Korean Internet Boom Helped By Online Gaming

The number of online users in Korea has reached 3.5 million and continues to climb thanks to an online gaming trend.

“The total number of subscribers of all online service providers is about 3.5 million,” said Jin Ho Hur, president and CEO of Inet, Inc., a corporate-focused ISP controlled by PSINet, Inc. “Among them, about 1.5 million users are estimated to access the Internet regularly.”

During Korea’s economic crisis in late 1997 and early 1998, the Internet industry was hard hit with many businesses and consumers cancelling subscriptions.

However, since late summer 1998, a new industry called Online Gaming Arcade (OGA) boosted Internet traffic in Korea.

OGA shops were set up with typically 30-50 PCs interconnected to the Web through a high speed leased line (either 512K to E1).

At these OGAs, users can play multi-user interactive games over high speed Internet connections which is attractive compared to the 56K modem access in the typical Korean home.

With the popularity of video gaming in Korea, the OGA fad took off; in the last 6 months, 3,000 OGA shops have popped up.

“It has created an entirely new market segment for ISPs,” said Jin. “I foresee that there will be up to 10,000 OGAs in Korea eventually. The saturation will happen sometime in Q2 or Q3 of 1999.”

In particular, one game called Starcraft is largely responsible for the success of online gaming and the recent boom in the ISP industry.

The ISP market in Korea has close to 30 providers. However, industry observers indicate that the number should be larger with the lack of government regulation.

The largest players in the consumer market include Chollian of conglomerate Dacom, Hitel,
Nowcom, Unitel, Netsgo, and Channeli, in the order size.

Less than 10 providers target the corporate market with leased lines.

The most successful corporate ISPs are KORNET of Korea Telecom (KT) with 25 percent of the market, Boranet of Dacom with 22 percent, and Inet with 22 percent.