A New Stage for the Domestic Game & IT Industry
A New Stage for the Domestic Game & IT Industry
  • Lee Seung-yeon
  • 승인 2023.09.05 17:32
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(Provided by Pixabay)
(Provided by Pixabay)

  Middle Eastern countries have recently broadened their equity investments and Memorandums of Understanding (MOU) with domestic game and IT companies. Last year, Saudi Arabian Ministry of Investment signed an MOU with the domestic game company SHIFTUP. This year, they also signed an MOU with NAVER. Additionally, the Public Investment Fund (PIF) has acquired significant equity stakes in domestic game companies NCSOFT and Nexon through investments, and this involvement is gradually expanding. PIF is also considering additional investments in domestic game companies Pearl Abyss and NEOWIZ. With Middle Eastern capital flowing into the domestic game industry in this manner, what outcomes can companies expect?
  Fortunately, domestic game and IT companies also view the Middle East market as a new frontier. The Middle East and Africa have a combined game user base of approximately 312 million. Saudi Arabia, in particular, stands out, with half of its population under 30 and a high internet penetration rate of 95%. In essence, domestic companies have the potential to tap into a substantial new market in the Middle East, serving as an alternative to the declining Chinese market. Furthermore, the gaming platforms predominantly used in the Middle East include smartphones, PCs/laptops, and consoles. This means that domestic companies, which primarily focus on mobile and online platforms, can seamlessly access this market without changing their strategies.
  While Korea maintains regulatory constraints, the Middle East operates with fewer restrictions. For instance, the United Arab Emirates lacks laws or regulations about probabilistic goods, and there are no autonomous regulations. Notably, Korea has stringent regulations surrounding PE2 games, where players acquire virtual currency or NFTs in-game and exchange them for physical goods. Conversely, the Middle East actively fosters a Web 3.0 ecosystem encompassing concepts like the metaverse and NFTs. This situation presents opportunities for the domestic game and IT industry to secure funds and explore new markets.
  However, some voices contend that the Middle East cannot entirely replace the Chinese market due to the current scale not being overwhelmingly large. Furthermore, it is crucial to closely monitor the potential influence of Middle Eastern countries on the domestic game and IT industry. Middle Eastern capital can intervene in the governance of the domestic game and IT sector at any given time. Additionally, some voices contend that there is a possibility that Saudi Arabia could transition from simple investment to strategic investment and assert management rights.

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