Nearly 300,000 Koreans play virtual golf regularly, and Golfzon, one of the country's fastest-growing companies, is enjoying the trend
At 6:30 p.m. on a Friday, Park Sang Pil and three of his colleagues at South Korea's BCcard rush to play a round of golf together. Although their tee time is just 10 minutes away, they still haven't decided on which course they will be playing. Not to worry: With just the click of a mouse, they can choose from more than 50 courses, including the Old Course at St. Andrews in Scotland (BusinessWeek.com, 7/11/08) and Pebble Beach in California. That's because Park and his pals are playing just a block from their downtown Seoul office, at Lemon Screen Golf Café. At the café, the foursome swing real clubs to hit real golf balls into a wall-size screen displaying virtual reality fairways.
Virtual golfing is hot in Korea. Park is one of nearly 300,000 South Koreans regularly playing 18-hole rounds at "screen golf cafés" that have been mushrooming in the country in the past couple of years. "Screen golf is great," says the 30-year-old assistant manager at the credit-card company. "It doesn't matter if it's hot or cold, rains or snows; you don't have to spend all day to play a round of golf; you can play it at night—and most of all, it is cheap."
That's music to the ears of Kim Wonil, chief operating officer of Golfzon, one of Korea's fastest-growing companies. Kim, 33, reckons by the end of this year there will be about 3,000 golf cafés across the country operating a total of 12,000 simulators, more than half made by Golfzon. "The growth potential is enormous," says Kim, one of the finalists in BusinessWeek's annual search) for the best young entrepreneurs in Asia.
Satisfying the Pent-Up Demand for Golf
Back in 2000, Kim and his 61-year-old father, Kim Young Chan, set up Golfzon to make computer simulators targeting golf novices who are trying to get the hang of the sport without having to splurge on exorbitantly expensive country club memberships and greens fees. Today the company has emerged as the world's largest provider of hardware and software for virtual reality golf, with projected revenues of some $77 million in 2008, more than triple its $23 million in sales from last year. (Earnings for 2007 were $9.2 million but the company declines to give its profit forecast for this year.)
The dramatic growth underscores the pent-up demand for the sport long associated with the rich and privileged in Korea. It costs about $250 for a real-world golfer to play a round, but tee times are hard to secure and memberships for many country clubs fetch more than half a million dollars. A round of 18-hole virtual golf costs $15 to $25.
Using a simulator for golfing (BusinessWeek.com, 3/18/08) isn't new. For years it has been around mainly as a teaching tool at golf clinics or as a rich man's toy. But in Korea—as advances in simulation technology enable it to replicate every fairway detail of coveted courses—virtual reality golf has quickly become a cheap alternative for many who can't afford to play on outdoor courses. In the U.S. numerous public golf courses charge each player $25 or less, whereas in Korea public courses are scarce and they aren't much cheaper than those run privately.
Technology for virtual sports keep evolving, too. "A couple of years ago, screen golf was mostly for fun, although you could improve your course management skills," says Yoon Dong Wook, a middle-aged salary man who took a $15 lunch-hour package at Lemon Screen Golf Café that offers a nine-hole round plus lunch. "Now I come here as much for practice as for fun," Yoon says as his mat tilts downward for a second shot to replicate a downhill slope on which his ball lies.
Indeed, some golfers take virtual reality golf seriously. They bring their own gear, even though the cafés provide clubs, shoes, and gloves free of charge. Cameras and sensors capture the club speed, the ball's launch angle, and its spin so the computer can create its trajectory on the virtual course. The computers also create audio and visual effects, depicting how the ball rolls if, for example, it hits a tree branch.
Virtual Tournaments, Real Prize Money
Golfzon execs believe the party is just beginning. That's because virtual reality technology not only could expand the golfing population by lowering expenses, but it also offers opportunities for the company to earn money through the Internet. Currently, Golfzon's revenues and profits come mostly from selling simulators, although it gets 10¢ when gamers play each hole. The senior Kim, who is Golfzon's chief executive, says it will all change in the future as users are hooked to the Net. "The core of the business is creating a network for content and cultural services," he says.
Call it a golfing mash-up. Golf cafés using Golfzon simulators across the nation are connected online, creating a social network. They sometimes organize online golf tournaments among themselves and frequently check Golfzon's Web site, which keeps track of registered users' scores and other data such as swing speed, driving distance, and ratio of fairways hit. Users also have access to video of their swing motions that can be watched at a Golfzon site any time to study where their swings went wrong.
As a marketing ploy to promote both online and offline business, Golfzon regularly organizes tournaments offering real money for winners. This summer, it offered $54,000 for a tournament among 60 golfing communities with at least 30 members each. For qualifying rounds, participants played at the golf café of their choice as long as it was equipped with Golfzon simulators. Then the top 24 teams played three rounds to decide the winner at the café run by Golfzon itself. The winner was given $15,000. The company also organizes a monthly tournament where about 4,000 players take part for prize money of $8,000.
The immediate goal is to attract 1 million golfers to the Golfzon site. Golfzon executives believe that will give the company enough users for launching various online services, including golf-related advertisements, online golfing lessons, and shopping. The target doesn't seem too far off the mark. An estimated 200,000 Koreans visit golf cafés every day, six times more than the number of golfers playing on real outdoor courses, according to the Korea Golf Assn.
Plus, Golfzon has ambitions to expand overseas. The company has shipped hundreds of simulators to other countries and is negotiating with partners in Japan and China to set up networks of golf cafés. Japan has already begun offering virtual reality golf using Golfzon's services in more than a dozen bars. "My dream is to set up Golfzon hubs in 100 big cities in the world," says CEO Kim.