Categorized | Economics, slider, South Korea

Gaming Industry: Another Trial of “Welfare vs. Growth”

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • WHO will officially ask individual member states to recognize gaming addiction as a mental health disorder on January 1, 2022.
  • Park Yang-woo, Minister of Culture, Sports and Tourism (MCST), vowed to review regulations that hinder the growth of the game industry and said that “gaming is not a disease” at the 2019 Korea Game Award on November 13.
  • According to an academic study, formalizing gaming disorder as an official mental disease could cause a $9.45 billion loss to the South Korean economy.
  • The government is looking for ways to minimize the loss before a new Korean Standard Classification of Diseases takes effect.

Implications: The dilemma surrounding the gaming industry is another area where the Moon administration is struggling to balance between growth and welfare. Despite increasing concerns about game addiction in South Korea, the government may be reluctant to adopt the WHO’s new standard of ‘gaming disorder’ because it might dampen this major growth industry. According to the Ministry of Culture, Sports and Tourism, the game industry accounts for 8.8 percent of Korea’s trade profit. As such, there are concerns that associating gaming with mental illness would suffocate local game businesses, which are already under pressure from increased global competition. As a temporary compromise, the government has assembled a panel of experts and industry people to study the issue further.

Context: Although it attracts less attention than K-pop, Korea’s gaming industry brings in greater revenue for the country. According to statistics from the Korea Creative Content Agency, gaming exports increased 80.7 percent to USD 5.9 billion in 2017. But most of this growth came from Korea’s exports to Chinese-speaking consumers: approximately 60 percent of the sales that year. China is also amidst efforts to regulate gaming in the country and the WHO classification will likely allow the government to intensify its control over the sector. This may have additional negative implications for South Korea’s gaming exports to the country.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Picture from user Rob Fahey on flickr

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