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I have worked, played and lived in Seoul for the past 11 years. I'll get that out of the way.
So when the buzzword was "virtual items", I used to politely nod and then yawn.I have lived, played and worked virtual item economies for about as long as I have been here. There is nothing controversial or demeaning about the business model to me.
When the buzzword was "mobile applications", I used to smile and cough appreciatively.I had played games on handsets since the start of the century, utilized mobile video capture technology and infrastructure in work and play in my career on the web side of things.
When the buzzword was "social networks", I used to pretend to listen and try not to be bored. After all Cyworld was the grandaddy of it all. I had worked on a video based "social network" Freechal's Q. Getting ready to roll out a "widget market" when Myspace was aborning.
I was so full of it, that if you pricked me the hot air and manure methane would have made me the Human Torch.
and I am a reflection of the Korean game/web industry.
Because none of these concepts and structures that can be argued was executed on a large scale in Korea first, was iterated upon, refined, and systematically analyzed/ripped apart. No. We were so proud we had built all this up ourselves. We were so proud that we suddenly got rich and important. We were proud to be mentioned.
We forgot that much of what we made was born out of desperation. We forgot to look and analyze the unique environment from which these things were born. We focused on the superficial elements of the products/services and ignored the processes that needed to be changed.
The Korean game industry got complacent. Then we started to falter. Now ursurped.
There are very few Korean game studios/companies involved in social gaming. Think about it. From the country that had Cyworld. That had these giant companies like NCSoft, Nexon, and Webzen that were expertly weaving the virtual item business model into game mechanics. No. Korean. Zynga.
I will examine this more closely in my next few blog posts but here will be my big points:
1) Korea has followed the Japanese model for too long and will fade into decline like the Japanese industry is doing in slow motion.
2) Korea has a tendency to foster a few giants but utterly grind the new and small into dust. In these giants, the operational processes are haphazard and insular.
3) Corporate structures in place and aped across the Korean industry are not fit for the fast paced and lean adaptation required. We are Microsoft zombies here. and finally:
4) The local media/popular culture does not breed the cultural imagination, thematic complexity, and the championing of daring that gives that spark. or "Sci-fi, spies and Silicon Valley is good for games".
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Based on my experience across Asia I have seen a significant uplift in browser based content for both Japan and China. It has surprised me that Korea has been so slow to recognize the benefits of browser, internet and so SNS.
Japan has sector of internet focused game companies, different name set to the traditional console majors but I would not say that Japan was in decline, just a change in guard!
(1) The closest and most salient one would be the boom-bust-revival of some of the game/creative industries in Europe; the tech industry in Taiwan. I will probably go into detail in my next blog entry. However, I will also have another unfortunate prediction: China will follow the Korean model and will only be relevant within the Chinese market. But honestly? They don't need to actually go outside their borders and they will be fine. Korean companies? not so much.
(2) Starting a small and new business is significantly cheaper and easier ( not just legally but in terms of mentorship opps, cheap/open source software & tool usage) in the US, Singapore, Taiwan, and in various other territories than it is in Korea AND Japan.
STUMBLING BLOCK 1: Patent protection is also significantly weaker in Korea which allows large companies to essentially clone any innovations, products, and even superficial aspects that a smaller company has introduced without reprisal from the law.Thus driving them out of business. It can be argued that this is the same anywhere HOWEVER in the US you have more of an acquisition culture which also prizes the personnel behind such innovations wheras there is no similar culture/perception in Korea.
SOLUTION: Stronger IP law slanted towards the new and innovative (lets not become the US but this is the other end of the spectrum). Focus on the teams and not the products as being the competitive advantage. AT least other game industries elsewhere pay lip service to that ideal if not strongly prize that.
STUMBLING BLOCK 2: In most game & web industries in other territories; it is usually the distribution/investment channels that gain size but leverage the outside development and resources available in the industry. Korean companies try to do EVERYTHING inhouse. They try to be the developer, publisher, distributor, marketing all at once. Outsourcing is not the rule here it is the exception. Sounds great until you realize that it damages the industry as a whole and doesn't make these fat bloated companies that adaptable either.
SOLUTION: OUTSOURCE to outside the companies for more! Focus on specific areas and strive to be efficient in those. Form ecosystems with partners instead of simply one time contracts.
STUMBLING BLOCK 3: Systematic processes are the exception. Example: preproduction in most Korean game companies goes a month, maybe 2 months. Toolsets are not the norm. Source and milestone management is done through an excel spreadsheet. Pipelines? Make it up as you go. China, Singapore, Taiwan (and to some extent) India have benefited immensely from partnerships/outsourcing with foreign companies in establishing, understanding best practices and the logic behind systems used in development, publishing, etc. Korea never had this mix of outside and inside cultures.
SOLUTION: Korea needs to have more companies doing more work outside Korea; and not as the lead partner. Korean companies have to swallow their pride and do alot more of the outsourcing work that they used to mock the Chinese for. Just sending people to conferences ( where more often than not they do not engage in casual networking outside) is not enough. Sustained commercial activity in a subordinate role is needed for an industry to get the foundations necessary. And for god's sake, take care of your source code. Use project management tools and not excel.
(3) Many of the larger game companies have to stop aping corporate structures/cultures of the large conglomerates like Samsung. It starts with something as simple as your title/rank. You may be a lead artist but only be a "daeri" (associate) in the corporate structure. A lead producer may be only a "chajang" and be lower than his engineer. This muddies up roles, accountability and responsibilities. It extends to certain departments which may be necessary when dealing with manufacturing (like a central planning office) but are not only unecessary but detrimental to game and web development and even online publishing/distribution.
SOLUTION: Simplify Simplify simplify. Your rank and role should be the same. Corporate structure on the whole should be as horizontal as possible not vertical in the software space.
(4) Korean popular media is essentially retelling of the mundane. We live in what is essentially a perfect setting for a 'Fringe' or '24' or even 'Chuck' but we get 'General Hospital' and 'Celebrity Squares' 100% of the time. There is no comparable 'Star Wars' or 'Doctor Who' touchstone of inspiration of the fantastic, futuristic, or bizarre.
Parody is non-existent. Comedy is usually on the level of slapstick. Even Russia had political satire for awhile...but Korea? It's not there. Music is one genre: boyband/girlband all the time. No Company from a garage myth (since the 1950's at least). No famous dropouts. Everything has to be Seoul National University or else.
There is no counter culture. There is no niche culture. There is no technocratic geek culture. The lack of the left field. The lack of the fantastic. This then leads to the inability to dream. The inability to critically think.
It affects our storytelling and narratives. When did you understand the background story of any Korean game? It affects our UI's; when did any Korean site,gadget or tech have innovative interfaces? It affects our daring; there is no cheering on the underdog here. More or less cynical acceptance and criticism for even trying.
Solution: Give me a media company. :)
whew. I should have saved this for a blog.
Like I said in regards to China. They can actually follow the Korean and Japanese models and actually thrive in their domestic market. But they are going on the same buying spree of famous names that the Korean companies did in their heyday. It remains to be seen if they make the same mistakes in regards to how they manage these relationships.
Really..Nexon (and I stress its the US) has done the best in their approach to foreign partners and the US market. They didn't go for the famous names, overpay, and then mismanage. They started small, made great partners, did great PR work both within the industry and out. They executed within their sphere of influence and let the people in the US do their jobs.
In regards to SNS...
the Chinese are on a roll! they have adapted faster, looked at outward platforms better, and just iterated. iterated .iterated. I think some of the benefits do come from Shanghai and Hong Kong and their exposure their to a diversity of cultures through history, outsourcing, and just the entreprenurial infrastructure and culture that is thriving there.
Its just I don't know if the9, Shanda, Giant personify that.
Perfect World on the other hand I can see being a Nexon case. They are doing some smart things and wouldn't be surprised if they make a Facebook play soon.
That's what John is replying to and my apologies for not removing it sooner. The point is all cultures, societal and corporate, go through this cycle. In fact, I could of used your exact points to describe Japan in the 80's and 90's prior to the Japan's recession. Even while Japan was investing in foreign countries and businesses, they became MORE Japanese in doing so.
The point is...it doesn't last. Economic and social drivers, as well as opportunistic practices forces companies to adapt or lose market share. The only thing I can point out is that there probably is a niche culture but it's just well hidden, or small and deemed to be un-vogue. Or the counter example is the Roppongi in Japan. Not as weird as I remember it as a kid, much weirder now that it is fashionably so. (And if you have asked me in the SONY heydey if there was ever a chance that the CEO would NOT be Japanese...oi vey.)
So it seems like you have two historical choices, stick it out or vote with your feet. I know it's not an easy answer, but it sounds like what you're wrestling with now. To stay and see if you can't create a niche or go elsewhere. You've already mentioned several companies as examples.
Finally, if I should ever go through my pockets and find a media company...you are 57th in line.
Or maybe I suffer from Asperger's and am missing some nuance.
But 57th???