercial Redduck Neowiz games  Various games had launched in 2011. But online game market is still dominated by MMORPG and FPS.  Top 20 ranking hardly changes every year. But many changes occurred within 2011 thanks to the growth of RTS and sequels to already popular games. Source: Gametrics.com. 15
  • 16. 1. Review of the Global market in 2011. 6. Korean market 3) Hottest news of 2011 The collapse of <Tera> was expected to grow the whole market size. But It didn’t keep users busy big title. due to the lack of content. The popularity of <League of Legends>, <Cyphers>, <Chaos online> were launched in 2011. The RTS genre. popularity of these games contributed to the overall game market growth. A government regulation started to take effect from 20th of November. So young Shutdown system Korean gamers under 16 can not play all online games from 12:00AM to 6:00AM. Nexon was suffering from these issues: <Sudden attack conflict between Nexon and Netmarbl An eventful year e> , <Dungeon & Fighter manipulates user opinion> , <Mabinogi hero made a copy of in-game m oney> , <Hacking of Nexon portal >. Nexon was happy about these issues:, Total CCU of <Maple for Nexon story>, <Sudden attack>, <Dungeon & Fighter> surpassed the 1 million users during the summer vacation, Nexon were listed Japanese stock market in December 2011. Blizzard has revealed that <Diablo III> will allow players to trade in-game items for r Diablo III eal money via an officially sanctioned auction house, integrated in the game. So <D auction system iablo III> is obviously 18+ game in Korea. 16
  • 17. 1. Review of the Global market in 2011. 6. Korean market 3-1) The collapse of big title.  <Tera> sharply decreased after commercialization due to the lack of contents.  The other publisher (Ncsoft, XL games, NHN, Netmarble etc.) which observed this situation delayed the launching plan to 2012. Playing time variation Commercialization 1st update 2nd update F2P until 25 lv. 1,800,000 1,600,000 PCCU 200K 1,400,000 1,200,000 Playing time 1,000,000 800,000 600,000 400,000 200,000 0 Period Source: Gametrics.com. 17
  • 18. 1. Review of the Global market in 2011. 6. Korean market 3-2) The popularity of RTS genre.  MOBA (Multiplayer Online Battle Arena) genre is one of the RTS genre came from DOTA. These genre games have gained in popularity over recent years.  1st half <Cyphers 1 / Neople>  2nd half <Chaos online / Sesisoft> <League of Legends / Riot games> - It ranked in #1 Xfire ranking with 32 mil register user and 1.3 mil CCU. <Cyphers> < Chaos online> < League of Legends> 18
  • 19. 1. Review of the Global market in 2011. 6. Korean market 3-3) Shutdown system.  Young Korean gamers under 16 can not play all online games from 12:00AM to 6:00AM. However, most of people have doubts about the effectiveness of the system with below reasons. 1. there are still 5% of them playing online games until dawn according to the statistics because they are using not their own account, instead using parents’ account that created by their social security numbers. 2. the system does not provide a clear guideline. For instance, young people still could play League of Legend(LOL) on NA server instead of Korean server. Classic Battle.net from Blizzard is another exception because it is free and does not have age verification feature within it. Title Shut down Starcraft 1 Non-applied Starcraft 2 Applied Warcraft 3 Non-applied World of warcraft Applied PS3 network (PSN) Applied Xbox Live Applied Wii TBD Portable game Non-applied Smartphone, Tablet game TBD Mobile game TBD Flash game TBD Webgame Applied Online game Applied Young Korean gamers under 16 can not play all online games from 12:00AM to 6:00AM. 19
  • 20. 1. Review of the Global market in 2011. 6. Korean market 3-4) An eventful year of Nexon Nexon was suffering from may issues but they are surpassed their CCU record and Nexon went to the public in the end of the year. Gamehi’s new ceo Dispute over sudden Mabinogi heroic 1,400,000 Blames ex-bod attack user D/B in-game money in public among Gamehi cheating <PCCU in August> and Netmarble. D&F: 290K 1,200,000 Sudden attack: 267K Maple story: 626K 1,000,000 Total: 1,183K Playing time 800,000 Dungeon and Fighter 600,000 Sudden attack Maple story 400,000 Mabinogi heroic 200,000 0 Period Source: Gametrics.com. 20
  • 21. 1. Review of the Global market in 2011. 6. Korean market 3-5) Diablo III auction system Blizzard has revealed that Diablo III will allow players to trade in-game items for real money via an officially sanctioned auction house, integrated in the game. It also require an internet connection to play at all times. There will be separate auction houses for each region and currency. Another separate, but functionally identical auction house will exist for players who wish to trade using in-game gold rather than real currency.  Korean Game Rating Board(GRB) postponed rating Blizzard’s upcoming title <Diablo 3> due to short of auction material to review. After several times of postpone, GRB gave Blizzard the approval of Korea service. <Diablo 3 Auction item list> <Creating auction> 21
  • 22. 2. Analysis of the Korean market change in 2011. 1. Analysis of the playing time change  Market increased 16% of playing time compare to 2010.  It is impressive that market is getting bigger thanks to the other genre, not MMORPG genre. 16% UP 3% UP Source: Gametrics.com. 22
  • 23. 2. Analysis of the Korean market change in 2011. 2. Analysis of playing time variation compare to 2010. ■ MMORPG and Casual genre are sharply decreased compare to 2010. ■ Sports genre increased considerably thanks to the popularity of sports management game and Fifa online 2. ■ RTS genre increased 53% compare to 2010 because of the MOBA games. ■ Racing genre increased considerably but It appears to have little effect on whole game market due to the tiny size of racing genre. playing time variation compare to 2010 100% 86% 83% 80% 60% 53% 40% 40% Percentage of variation 20% 0% RPG FPS RTS BOARD CASUAL RACING SPORTS -20% -11% -8% -40% -60% -56% -80% -100% Genre Source: Gametrics.com. 23
  • 24. 2. Analysis of the Korean market change in 2011.  Analysis of MMORPG playing time. ■ <Tera> sharply decreased after commercialization due to the lack of contents. ■ <Dungeon & Fighter> surpassed 290,000 CCU in July and <Maple story> surpassed 620,000 CCU in August. ■ <Rohan> changed commercialization policy from subscription to Free to play in September. 1,400,000 1,200,000 Aion Lineage 1,000,000 WOW [Changes in playing time] Dungeon and Fighter Playing time per day Tera 800,000 11% down Maple story (hour) Lineage 2 600,000 Fighters club RPG Myungpoom RPG 2,895,620 400,000 Rohan h/day 2,564,932 h/day Country of baram Gosu online 200,000 Warren Cheonja hero 2010 2011 0 Genghis Khan Oct Jan Jan Mar Aug Jun Dec Mar May Jul Nov Feb Apr Sep Feb Month Source: Gametrics.com. 24
  • 25. 2. Analysis of the Korean market change in 2011.  Analysis of FPS playing time.  <Sudden attack> decreased after changing publisher Netmarble to Nexon. But the playing time recovered quickly.  <Special force 2> brought the cannibalization of <Special force 1>. Unfortunately, <Special force 2> didn’t gain the popularity as compared with <Special force 1>.  Many games released in 2011, but there is no games to receive much attention. 1,200,000 1,000,000 [Changes in playing time] Sudden attack 800,000 Special force Playing time / day Special force 2 40% UP 600,000 Counter strike online Dizzel FPS A.V.A FPS 1,768,977 400,000 Warlock h/day 1,263,474 Soldier of fortune h/day Battlefield 200,000 S2 2010 2011 0 Oct Jan Jan Aug Dec Mar May Jun Jul Mar Nov Feb Sep Feb Apr Month Source: Gametrics. 25
  • 26. 2. Analysis of the Korean market change in 2011.  Analysis of RTS playing time.  Many AOS genre games launched and becoming increasingly popularity.  <League of Legends> enter the TOP 10 right just after the launching.  RTS genre led the growth of the market 2011. 800,000 700,000 [Changes in playing time] 600,000 500,000 Warcraft 3 53% UP Playing time / day Starcraft RTS 400,000 League of legends Starcraft 2 1,341,762 RTS h/day Chaos online 300,000 Avalon 875,337 h/day Loco 200,000 Cyphers 100,000 2010 2011 0 Oct Jan Jan Mar Aug Dec Mar May Jun Jul Nov Feb Apr Sep Feb Month Source: Gametrics.com. 26
  • 27. 2. Analysis of the Korean market change in 2011.  Analysis of Casual playing time.  Many casual game has launched in 2011. but market sharply decreased due to the no titles to success.  <Getamped> increased after 9th year anniversary event.  Many casual game user left to the Facebook games or Social games. 140,000 [Changes in playing time] 120,000 Audition Kartrider 100,000 Talesrunner Playing time / day Raycity 80,000 Alicia Getamped Arcade + Racing 56% down Tetris 60,000 259,471 Crazy arcade h/day Arcade + Racing Elsword 113,240 40,000 Bubble fighter h/day Lostsaga 2010 2011 20,000 R2beat Lovebeat Mstar online 0 Nov Aug Apr Jul Mar Dec Mar May Feb Jun Sep Feb Oct Jan Jan Month 27 Source: Gametrics.com.
  • 28. 2. Analysis of the Korean market change in 2011.  Analysis of Sports playing time.  <Fifa online 2> provides the opportunity to watch the matches of Premier league and Primera Liga for 100 users.  There is no significant change compared to previous years in sports game genre. 600,000 500,000 [Changes in playing time] 400,000 Fifa online 2 Freestyle football Playing time / day Freestyle 2 300,000 Freestyle 83% UP Magumagu Sports Slugger 1,050,293 200,000 Probaseball manager Sports h/day FC manager 573,987 Shot online h/day Fishing king 100,000 2010 2011 0 Mar May Jun Jul Oct Mar Jan Nov Feb Sep Jan Feb Apr Aug Dec Month Source: Gametrics.com. 28
  • 29. 3. Forecast of the Changes of the Korean market in 2012.  2012 market keyword Ministry of Education, Science, and Technology(MEST) have submitted a special bill about Law to Ban minors prevention and treatment of internet game addiction in minors and they asked complement in game rating system so as to strengthen the rating for minors. And more, giving the industry an from online game opportunity to take social responsibility on the game addiction by expanding and legalizing the private fund. Smartphone user getting bigger than last year and many game publisher Keen competition (Nexon, Wemade, Hangame, Ncsoft, Mgame etc.) plan to enter the social game of social game market. Many foreign games KTH <Football Manager online>, Hangame <Winning eleven online>, Red5 studio are being launched <Firefall online>, Blizzard <Diablo 3>, The9 <Planet side> will launch games in in Korea Korea. It looks like the popularity of MOBA genre will continue to rise. 7 more game will be launched in 2012: Dragonfly <Kingdom under fire>, <King of Popularity of fighters online>, Ntreev <Heroes of Newerth>, Blizzard <Blizzard dota>, Valve AOS genre game <Dota 2>, Bioware <Warhammer online: Wrathes of heroes>, Hi-rez studio <Smite> It is expected to increase the launch of martial arts games. Increase of Ncsoft <Blade and soul>, Mgame <Scion of fate 2>, Wemade <Changchun 2>, XL martial arts game games <Archeage> 29
  • 30. 3. Forecast of the Changes of the Korean market in 2012. 1. RPG 2010 2011 2012 (estimated) UP 44.94%% 34.25% 40%  Market size decreased about 10%, and now forecasts are for growth of 5 and 6% next year thanks to the launching of big titles. Most anticipated title Title: Blade and soul Title: Diablo 3 Title: Archeage Title: Rift Developer : NC SOFT Developer: Blizzard Developer : Xl games Developer: Trion worlds Publisher: NC SOFT Publisher: Blizzard Publisher: Xl games Publisher: Netmarble Release date: 2012 3Q Release date: 2012 4Q Release date: 2012 2Q Release date: 2012 1Q Source: Gametrics.com. 30
  • 31. 3. Forecast of the Changes of the Korean market in 2012. 2. FPS 2010 2011 2012 (estimated) DOWN 19.61% 23.62% 21.4%  Later FPS game released with different concept and fascinated graphics. But It’s not enough to beat <Sudden attack>.  Futuristic type of FPS/TPS games are planned to release. Most anticipated title Title: Ground zero Title: Mercury : red Title: Born to fire Title: Firefall Developer: Anipark Developer: Choirock games Developer: Funtree Developer : Red 5 studio Publisher: Netmarble Publisher: Choirock games Publisher: Netmarble Publisher : Red 5 Korea Release date: 2012 2Q Release date: 2012 1Q Release date: 2012 3Q Release date: 2012 3Q Source: Gametrics.com. 31
  • 32. 3. Forecast of the Changes of the Korean market in 2012. 3. RTS 2010 2011 2012 (estimated) UP 13.59% 17.92% 20%  RTS genre led the growth of the market 2011 and market getting bigger in 2012. Most anticipated title Title: Kingdom under fire Title: Heroes of newerth Title: King of fighters online Title : Blizzard dota Developer: Dragonfly Developer: S2games Developer: Dragonfly Developer: Blizzard Publisher: Dragonfly Publisher: Ntreev Publisher: Dragonfly Publisher: Blizzard Release date: 2012 2Q Release date: 2012 3Q Release date: 2012 1Q Release date: 2012 4Q Source: Gametrics.com. 32
  • 33. 3. Forecast of the Changes of the Korean market in 2012. 4. SPORTS 2010 2011 2012 (estimated) UP 8.91% 14.02% 18%  Many famous IP based simulation games are planned to release in 2012. Most anticipated title Title: Winning eleven online Title: MLB manager online Title: Football manager online Title: MVP baseball online Developer: Konami Developer: Sega Developer: Sega/KTH Developer: EA Seoul studio Publisher: Hangame Publisher: Sega Publisher: KTH Publisher: NCsoft Release date: 2012 3Q Release date: 2012 1Q Release date: 2012 2Q Release date: 2012 3Q Source: Gametrics.com. 33
  • 34. 3. Forecast of the Changes of the Korean market in 2012. 5. CASUAL 2010 2011 2012 DOWN 6.05% 4.74% 3.5%  Many famous IP based simulation games are planned to release in 2012.  A number of new games are smaller than the other genre. Most anticipated title Title: Power ranger online Title: Ghosts’n Ghoblins online Title: Rockman online Title: Myungjang online Developer: Iron north / Ntreev Developer: Seed9 Developer: Capcom/ Neowiz Developer: The9 Publisher: Ntreev Publisher: Netmarble Publisher: Neowiz Publisher: Neowiz Release date: 2012 3Q Release date: 2012 1Q Release date: 2012 1Q Release date: 2012 2Q Source: Gametrics.com. 34