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Web board decision boon for S. Korean game developers

All Headlines 15:12 March 04, 2013

By Lee Minji

SEOUL, March 4 (Yonhap) -- A decision by a presidential committee to cancel regulatory measures on Web board games is expected to bode well for South Korean game developers who have been battling against government attempts to clamp down on the industry, analysts said Monday.

Citing a lack of legal ground, the Regulatory Reform Committee recently decided to reject a set of measures proposed by the Ministry of Culture, Sports and Tourism that would prevent speculation on Web board games, which include genres such as poker games.

The proposal, unveiled in October, triggered fierce industry-wide backlash for policies such as limiting monthly game money purchases to 300,000 won (US$274), activating 48-hour playing bans for daily losses over 100,000 won and mandating identification certification for access.

While the cultural ministry is expected to sustain its regulatory stance on the game industry, analysts said the latest decision marks an optimistic turn for major game developers such as NHN Corp. and CJ E&M Corp.

"In NHN's case, the proposal would have more than halved its Web board game revenue. But now with the rejection, we expect revenue to slip around 20 percent from the previous year," Korea Investment & Securities Co. analyst Hong Jong-gil said by phone.

"There were market expectations that regulations would ease, but a complete rejection was unexpected. This is really boosting shares of NHN," said Hong.

Joseph Chung of Woori Investment & Securities Co. echoed the view by writing in a report that the policy move will improve investor sentiment on Web board game operators such as NHN, CJ E&M and Neowiz Games.

Meanwhile, some analysts pinned hopes that the government is shifting towards easing regulation rather than setting up hurdles against the game industry.

Last month, the cultural ministry and the Ministry of Gender Equality and Family decided to exclude mobile games from their controversial "shut down" policy which bans game users under the age of 16 from playing between midnight and 6 a.m.

While the exclusion is temporarily valid until 2015, the move raised hopes that the Park Geun-hye administration may move to ease its helm on the game industry in line with its vow to nurture the local IT ecosystem.

"The Web board proposal rejection definitely earned some time for game developers. With the mobile shut down policy decision, it seems that the overall atmosphere is shifting towards easing regulation, a plus factor for investors," Eugene Investment & Securities Co. analyst Park Jin-young said by phone.

Shares of NHN jumped 4.56 percent to 275,000 won on the main stock index. CJ E&M rose 1.33 percent to 38,000 won and Neowiz Games surged 6.22 percent to 20,500 won on the secondary KOSDAQ index.


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