The South Korean Government wants global app stores such as the App Store and Google Play Store to block the distribution of play-to-earn (P2E) games in the country. It has further asked for existing P2E games to be removed from the stores as well.

P2E players usually buy game items as NFTs prior to playing, to win in-game prizes. However, as per South Korean law, a gamer can only win a maximum of 10,000 Korean won ($8.42) in one go. A GMC official said that it is adhering to the precedent set by the country’s Supreme Court to prevent P2E games from getting age ratings. This will ensure that such games will not be listed on the most popular mobile app stores. The official justified its move by saying, “It is reasonable to keep P2E games from getting age ratings under the current law because cash rewards in games can be considered prizes.”

However, it is to be noted that the GMC is only banning P2E games, and not games that use blockchain in general. GMC chairman Kim Gyu-cheol, back in November, said:

“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.”

South Korea has always maintained a strict stance when it came to gambling. And when it comes to NFT and P2E games, the government views them as a form of gambling. Last month, South Korea’s gaming regulatory board, the Game Management Committee (GMC), stated that games featuring tradeable crypto assets such as NFTs cannot be given age-appropriate licenses. This, in turn, blocks the distribution of the game in the country.

Some game developers, in an attempt to bypass the GMC’s rulings, were known to release their games directly to the App Store and Google Play Store. The South Korean regulator was quick to catch on and is attempting to thwart these attempts by blocking P2E titles entirely. Now, developers will need to apply to the GMC for permission to release their games to the App Store and Google Play Store. App marketplaces will also be told to block games that warrant in-app purchases before playing.

Our Take

While we believe in the free-market theory and would like market forces to shape businesses and products, it is still a bad idea to mix gambling with video games. Any time a game has gambling, microtransactions, and pay-to-earn elements, it shifts the game developers’ focus from making the games fun and challenging to sacrificing the underlying gameplay at the altar of profits. This invariably leads to the core gaming experience being made unsavory in order to force gamers to fork out money. And that’s never a good idea.