- South Korean authorities are bringing down the hammer on play-to-earn (P2E) games by asking
Google ,Apple and other global app stores to stop distribution. - According to the regulators, these games are ‘speculative money-making’ instruments, which means any earnings are ‘prizes’ – not additional income.
- This is only the latest development in the ongoing tussle between gaming companies and the country’s policy makers.
The issue, however, isn’t the fact that the games are based on the blockchain, according to a local media publication called Naver, who first reported the development.
Instead, South Korean authorities have beef with the fact that the P2E model lets people earn in cryptocurrency, which can then be exchanged for fiat money. According to the country’s Game Management Committee (GMC), this amounts to winning ‘prizes’, which is capped at 10,000 Korean Won – around $8.42 – under the Game Industry Promotion Act.
According to Naver, the GMC has not only reached out to the two tech giants – Apple and Google – but has asked all major app distributors to block the domestic distribution of blockchain-based games.
As the ropes tighten around the gaming industry in South Korea, game development companies are also expected to up-the-ante in the fight to keep the system open.
P2E includes blockchain-based games that reward players, often using cryptocurrency, for their in-game actions. Such games also use non-fungible tokens (NFTs) to sell in-game items, virtual real-estate and more. By not allowing Google and Apple to host such games in their stores, the Korean government could deal a huge blow to their possible proliferation.
In South Korea, six of the country’s 10 best-performing stocks of the year are linked to either the metaverse or non-fungible tokens (NFTs). This includes WeMade, the gaming company behind the P2E game MIR4, which has crypto to thank for the revival of its fortunes in 2021.
The GMC called P2E games “speculative money-making games”, and is worried that the trend has been gaining steam of late.
Normal non-crypto games in South Korea need to acquire an age rating from the GMC in order to distribute in the country. However, they can rate themselves if they are being distributed through other app stores, like the ones set up by Apple and Google.
However, South Korea also has a rule that prizes from gaming cannot exceed 10,000 Korean Won, which can easily be surpassed by cryptocurrency rewards. For instance, 1 ETH amounts to over 4 million Korean Won at the time of writing.
“It is reasonable to keep P2E games from getting age ratings under the current law because cash rewards in games can be considered prizes,” the GMC said in a statement on December 28.
To be clear, the GMC is not wrong about the fact that P2E games have grown recently. Axie Infinity, Decentraland and more have racked up billions in trades, and have millions of players worldwide too. According to blockchain tracking firm DappRadar, Axie Infinity has racked up lifetime trading volumes of over $3.81 billion since its launch in 2018. Its 30-day trading volumes account of $563 million also show how popular the game, and the P2E segment has become.
To be sure, the GMC isn’t banning blockchain games in general. It is only banning those that use the P2E model. In November, Kim Gyu-cheol, the chairman of the GMC, had clarified the same during a video game trade show. “It is a misconception that the game committee blocks new technology such as blockchain and NFTs. The game industry promotion act, unlike other laws promoting culture, is established to prevent speculation,” he said, according to a report by Forkfast.
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