While Korean game companies such as Pearl Abyss and Krafton are advancing with record earnings, the public and private sectors have rolled up their sleeves as a downturn persists among small and mid-sized game companies. The government and the Seoul Metropolitan Government are implementing an AI usage support program for the first time, while a 250 billion won investment fund for game companies has also been established, led by Nexon, the industry's senior figure. Observers point out that for the game industry, which accounts for more than half of Korea's content industry exports, to grow continuously, investment in promising small and mid-sized game companies must become more active.
According to the game industry on Friday, the Korea AI Game Association, the Korea Mobile Game Association, and the Korea Game Developers Association will accept second-round applications for the "Game Production Environment AI Transformation (AX) Support Program" from July 1 to July 7. The Game Production Environment AX program is a project launched this year for the first time by the Ministry of Culture, Sports and Tourism and the Korea Creative Content Agency (KOCCA) to support the use of generative AI by small and mid-sized game companies. With a budget of approximately 7 billion won, it subsidizes AI tool subscription fees for about 500 small and mid-sized game companies. The support ranges from 5 million won to 50 million won depending on the size of the game company.
In this second round of applications, a total of 251 game companies are to be selected, including 89 from the Korea AI Game Association, 103 from the Korea Mobile Game Association, and 59 from the Korea Game Developers Association. Through the previously conducted first round of applications, a total of 246 game companies are proceeding with support agreements with the three associations.
Although negative perceptions of AI work still exist among game users, in the actual development environment, using AI to improve efficiency has become essential. According to KOCCA, the generative AI utilization rate of Korean game companies stood at 70% as of the fourth quarter of last year, nearly 30 percentage points higher than in the second quarter of last year (41.7%).
"Using AI can reduce work time, but these days, with the business climate poor especially among small and mid-sized game companies, many feel burdened even by AI subscriptions," an official from the Korea AI Game Development Association said. "That is why the first support was decided this year." For similar reasons, the Seoul Business Agency newly established a section to support game production using generative AI in its "Game Content Commercialization Support Program," which it conducts every year, for the first time this year.
In fact, as game usage has steadily declined worldwide, the industry downturn is becoming prolonged. According to the "Game White Paper" published annually by KOCCA, the proportion of game companies with revenue of 1 billion won or less increased from 45.8% in 2023 to 53.5% in 2024. The median revenue of game companies decreased from 1.212 billion won in 2023 to 831 million won in 2024. According to venture investment platform THE VC, investment in Korean game startups plunged from 556.6 billion won in 2022 to 110 billion won last year. The recent concentration of investment in the artificial intelligence (AI) and robotics fields has also had an impact.
As this investment drought has dragged on, a large fund supporting Korean games from early development to growth has also been established. The Ministry of Culture, Sports and Tourism and Nexon announced Monday that they had formed the "Kona Global IP Investment Partnership," a sub-fund of the parent fund "Culture Account." The Culture Ministry contributed 60 billion won, Nexon 58.8 billion won, and the operating firm Kona Venture Partners 1.2 billion won, for a total of 120 billion won. The fund, the largest ever among Culture Account sub-funds, provides funding from the seed to Series A stages for next-generation game developers and intellectual property (IP) with potential for global expansion.
Furthermore, Nexon plans to separately invest 130 billion won in game developers at later stages. Active investment and mergers and acquisitions (M&A) can be said to be the foundation that made Nexon what it is today. Nexon's flagship titles—MapleStory (Wizet), Dungeon & Fighter (Neople), and ARC Raiders (Embark Studios)—are all IPs born from game companies that Nexon invested in or acquired. "Games are the industry that supports the exports of Korea's content industry," a game industry official said. "As in this Nexon fund case, the government should create an environment where companies can focus on development over the long term."
