Trend of 'Content Diversification' in the Game Industry… Smilegate Files for Film Production and Distribution Business

Game companies are expanding their territory into content businesses. As growth in the game market slows, they are seeking new revenue streams. Smilegate, which lost with 'Omniscient Reader's Viewpoint' but gained with 'COLONY', has completed administrative procedures related to its film business.

According to Seongnam City on the 24th, Smilegate filed a report for film production and distribution businesses with local authorities last month. The current 'Act on Promotion of Motion Pictures and Video Products' requires those engaged in film production, import, distribution, or exhibition for profit to file with local governments. Until now, Smilegate has operated its film production business through its joint venture 'Smilegate Realize', established with Realize Pictures; this marks the company's formal entry into the film industry at headquarters. At last month's shareholders' meeting, Smilegate added 'planning, development, production, and distribution of films, etc.' to its corporate purpose in its articles of incorporation.

This move is interpreted as an effort to secure a portfolio. Smilegate is a company heavily reliant on its representative IP (intellectual property), 'CrossFire'. While the MMORPG (massively multiplayer online role-playing game) 'Lost Ark', launched in 2018, has served as a core pillar until recently, its downward trend has become pronounced. Sales of Smilegate RPG, the legal entity responsible for MMORPGs, peaked at 737 billion won in 2022, then declined to 523.7 billion won in 2023 and 475.8 billion won in 2024—a decrease of 35.4% from the peak. Although Smilegate RPG merged with headquarters and is no longer separately disclosed, industry estimates suggest 'Lost Ark' generated sales of around 280 billion won last year.

Smilegate's film production record currently stands at '1 win, 1 loss'. The web novel IP-based film 'Omniscient Reader's Viewpoint', released last year, failed as its audience reached only 20% of the break-even point. At that time, Smilegate is reported to have shouldered about 40% of the production costs exceeding 30 billion won. In contrast, this year's release 'COLONY' attracted approximately 6 million viewers, surpassing its break-even point of 3 million. Smilegate also participated as a provider in 'Vampire', known as actor Yoo Ah-in's comeback film, with a target release date of 2028.

Other game companies are also attempting to enter content businesses such as screen media. Nexon invested in director Jang Hang-jun's 2023 film 'Rebound'. Krafton produced short films including 'Ground Zero' and 'Bystanders', based on the world of its representative IP, PUBG. Last year, Krafton acquired Japanese advertising and content company ADK for approximately 700 billion won. JTBC drama 'The Youngest Son of a Chaebol Family', invested in by Wizy Studio—a subsidiary of Com2uS focused on content production—achieved a final episode viewership rating of 26.9%.

This diversification of revenue streams is driven by the slowing growth of the domestic game market. According to '2025 Korea Game White Paper' published by the Korea Creative Content Agency, the annual growth rate of domestic game market sales reached 21.3% in 2020 but was only 5.8% in 2022, 3.4% in 2023, and 3.9% in 2024. In addition to the film industry, Smilegate is pursuing non-game businesses including the construction of two 50-megawatt-class AI data centers (DCs) and a theme park project (Jeju Dolcori Forest).

An industry insider stated, "Since games are a box-office business where success means a jackpot and failure means total loss, they share similarities with content ventures." The insider added, "There is also the advantage of discovering IPs or extending their lifespans by expanding game IPs into video formats or re-releasing video IPs as games."