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Tencent, a stakeholder in PUBG creator Bluehole, tried for nearly a year to bring PUBG to China, but to no avail. (Picture: Bluehole)

South Korea asks China to stop banning its games

South Korean developers have been locked out of China for two years, seemingly over an anti-missile system dispute

Video gaming
This article originally appeared on ABACUS

Since March 2017, the Chinese government has yet to license a single South Korean game. Now it looks like the country's game makers may have a glimmer of hope in getting their latest titles into the world’s largest gaming market.

The game licensing freeze coincided with harmful moves against other South Korean businesses starting in 2016, which came after the country agreed to deploy the US anti-ballistic missile system, known as THAAD, on the peninsula.
But with the rancor having subsided some over the last two years, South Korea's Chairman of Foreign Affairs and Unification Committee recently met with China's ambassador to Seoul and requested that China reopen its doors to South Korean games.
For a long time, China has been South Korea's largest export market for games. In 2012, it accounted for more than 38 percent of the country’s domestic game exports. Needless to say, China's blanket ban on any new South Korean game means the country is leaving a lot of money on the table, despite the gaming sector’s continued growth.  

This ban has hurt not only South Korean gaming companies, but also Chinese companies that distribute or adapt South Korean games.

Most notably, it may have impacted one of Tencent's hottest titles, PUBG Mobile, a mobile version of the South Korean PC shooter PUBG. The game had struggled to obtain a monetization license over the past year and a half. As a result, Tencent recently scrapped the PUBG brand in China and replaced the mobile game with a highly patriotic game with all the same gameplay and a monetization license at launch.

PUBG, the battle royale pioneer

So can South Korean game developers expect the money to start pouring in from China again?  The Chinese ambassador would only say that his country values its relationship with South Korea.

This might be because China never officially sanctioned South Korea over THAAD. It simply stopped importing many strategic goods from its neighbour and refused to grant licenses to cultural exports like games and TV shows.
Tencent, a stakeholder in PUBG creator Bluehole, tried for nearly a year to bring PUBG to China, but to no avail. (Picture: Bluehole)
While South Korean games have been shut out of China, Chinese games have been making significant inroads in South Korea, especially in the mobile gaming sector. According to Chinese media, nearly one third of the top 100 most popular mobile games in South Korea are currently made by Chinese companies.
South Korea’s gaming market was also enticing enough for Tencent to look into acquiring the country’s biggest gaming company, Nexon. For months, Tencent was reported to be a top bidder to acquire a controlling stake in the company in a deal expected to be worth US$12 billion. However, Tencent was recently said to have pulled out of bidding.

With Chinese gaming companies increasingly pushing their way abroad, some experts believe South Korea's gaming business will inevitably decline.

“To be honest, I see little hope in the future of Korea’s game business,”  Wi Jong-hyun, president of the Korea Academic Society of Games, told Korean media outlet The Investor. “Each industry has a megatrend, and it is obvious that China has taken its uptrend while Korea’s momentum has snapped.”
These comments are in sharp contrast to the dominant position South Korean games once held in China. At the turn of the century, when gaming consoles were outlawed in China, South Korean MMORPGs were all the rage in China, with The Legend of Mir 2 logging more than 700,000 concurrent users at one point.

Why the impact of China’s 15-year console ban still lingers today

Even if China were to resume licensing South Korean games, though, it's likely to be a slow process. That's because China has ramped up scrutiny of video games in general.

For nearly nine months in 2018, the Chinese government suspended the approval of all games as it restructured organizations that were in charge of the process. The government has only recently started to grant licenses again.
So naturally some people in China don’t feel like South Korean developers should be next in line. As one Chinese gamer wrote on microblogging site Weibo, “What request? Not even our own licenses are being given. How is it your turn?”

For more insights into China tech, sign up for our tech newsletters, subscribe to our Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.