Evolution of innovation focus of online games: from technology-oriented, through market-oriented, and to design-oriented soft innovation

Abstract

This paper aims at analysing the evolutionary innovation patterns of the online games industry in Korea. Online games, as IT-based and creative service products, are important in the development trajectory of Korea, in that Korea created a new global leadership for the online games industry breaking the traditional catch-up innovation pattern. Two research hypotheses are examined and accepted based on questionnaire surveys and in-depth interviews. First, a quantitative analysis as to the hours of online game playing for 250 games over the last 19 months demonstrates that a few games dominate the online game market in Korea, which implies network externalities in the online games industry. Second, from the perspective of evolution, the innovation focus of online games changes from technology-oriented, through market-oriented, and finally to design-oriented soft innovation. This paper introduces network externalities as the reasons why design-oriented (non-technological) soft innovation has become significant in online games over time. The results of this study suggest managerial and policy implications. Online games companies are recommended to expand the research and development (R&D) capabilities of non-technological and soft innovation in combination with those of technological innovation to improve strategic competitiveness. From the point of innovation policies, the redefinition of R&D scopes is required as a pre-requisite step for diversifying the government R&D support into the areas of non-technological and soft innovation capabilities. The government effort to grow human resources with a high level of creative capabilities relevant to soft innovation also needs to be made.