#TeaTalkKorea# The Digital Nomad Era Has Begun—Let’s Go Global! Let’s Go Global! Let’s Go to Germany Together!

Let's take a look at what's been happening in the South Korean market lately.

One of the highlights of last month’s G-Star in Busan, South Korea, was the participation of the German state of Brandenburg, which held a briefing session at G-Star on November 21, 2014.The session provided an overview of the development of the German gaming market and noted that this was the second time Germany had held a briefing session at G-Star to promote investment in South Korean gaming companies, following North Rhine-Westphalia’s participation in the 2013 G-Star.

In the early years of the 21st century, Germany’s gaming industry was significantly behind the curve. Although Germany was the second-largest gaming market in Europe, domestically produced games accounted for only 10 percent of the market. Due to fears that teenagers would become addicted to games, public attitudes toward the gaming industry were very indifferent.As a result, apart from Crytek—founded in 1999—there was not a single other profitable game developer, and industry talent began leaving the sector in droves to pursue careers in other IT fields.

Scenery of the State of Brandenburg

However, over the past decade, German local governments have recognized the gaming industry as a “creative industry” and have begun to vigorously develop it while attracting a large number of global gaming companies. Currently, there are more than 300 German game developers worldwide, and the number of people employed in the industry exceeds 10,000.According to data from the market research firm Newzoo, the German gaming market reached $3.6 billion in 2013, with 40 million players. Furthermore, major global companies such as EA, Blizzard, and Activision Blizzard have chosen Germany as their preferred country for entering the European market.The most distinctive feature of the German gaming market is that 70 percent of all players are paying customers. Although the total number of players is lower than in Asian countries such as China and Japan, the rate of in-game spending is significantly higher than in those nations.

Now, well-known U.S. game publishers such as Kabam and King—the developer of *Candy Crush Saga*—have established branches in the German state of Brandenburg, near Berlin.As the new hub of Europe’s gaming industry, the German state of Brandenburg is naturally seizing this golden opportunity. It is taking proactive steps to attract investment in gaming and related emerging industries, offering incentives of up to 40 percent of the total investment to entice gaming companies to set up operations there.

Organizers of the Berlin International Games Week noted that Germany nationally recognizes games as part of the cultural industry; therefore, rather than imposing restrictions on the gaming industry, the country actively and vigorously supports its development. The state of Brandenburg is an emerging hub for youth culture in Europe and offers more comprehensive infrastructure support for the gaming industry than other regions.

From the examples above, we can see that German local governments are fully committed to vigorously developing the gaming industry, as well as Germany’s high regard for South Korean game companies and the quality of their games. In fact, Germany has long taken an interest in the South Korean gaming industry.

At the 2009 Leipzig Games Convention (GCO) in Germany, 19 South Korean game developers participated in the event. The “Game On KOREA” logo was prominently displayed in the center of the GCO’s B2C exhibition hall, which was occupied by the South Korean pavilion.More than half of the titles in the WCG (World Cyber Games) and GNGWC (World Game Champions Cup) pavilions were South Korean online games.At the GCO opening ceremony on July 30, after holding talks with Yoo Byung-han, Director General of the Cultural Content Industry Bureau at the Ministry of Culture, Sports and Tourism of South Korea, Thielich, Governor of the German state of Saxony, and Buchard Rong, Mayor of Leipzig, stated, “We will establish a joint game R&D center with South Korea to learn from the creativity and technological capabilities of South Korean online games.”” On July 31 and August 1, the GCO also successfully held export business meetings targeting European buyers.Nineteen South Korean game developers, including NHN Entertainment, Nexon, ncsoft, Gom2uS, Phantagram, JCE, Eden Entertainment, SBSi, Ntreev, and GamePark Holdings, attended the meetings and held 206 export negotiations with over 40 companies from eight countries—including major European buyers such as Gameforge,Bigpoint, and Gamigo, among other major European buyers, resulting in 206 export negotiations. The event yielded $123 million in negotiated business volume and $4.27 million in contracts currently in progress.

In 2011, the “ITS GAME 2011” game export trade fair—hosted by South Korea’s Ministry of Culture, Sports and Tourism and organized by the Korea Industrial Promotion Agency—was held in Germany.During “ITS GAME 2011,” two companies—one from Germany and one from South Korea—signed an agreement to invest a total of $5 million over the next 10 years. The initial investment of $300,000 marked the largest contract amount in the history of South Korean board and card games.Rajive Gupta, President of QUEEN GAMES, a German participant, stated that he had not expected competition in the South Korean board and card game market to be so fierce, and that the quality of each game was quite satisfactory. He also felt that his participation in this trade fair had truly been worth the trip.

In 2012, the “2012 Gamescom” opened in Cologne, Germany, with Germany inviting South Korea to participate as a co-host. A “Korean gaming craze” swept through Germany.According to local reports, South Korean-made games have gone far beyond simply being “trendy”; some players have even begun to study South Korean gaming culture. A buyer from the German gaming industry visited the South Korean joint pavilion and stated, “We are closely monitoring South Korea’s ‘market entry strategy’ for games and are very optimistic about its cutting-edge technology.”

The government of North Rhine-Westphalia, Germany (hereinafter referred to as the state of NRW), has offered generous incentives to attract South Korean game companies to set up operations there. These include a subsidy of 100,000 euros per game; free office space;financial support of up to 200,000 to 300,000 for each gaming company; exemption from corporate registration taxes and other fees; and educational assistance for the children of R&D staff, among other benefits.

The state of North Rhine-Westphalia (NRW) also participated in G-Star 2013 and hosted the “First German-Korean Game Industry Symposium” during the event, announcing that it would provide comprehensive support to Korean game companies establishing operations in the state of North Rhine-Westphalia.

North Rhine-Westphalia (NRW) ranks first in GDP among Germany’s 16 federal states. The well-known video game company EA has established a presence there, and the state is actively developing its online gaming market. Server hosting costs are very reasonable, the network infrastructure is excellent, and it offers convenient access to the European market. Setting up operations in NRW truly means having the best of both worlds.

In June of this year, following last year’s “First Germany-Korea Game Industry Symposium” at G-Star, the “Second Germany-Korea Game Industry Symposium” was held in the Han River Hall at the Seoul Hotel in South Korea.The event was organized by the Korea Creative Content Agency (KOCCA) and the German state of North Rhine-Westphalia (NRW). The main focus of this symposium was to discuss and share information related to the European game industry, including Germany, and to promote exchange and deepen cooperation between game companies in South Korea and Germany.

On November 20 of this year, the Korea Game Rating and Administration Committee (GRAC) signed a business cooperation agreement with the German game rating agency USK (Unterhaltungssoftware Selbstkontrolle) and the Korea Game Industry Rating Board (GCRB), a private rating agency in South Korea, in the conference room on the second floor of the Busan Office.Following the signing of the agreement, GRAC will assist GCRB and USK with their rating operations, particularly by promptly sharing information on changes to policy regulations and statistical data regarding mobile game platforms. Moving forward, the organizations will collaborate to establish detailed game rating guidelines to achieve their shared goal of protecting minors.Note: USK: The German software rating system (Unterhaltungssoftware Selbstkontrolle, USK) is used for software ratings within Germany (primarily for video game products) and is legally binding in Germany.All video games must be rated by the USK before they can be sold in Germany; anyone who violates USK ratings by allowing players under the appropriate age to play a game will face legal penalties.

So we can see that exchanges between the German and South Korean gaming industries have a long history, and that Germany is so proactive and sincere in welcoming South Korean gaming companies and talent.

Some local governments in China have also followed the example of their German counterparts. Lishui City in Zhejiang Province established the “South Korean Mobile Game Development Support Center” and offers corresponding incentives to game companies that set up operations there, such as three years of free office space and dormitories, as well as significant tax breaks. This is intended to attract South Korean mobile game companies and recruit talent in the gaming industry.

Although the Busan municipal government recently announced that it would invest 15 billion won to build a “mobile game center,” the center is not expected to be completed until 2019.If one of the root causes constraining the growth of South Korea’s gaming industry—restrictions imposed by government policy—remains unchanged or becomes even more severe, the cry from South Korean game companies and talent will likely be, “Go overseas! Go overseas!!”

(This article was translated by Su Cai of Game Teahouse. Please credit the source if you wish to repost it.)