[MUSAI] Forecast of Korean Game L10n Industry under the COVID-19 Situation

2020-04-02

 

Assumption: This article is written based on the current trend and personal opinion of the writer.

 

We knew what the meaning behind warm hearted messages is

Business development managers (BDM or account managers), vendor managers and project managers are getting busier since the pandemic of COVID-19 has been over the world. They are sending huge emails with the sincere worries about the partners’ health and safety, and checking the production availability as well.

 

BDMs are worried how it affects the upcoming and potential projects which have already been contracted. Project managers are concerned how much the schedule of the current projects will be delayed or cancelled in the worst case. Vendor managers are counting the availability of vendors in worldwide.

 

Since checking those factors is very natural in the business relation, we do not complain although it may seem too realistic and cold-hearted. Even more in this situation. We all know it is almost impossible to forecast the future under this COVID-19 crisis, and we all agree that we should overcome with the cooperation and flexibility to the change of the situation.

 

Should we create a new contingency plan from the business perspective this year?

All companies set up a business plan early every year. You may already have the business plan for 2020, but the COVID-19 situation makes it almost useless. For this year, it should be changed, and a new plan is inevitable under the Covid-19 crisis. All previous factors of business are meaningless and rapidly changed.

 

Unfortunately, Korean L10n market is not different with others even though Korean market is comparatively safe and managed well the crisis. We are analyzed about how our industry is going in Korea amid the COVID-19 crisis as a L10n studio and would like to share it with our partners.

 

Game market growth under the COVID-19 pandemic?

While working from home (WFH) situation has been expending and schools are closed in world widely, the remote working tools like MS teams, Google suite and Line Works are used more than before for WFH environments. So,

  • People spent more time for playing games at home. Please refer the latest ‘Newzoo’ report. (https://bit.ly/39zwedo)
[Photo 1] People spent more time for playing games at home. (Source: Newzoo report)

 

  • Even World Health Organization encouraged to play games – 18 game industry leaders joined this program. (https://bwnews.pr/2R4tq1d)
[Photo 2] WHO encouraged to play games. (Source: BusinessWire.com)

 

  • The revenue of the game industry seems like climbing – for example, the annual revenue of Tencent has been up by 21%. (https://bit.ly/2X3lrp4)
[Photo 3] The annual revenue of Tencent has been up by 21%. (Source: The Gaming Economy)

 

  • Big discounts promotions by the major game platforms.

Most of the major gaming platforms (e.g. PSN, Steam, BattleNet, Uplay…) offer various promotions with the discounted price to expand revenue and users. It looks worked.

 

  • New console platforms (Xbox X and PS5) are planned to launch later this year.

 

On the contrary, most of the big gaming events were cancelled or planned to be cancelled. Besides, the biggest issue is if gamers are willing to open their wallet for gaming under the global economic downturn. These can be negative factors.

 

In spite of the negative factors, it seems that there are more positive factors than negative ones in the gaming industry. It can make the revenue grow up in terms of the global game market, but it could be temporarily in my humble opinion.

 

The problem is that the game titles which are on the development phase. We are not sure if they can be launched on schedule or can’t help but delaying due to COVID-19. It’s because launching one title needs thousands of matters as you know. One game requires more than just game development like localization, testing, marketing and manufacturing, etc. to meet users, and it may be hard to make a plan in the WFH situation. As for the localization industry, we can’t say this is a positive situation. The revenue is mainly coming from the ongoing projects which are under the developing phase, not from the launched titles.

 

Revenue forecast of Korean language

Now, let’s see the Korean L10n market.

 

Revenue forecast of Korean relative language combination

As for the Korean relative language combination, we can divide into 2 groups like the followings:

  1. Korean to Multi-languages
    1. Target customer: Korean game publishers and developers from the major companies to the indies.
    2. Languages: Korean to English, Japanese, Chinese.
  2. Multi-languages to Korean
    1. Target customers: Global game publishers and developers & Global game service providers
    2. Languages: English, Japanese, Chinese to Korean

In my humble opinion, I think Korean game publishers and developers can react more rapidly than other global publishers to expand revenue under the COVID-19 situation.

 

At this moment, Korea is one of the countries who wisely manages the COVID-19 crisis and it means that most of companies keep the ability to maintain production. It can be applied to gaming industry in Korea. Korean gaming companies can continue to develop and launch their games even under WFH situation and other difficulties. The progress would not be on the same level as before the crisis, I think they won’t stop most of their projects. Thus, it can bring the result of the revenue growth in terms of the ‘Korean to Multi-language’ side.

 

On the other hands, the revenue from the ‘Multi-languages to Korean’ side may decrease since most of the global game publishers claimed the delay of game development due to COVID-19. Plus, it may cause the decrease of the revenue on 2Q and 3Q this year. This means related agencies should survive the period and make a financial backup plan to keep their resources. Furthermore, the delayed projects may start at the end of Q3 or Q4 simultaneously and it will be hard pressure for game L10n agencies in terms of adjusting the workload and schedule. Anyways, we should endure the period of famine.

 

As for the details of the language combination in Korea, please refer our previous article. (https://bit.ly/3dKLXJL)

 

 

Revenue forecast depends on the types of L10n agency in Korea

As for L10n agencies in Korea, we could divide into 2 groups.

We posted statistics regarding the types of L10n Agencies in Korea last year. Please refer the following link for the detail. (https://bit.ly/3ax8S9o)

  • MLVs (Multi-language vendors) in Korea
    • Major MLVs: They may create their own separate business plan considering global & local situation regardless of the gaming localization revenue, because the gaming revenue is a less critical factor than their major fields like IT, medical, legal, etc.
  • Local agencies in Korea
    • Considering the nature of L10n industry, it is almost impossible to forecast long-term revenue more than 3 months.
    • Large & Middle-sized agencies usually have the reserved fund to prepare the worst scenario. Thus, they could endure the hard time.
    • However, small sized agencies may encounter the financial issue especially Q2 and Q3 of this year since the business slowdown is expected. The period will bring the unstable revenue so it must be hard to maintain the current employment.

 

The support from Korean government for middle & small sized companies

As mentioned above, small sized agencies may encounter the difficulties due to COVID-19. However, the translation companies are counted as better than other industries like tourism. (All the small sized companies in Korea have been faced the financial crisis due to the COVID-19 situation as same as the global market.)

 

To support the middle and small sized companies in Korea, the Korean government announced the measures. (https://bit.ly/3aBEXNb) The measures will be helpful to break through the financial problem and maintain their internal resources, especially for middle and small sized L10n agencies. We know how important it is to keep good internal resources in L10n industry.

[Photo 4] The Korean government announced the measures to support the middle & small sized companies. (Source: Korean MOEL)

 

Everyone feels tough in the past couple of months. Many economic experts say that the period of economic stagnation is already started, and it will be longer than we expect. L10n industry also has been stroken severly, globally as well as domestically. This kind of analysis and the series of supporting plans may be useless. Even worse situation may be on our way even though we prepared it. But, I strongly believe we can get this better and make a progress after we win this crisis. Hope you believe this as well. Stay safe and sound!

 

Writer: Ryan Lee (VP in Musai Studio)

Ryan Lee has a 20 years-experience in L10n industry in Korea. He had been worked both Multi- language vendors (Bowne Global Solutions, LionBridge and Jonckers) and Local L10n companies (YBMSisa, LatisGlobal Communications)

 

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