April 25, 2024

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[THE INVESTOR] China has reportedly stopped issuing new service licenses to South Korean games in an apparent retaliation against Seoul’s latest preparations to install a US missile defense system in Korea.

According to Korean media outlets on Mar. 7, the Chinese government informed local game publishers earlier this month that it would no longer issue licenses -- which a company needs to service a game in China -- for Korea-made games.

The measure is “likely related to Korea’s deployment of the Terminal High Altitude Defense System,” which China has been vehemently opposing, according to a Chinese game publishing official cited by local reports.

China is denying licenses to new Korean game applicants seeking approval, but Korean games already serviced in China or those that have already applied for a license are unaffected by the new protocol, the official said.

Whether the Chinese government has officially adopted such measures remains unconfirmed. Korean game companies including Nexon, Netmarble Games and NCSoft said they are monitoring new developments with caution.

China is considered an important market for Korean game companies as a big revenue driver and as a promising destination for their new games. Around 40 percent of Nexon’s 2016 revenue came from China. 

Netmarble Games is preparing to launch its hit mobile role-playing game “Lineage II: Revolution” in China this year in partnership with Chinese publisher Tencent, while NCSoft is looking to bring its new mobile game “Lineage Red Knights” to China in partnership with China’s Alpha Group.

Korean mobile game giant Netmarble Games said its Chinese partner Tencent has already applied for a license to service its hit mobile game “Lineage II: Revolution” in China, addressing concerns that the game’s launch there could be blocked.

Nexon said it does not expect any immediate impact from China’s moves, as its games currently serviced in China via its local game publishing partners have already obtained licenses. It plans to take additional action once China confirms and clarifies its regulations.

NCSoft said it has already applied for a service license to launch “Lineage: Red Knights” in China via its local publishing partner. The firm is also monitoring developments as emerging reports regarding China’s new license ban remain unverified.

Tension has been rising between South Korea and China over THAAD, especially after Lotte Group decided to sign a land swap deal with the Korean Defense Ministry to provide land for the deployment of the American anti-missile system on Feb. 27.

Since the deal, Beijing has been ramping up retaliatory measures against Korea -- including an unofficial travel ban to Korea and tougher inspections of Korea-made products -- igniting alarm among Korean companies that depend heavily on the Chinese market.

By Sohn Ji-young/The Korea Herald (jys@heraldcorp.com)