South Korea’s metaverse gaming market is about to heat up with the country's leading 3D avatar platform Zepeto rolling out a game development tool for its users alongside the global metaverse giant Roblox Corp. setting up an entity in Korea.
According to industry sources on July 25, Naver Z Corp., the operator of Zepeto and an affiliate of platform giant Naver Corp., plans to introduce game-building tools on Zepeto within the year. Currently, users can play basic games on Zepeto's official virtual map, but the game features do not extend to users' maps.
Zepeto's adoption of game-building services is similar to Roblox, foreshadowing a fierce competition between the two companies in Korea's metaverse scene.
Founded in 2004, the US-based Roblox is an online game platform where users create Lego-themed avatars to build games and play other users' games.
Already, the metaverse gaming platform Roblox has emerged as a powerful variable in Korea’s gaming market following the establishment of Roblox Korea in June, headed by the company's general counsel Mark L. Reinstra.
Roblox plans to target the Korean market by adding local content and enhancing its game development tools to align with the domestic gaming market. It will also provide support for Roblox Korea's online gaming and platform development services alongside PR, marketing and e-commerce operations.
“Netflix was also available in Korea before it set up a local office, but its market shares surged after establishing the Korean entity and carrying out Korea-specific strategies,” said an industry source, adding that Roblox is likely to follow suit.
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Zepeto and Roblox are both considered major global metaverse platforms, but they have never been positioned as rivals given that Zepeto’s main service is based on social networking services (SNS) while Roblox focuses on games.
But the rivalry between the two platforms will now be inevitable since Zepeto has formalized its plans to offer game development features as well.
“Game is indispensable to the metaverse when considering usage time and sales,” said a Naver Z official.
Naver Z, which spun off from Naver in May 2020, logged revenue of 8.6 billion won ($7.4 million) from May to December 2020 with an operating loss of 18.9 billion won during the same period.
This year, the company’s monthly revenue hovered between 2.5 billion won and 3.3 billion won, up by 70% from the year-earlier period, thanks to securing advertisements from Samsung Electronics Co., Hyundai Motor Co., Gucci and Dior.
Still, Naver Z is in the red, making the adoption of metaverse gaming unavoidable to improve its profitability.
Meanwhile, the domestic gaming industry is also paying close attention to Zepeto and Roblox due to concerns that they may lose their Gen Z users to the two metaverse platforms. More than 80% of Zepeto’s users are teenagers and over 60% of Roblox’s users are under the age of 16.
Industry watchers are also taking note of Microsoft's video game Minecraft, which may emerge as another rival given its similarity with Zepeto and Naver in terms of users being able to create a virtual world.
“It’s not just game companies. Recently, domestic telecommunication carriers and IT firms have been expanding their footing in the metaverse business, meaning that competition with non-gaming sectors will also intensify,” said an IT industry official.
Write to Joo-wan Kim at kjwan@hankyung.com Danbee Lee edited this article.
