As the Chinese 'Korean Wave restriction' (한한령·Korean Wave limitation) is about to be lifted, domestic game companies' expectations for entering the Chinese market have risen, but the actual results remain sluggish. SHIFT UP, which has risen as a subculture genre, has made an attempt to penetrate the Chinese market with 'Goddess of Victory: Nikke,' but despite an early positive atmosphere, its ranking is quickly falling, showing poor performance.
According to market research firm Sensor Tower, as of the 8th, Nikke ranks 68th in revenue on the Chinese iOS App Store. This is in stark contrast to its initial rise into the top 10.
Nikke was officially launched in China on the 22nd of last month. The number of pre-registrants surpassed 10 million, with publishing handled by Tencent, which holds 34.85% equity in SHIFT UP. Tencent obtained the game license through its gaming brand, Level Infinite, and carried out large-scale marketing. SHIFT UP, confident in its potential for success by targeting the fandom of CEO Kim Hyung-tae, who is from the original artworks of 'Chrono Trigger' and 'Blade & Soul,' also topped the popularity charts in major app markets like Bilibili and TapTap immediately after its launch.
However, within less than a month, the market's reaction is cooling rapidly. Once, Korean games held advantages in technology and graphics, but in recent years, the quality and content completeness of Chinese games have improved dramatically. An analysis shows that 'Arknights,' a representative work of the subculture genre, still maintains its 23rd position in iOS revenue rankings even six years after its release, and that there are already various high-quality alternatives in the local market. While the issuance of game licenses (版號·game service permits) has become faster, the industry's common perception is that user expectations have actually increased.
The structural limitations of the Chinese market are also burdensome. In China, games cannot be serviced without going through a local publisher, and most of the revenue is taken by the publisher. In the case of Nikke, Tencent first collects the revenue, and SHIFT UP receives a portion of it later in the form of royalties. According to industry reports, the typical revenue distribution ratio is about 60% for the publisher and 40% for the developer, and after subtracting the app store commission (30%), the developer's revenue is limited. The global version of Nikke is also serviced by Tencent, putting SHIFT UP at a disadvantage in terms of revenue structure.
Due to expectations for the Chinese market, SHIFT UP's stock price, which had risen to 58,500 won on the 22nd of last month, fell to 50,500 won as of the 5th. Securities firms have also adjusted SHIFT UP's target stock price down from 80,000 won to 70,000 won.
Amid this structure, the only Korean games currently achieving meaningful results in the Chinese market are Krafton's 'PUBG Mobile' (Chinese name: 和平精英·Peace Elite, 2nd in iOS revenue) and Nexon's 'Dungeon & Fighter Mobile' (Chinese name: 地下城与勇士·Dungeon and Fighter, 11th in iOS revenue). All are published through Tencent and are established games based on long-running intellectual property (IP).
In the second half of this year, major Korean game companies continue to advance into the Chinese market. Wemade is set to release 'MirM,' while NCSOFT plans to launch 'Lineage2M.' However, there are projections that their performance may be limited by the revenue distribution structure with local publishers.
A game industry official noted, 'Now, the Chinese market does not guarantee success just because it is a Korean game' and added that 'a content strategy thoroughly reflecting local users' emotions and usage behaviors, along with a competitiveness in quality that does not lag behind Chinese games, is essential for survival.'