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Air Penguin, a game in which players guide an animated penguin across an icy landscape, jumped to near the top of the iPhone gaming charts last spring. Yet until now the game hasn’t been available to iPhone owners in the home country of its creator, Seoul-based Gamevil. That’s because South Korea has long required game makers to submit their products to the government for review of their suitability for various age groups based on factors such as violence and sexual content. Apple (AAPL) and Android backer Google (GOOG), concerned that producers wouldn’t adhere to the rules, decided to shutter their mobile-game stores in the country, so few Koreans had access to popular titles such as Angry Birds, Tiny Wings, and Cut the Rope.
On July 6, South Korea scrapped those rules, which could lead to a big boost for game producers. Interest in gaming is so high in the country that there are professional leagues for online game players, and local cable TV channels offer live broadcasts of the virtual tournaments. The country of 49 million has 14 million smartphone users, according to Seoul brokerage Hanwha Securities. The government expects sales of mobile games to exceed 355 billion won ($333 million) next year, up 36 percent from 2009—and that doesn’t take into account the rule change. “A new chapter is opening in the Korean smartphone game market,” says Jang Woo Jin, an analyst at NH Investment & Securities.
Apple and Google declined to comment on their plans for Korea, but Jang expects both companies to quickly start offering games in the country. Gamevil’s third-quarter sales in Korea could rise as much as 17 percent if that happens, Jang says. Korean rival Com2uS, maker of Third Blade, Homerun Battle 3D, and other titles, expects the looser regulation to help triple global smartphone game sales this year, to 26 billion won. “We’re looking at this very positively,” says Choi Baek Yong, the company’s chief financial officer.
Even under the old rules, determined Koreans could get their hands on some otherwise-unavailable games. IPhone users could create an account in an overseas store, and a few Android applications can be downloaded from local mobile-phone carriers rather than via Google’s online store.
The move doesn’t mean Seoul is abandoning all oversight of games. A bill that would prohibit anyone under 16 from playing online games past midnight passed the National Assembly in April, though it’s unclear how the law will be enforced. The under-16 time limit, aimed at curbing game addiction, is an extension of a long-standing effort to protect Korean cultural values, says Yi Ki Jeong, a manager at the Culture, Sports, and Tourism Ministry in Seoul. “A total removal of regulations could still create trouble,” Yi says.
The bottom line: South Korea is eliminating rules requiring government review of games, which should boost sales for popular titles such as Angry Birds.