Korea Update: Foreign Game Companies to be Mandated to Designate Local Representative

Amendment to Game Industry Promotion Act Mandating Designation of Local Representative

On September 26, 2024, the Korean National Assembly passed an amendment to the Game Industry Promotion Act (“GIPA”), which would mandate foreign video game companies operating in Korea to designate a local representative.

As the popularity of video games serviced by foreign companies, especially mobile games, has risen in recent years, there has been increasing complaints regarding compliance of local regulations from both the public and local companies. In particular, although companies servicing video games in Korea are mandated to disclose probability figures for loot box-type items from Mar. 22, 2024 onwards, some foreign video game companies have not complied.

However, since many foreign video companies service their products through platforms and do not have a physical presence in Korea, it has been difficult to enforce compliance with regulations.

With the above background, this GIPA amendment seeks to strengthen compliance by mandating foreign video game companies servicing games in Korea to designate a local representative, who will be responsible for reporting and disclosure obligations.

Key Provisions

Under the newly added Article 31-2 of GIPA, certain video game publishers or providers without an address or business site in Korea will be required to designate a local representative handling (i) reporting under Article 31(2) of GIPA and (ii) disclosure under Article 33 of GIPA.

Further details are as follows:

• Only video game companies that are larger than a certain threshold will be subject to the above requirement. This threshold is not yet determined, but will be based on factors such as number of users and revenue.
• “Reporting under Article 31(2)” refers to responding to government compliance requests.
• “Disclosure under Article 33” refers to various disclosure and labeling requirements, and includes disclosure of probability figures for loot box-type items.
• Non-compliance with the above requirement may result in an administrative fine of up to KRW 20 million.

Implications and Outlook

This GIPA amendment is designed to enhance the government’s ability to force compliance with local video game regulations, even for foreign companies that do not have a physical presence in Korea. This requirement is scheduled to take effect one year after the amendment’s promulgation; during the intervening period, specific standards for enforcing the law will be established, including the size threshold triggering the requirement. Therefore, it is crucial for major foreign video game companies to review and meet the requirements during the one-year intervening period.

By Yulchon, Korea, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact korea@transatlanticlaw.com

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