People play video games at an internet cafe in Beijing, China, Jan. 8. EPA-Yonhap

Korean video gaming companies, grappling with geopolitical risks and regulatory pressure in China over the past few years, are seeing a future in the world's largest video gaming market with newly granted licenses and more upcoming titles, according to industry insiders and analysts, Thursday.

The top three video gaming companies in Korea — Nexon, NCSoft and Netmarble — have all received licenses in the latest batches approved by China's gaming regulator. Nexon's Dungeon & Fighter (DnF) Mobile and Netmarble's The King of Fighters All Star were among the 32 approved foreign titles announced on Feb. 2, while NCSoft's Blade & Soul 2 was one of the 40 titles approved for import last December.

The most notable title was DnF Mobile, a role-playing game developed by Nexon and operated in China by Tencent Holdings, which runs the world's largest video gaming business by revenue. The game was adapted from Nexon's flagship PC title, DnF, which was launched as early as 2005 and became one of the highest-grossing video games ever, with over $22 billion in lifetime revenue as of June 2023.

The approval of the game came as a surprise, as DnF Mobile did not have a smooth journey in the country. Nexon originally planned to release the mobile game in China in collaboration with Tencent in August 2020, but the companies suddenly canceled the launch even though it had more than 60 million pre-reservations at that time, citing the need to adjust to regulatory requirements. DnF Mobile was released in Korea in 2022.

On Tuesday, a team of designers of the game said through its official WeChat account that a new round of testing will start at the end of February, after “our preparations have finally entered a new stage.”

A poster of DnF PC game for the Chinese market / Korea Times file

The mobile title is just one of the latest examples of how Korean game companies are betting big on the Chinese market, as they have received more than a dozen licenses since late 2022, when Beijing started to ease years of controls on Korean game companies' operations in the territory.

China started a crackdown on the video gaming industry in late 2021 with an 18-month licensing freeze on foreign games. What further choked the Korean game industry was Beijing's ban on Korean cultural imports that started in 2017 in retaliation against Korea's deployment of the U.S. THAAD anti-missile system.

In December 2022, seven Korean titles — including Lost Ark by Smilegate, MapleStory M by Nexon and Ni no Kuni: Cross Worlds by Netmarble, were among the first batch of 44 licenses given to the foreign games after the crackdown. By early February, when the latest batch was released, the number of approved Korean games had grown to at least 18.

The increased approvals were seen as an apparent signal that the country is easing its controls on Korean video games. Before that, only two Korean games had received the licenses in the six years since 2017.

With the licenses, the Korean companies have launched or have been staging an entry of their titles, such as DnF Mobile's testing and Netmarble's launch of Ni no Kuni: Cross Worlds in the first half of 2024.

DnF Mobile has raised high expectations from both China's gaming community and industry watchers. Many players took to social media to express their excitement about the approval. At the same time, analysts have also expressed expectations that the game will come as a revenue boost for both Tencent and Nexon.

A promotional image for "The King of Fighters All Star" by Netmarble / Korea Times file

The potential of upcoming titles is based on the performance achieved by a number of games launched in 2023.

From June to September 2023, at least nine major Korean games were released in China, with a total revenue of over 3 billion yuan ($422 million) as of October, according to a report by Chinese video game media GameLook that called Korean games “a bright spot in the market.”

Some have already proved to play a role in the companies' revenue growth. For instance, Nexon said it had achieved record-breaking revenue for the full year of 2023, partly driven by the growth of DnF in China, as well as MapleStory: The Legends of Maple, which was launched in the country last August.

It is believed that more foreign games will be approved to be launched in China as Beijing seeks to showcase its support for the industry after scrapping a controversial gaming regulation that wiped out billions of dollars of value from Chinese gaming stocks in December.

Notably, many of the approved products in China were part of the franchises developed at least five or even ten years ago as a result of China's prolonged regulatory processes and the companies' selection of more mature titles in the Chinese market.

“After all, under the background of [China's] control on game license numbers, they would naturally prefer products already with performance and achievements [overseas],” the GameLook report said.

However, some analysts also noted that such a choice could also pose a challenge for the game companies.

For older IPs like DnF, “obtaining the license is more of a use of existing resources,” Zhang Shule, an analyst with CBJ Think Tank, said. “Its gameplay and concept lag behind the times, and it would be even harder to entice players to pay for the game based on their emotions,” he added.

Ann Cao is a tech reporter with the South China Morning Post. She is currently based in Seoul, reporting for both The Korea Times and the South China Morning Post under an exchange program.