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South Korea Betting Big On The Metaverse

South Korea’s government showed the country’s interest early in 2022 in getting a lead in the metaverse world by announcing a US$170 million fund to invest in virtual reality and other digital technologies. 

These funds are to set the stage for South Korea to be among the top five nations in metaverse developments by 2026. South Korean President Yoon Suk-yeol stated that the technology is a national priority. The Minister of Foreign Affairs Park Jin doubled down on that message while at the forum for Global Innovation in Seoul, saying the country is set to be a powerhouse of the metaverse.

The term “metaverse” refers to a network of 3D virtual worlds that are typically accessed through VR (virtual reality) headsets and avatars as part of a decentralized internet or web3. Built around blockchains, it is the underlying technology of cryptocurrencies.

There are mixed opinions of the metaverse and where it will take us. Phil Spencer, chief of Microsoft Gaming and head of Xbox, dubbed the metaverse a “poorly built video game”. But An Dong-wook, chairman and chief executive officer of South Korea’s AI and metaverse company Miso Information Technology, had another view. “[The internet] helps humans overcome the limits of time and space, but it is not effective for situations that require in-person communication or emotional interactions”, he stated in a Forkast interview. “That is why the metaverse is striving to produce a replica of a real-life environment”.

An says that South Korea has the potential to be a leader of the metaverse age, powered by the popularity of the country’s cultural content, such as K-pop, adding that the country quickly adapts to new technology in general.

Metaverse Love

A number of South Korean companies along with local governments have piled into metaverse projects. 

Seoul is building its virtual replica of the Korean capital in a project that will provide citizens with digital civil services. Local governments such as Seongnam, Busan, and Gumi have all announced similar metaverse initiatives.

The Eastern Gyeongbuk province has proclaimed itself as the “metaverse capital” of South Korea after it announced a five-year initiative to invest US$13.8 million into “the local metaverse economy”. It estimates that this will add roughly US$780 million of value to the region.

The South Korean internet giant Naver has set up Zepeto, which is a metaverse platform that has 20 million monthly active users, one of the largest in Asia. Their rival the Ifland metaverse, run by the telecommunications leader SK Telecom, attracts users with K-pop brand collaborations.

Naver’s metaverse unit has joined the Solana blockchain to develop a new platform called ZepetoX. It is expected to allow users to monetize their activities through cryptocurrency. Ifland has already allowed some users to “cash out” in-platform points and rewards.

Some financial institutions and banks in Asia’s fourth-largest economy have set up shop in the metaverse as well.

KB Kookmin Bank, NH Nonghyup Bank, and Shinhan Financial Group have either already launched virtual branches on the metaverse or have their own virtual platforms to attract tech-savvy customers to their financial products.

Furthermore, South Korean companies reportedly trail behind only the U.S. in the amount of metaverse-related patent applications for VR and AR (augmented reality) since 2016, owning 19% of the 7000+ applications filed. The USA and South Korea account for 75% of the total.

Traditional Gaming Vs. The Metaverse

South Korea’s Science Ministry has defined the metaverse as a space where virtual and physical realities converge so that people and objects can interact and create economic, social, and cultural value.

This definition has upset some of South Korea’s online game developers after authorities said they will not regulate metaverse platforms in the same way as the existing laws do for game developers.

Their reaction comes as South Korea’s video gaming sector remains tethered to the strict rules and an unsavory reputation that experts in the region say is outdated and unfair. 

Video games are generally seen as a nemesis to school kids and teenagers in South Korea as the pressure put on them to get higher grades and into the best universities is especially intense. 

This year South Korea abolished the so-called Shutdown Law, which has been in effect for 10 years, banning under-16 players from online games between midnight and six in the morning. 

Another of the recent South Korean restrictions on video games that added to the controversy is the ban on incorporating blockchain elements into games, which includes the popular P2E (play-to-earn).

“I call it cognitive disorder”, Henry Chang, CEO of the South Korean-based blockchain game developer Wemade Co. said in an interview. “The metaverse is like a game, but it cannot be classified as a game because it would be banned”, he added.

Kim Jung-tae, a professor of gamification at Dongyang University, says current policies of separating games and the metaverse is like a “comedy”. Kim said that although the metaverse is very much a video game, when it is framed as a “game”, instant negative connotations follow. 

Park Hye-jin, a professor at the Venture Capital MBA program for the Seoul School of Integrated Sciences & Technologies says the metaverse has game elements but also has much more potential as a social platform and as a space for economic activities.

“New products and services that use new technologies need support from industry regulation and regulatory sandboxes, not purely from existing laws or pre-deliberations,” he stated.

SK Telecom’s Ifland metaverse, which recently added a cashable point system to the platform, told Forkast: “the Ifland platform is a social metaverse service, and is not related to games”, going on to compare Ifland to Youtube.

An of Miso Information Technology says that while the game-not-a-game debate continues in South Korea, the country should continue its investment in the metaverse, but disperse it across a wider range of platform developers.

Now is the time for the country to experiment and let the metaverse sector grow, he said.