A Time Series Analysis on the Effects of Deregulation on Online Games: A Case of Social Casino in Korea

Abstract

Online games including web board games have been known to contribute to fostering entrepreneurship in information technology; a number of big online corporations such as portal sites and mobile messengers have roots in game startups. A lot of tactics and format used to play games is also used to teach entrepreneurship and more. In 2013, the Korean government imposed strict rules to web board games and to the genuine online games framing it with a highly negative social perception. The regulation brought the fall of industry and in early 2016, the Korean government has relieved some of its regulations in attempt to revitalize the industry. The objective of this research is to investigate the outcomes of deregulation on a specific online game field, the web board game industry. According to previous research, government regulation is proven to have high relationship to how the industry and individual consumers form a consumption pattern. Literature shows that the regulations may result in devaluating the industry, followed by a sharp decrease in the market itself. This research provides empirical and quantifiable evidence of the deregulation results using VAR (Vector Auto Regression) and Granger causality test. The results show that the deregulation had no impact in reviving the industry. Using the framework of gambling theory, TAM (Technology Acceptance Model) and consumer perception, the study tries to explain the reasons for such results. More and more policy review research is concentrating in using quantifying methods. By providing an comparison of industry before and after the regulation/deregulation, this research also aligns to provide further evidence and guidance in evaluating government policies using quantifiable measurements.