How South Korea's Martial Law Affects Gaming

At around 11 PM on December 3, 2024, South Korean President Yoon Suk Yeol declared martial law in the country, the first time since 1980. The declaration was short-lived, however, as National Assembly members voted 190-0 to against it, and President Yoon lifting restrictions by the early hours of December 4 following a cabinet meeting. In this post, we examine the effect of the declaration and its political impact on Korea’s games industry.

According to Niko Partners’ 2024 Market Model Update Report, Korea’s games revenue is expected to grow 1.5% year-over-year to $11 billion following higher-than expected growth across the industry. While we initially expected 2025 to be a stagnant year for the Korean games industry, the declaration of martial law and the subsequent drama surrounding it might affect the economic situation slightly on to a more downward trajectory. Following the martial law declaration, it immediately plunged the Korean won to its lowest value against the US dollar since 2022 – we note, however, that the won later stabilized to levels similar to those after the US Presidential elections.

We also note that major shares on the KOSPI were down by more than 7% on average, but this was expected, and prices later stabilized to less than a 2% drop on average. When it comes to the country’s games industry, Niko expects some contraction compared to our initial estimates of stagnated growth purely due to exchange rate movements and investment concerns. Even though the declaration was lifted overnight, the act has led to heightened uncertainty among investors because of the potential of continued political instability.

Interestingly, we believe that as media and political gatherings are tightly controlled while martial law is in effect, online games might act as a safe haven for people to discuss developments, especially as they would prefer to stay at home to avoid any unrest. We also note that the stock price of several game companies such as Kakao Games, Webzen, Wemade, and Mgame even rose around 1% on average as the market stabilized following the lifting of the martial law declaration on Tuesday. This shows that the quick turnaround of events and the role of games as an entertainment medium could be seen positively even during turmoil. Alas, we will only be able to quantify the impact once game companies release their upcoming annual earnings report.

With the situation progressing away from domestic unrest, it is expected that that the impact of the martial law will only be slightly damaging to the short-term games market growth projection. Niko will continue to observe the situation in Korea. Subscribe to our Value-Added News Analysis (VANA) and read our upcoming market report on the Asia and MENA markets to see more of Niko’s analysis.

About Niko’s South Korea Coverage

South Korea is one of the notable East Asian video games markets that Niko Partners tracks for over a decade. Deep dive into the market through our East Asia Games Market Reports Series with the recently updated market model. Get regular pulse check on the industry through Niko’s Value-VANA, now in NikoIQ, our online intelligence dashboard. We also have custom research & consulting service that will help you answer more specific questions and develop strategic planning, tailored to your needs.

South Korea’s Short-Lived Martial Law: Potential Implication on the Country’s Games Industry