Google Lowers App Market Fees... Netmarble and Others Expect Profitability Boost

Expectations Rise for Improved Profitability in Korea's Gaming Industry

Google’s decision to lower the commission fees for its app marketplace, Google Play, has raised expectations for improved profitability in the domestic gaming industry. Companies like Netmarble, which have a high proportion of mobile game and overseas revenue, are expected to benefit directly from the change.

According to the industry on March 9, starting in December this year, the Google in-app purchase commission rate in Korea will be reduced from the current 30% to 20% for new installations. Furthermore, if developers participate in Google’s “App Experience Program” and meet certain quality standards, the commission rate can be lowered further to 15%.

Additionally, while an extra 5% fee will be charged if the Google payment system is used, no additional fee will be imposed if developers use their own or third-party payment systems. This represents a shift to a structure where service and payment fees are separated. Alongside this, the commission rate for subscription services will be lowered from 15% to 10%, and a “Registered App Store” program will be introduced to simplify the installation process of third-party app stores.

The gaming industry has welcomed the changes. Seven gaming-related organizations (Game Culture Foundation, Game Talent Foundation, Korea Game Developers Association, Korea Association of Game Industry, Korea Mobile Game Association, Korea Artificial Intelligence Games Association, and Korea e-Sports Association) stated, “We are paying close attention to Google’s changes in app marketplace policy and expect the creation of a fair and mutually beneficial gaming ecosystem. We hope that Apple and other platforms will also participate.”

Until now, Google has imposed a 30% commission rate on annual revenue exceeding USD 1 million (approximately KRW 1.46 billion). Apple has also allowed external payments in its Korean App Store according to the “Prohibition of Mandatory In-App Payment Law,” but its commission rate is not significantly different from Google’s. According to the Korea Association of Game Industry, from 2020 to 2023, Korean game companies are estimated to have paid about KRW 9 trillion in in-app purchase commission fees to Google and Apple. Large domestic game companies, such as NCSoft and Netmarble, have responded to the fee burden by introducing their own payment systems.

The biggest beneficiary of Google’s policy change is expected to be Netmarble. Netmarble’s mobile sales account for over 90% of its revenue, and in-app payments via platforms still make up more than 70%. Heeseok Lim, an analyst at Mirae Asset Securities, said, “If Apple follows Google in lowering commission rates, the average operating margin of game companies could rise by 7 percentage points,” adding, “Netmarble is expected to save KRW 30 billion this year and KRW 100 billion next year in commission fees.”

Small and medium-sized game companies will also see some relief. A representative from one game company stated, “Building an in-house payment system also requires significant costs, which makes it challenging for smaller companies,” adding, “Small and medium-sized firms welcome Google’s new policy just as much as the large ones.” However, the representative also noted, “It is regrettable that the implementation is scheduled for the end of the year, which is later than in other countries, and that there is a difference in commission rates between existing and new members. As the gaming industry shifts from a growth phase to a mature phase, commission rates should be lowered further with the ecosystem in mind.”

This content was produced with the assistance of AI translation services.