Games Market Trends and Publishers to Watch in Southeast Asia: The World’s Fastest-Growing Mobile Games Market
This article is a collaboration between Newzoo and gamescom asia.
Southeast Asia’s games market is growing rapidly. In 2019 alone, it will generate game revenues of more than $4.3 billion — a remarkable year-on-year growth of +13.9%, as shown by Newzoo’s Global Games Market Report. Linked to this impressive growth is SEA’s rapidly increasing online population, a byproduct of the region’s increasing number of smartphone users.
The SEA games market is like no other in the world, in terms of tastes, top publishers, and more. In this article, we explore the market’s games landscape, zooming in on notable local and foreign game companies’ performance in the exciting region.
We focus on the six markets that make up the majority of Southeast Asia’s gaming market: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Many publishers across the globe are already targeting SEA, with some striking results. The swell in the number of SEA’s smartphone users is reflected in the region’s mobile games market, which boasts revenues of $2.6 billion this year and a year-on-year growth of +17.4%, making SEA the fastest-growing mobile games market in the world.
This year, these mobile revenues will account for 69.4% of the region’s overall game revenues, compared to PC’s 22.3% and console’s 8.3%. While console, mobile, and PC revenues are each growing in the region, mobile is growing the fastest, as shown by mobile’s share of game revenues growing from 67.3% in 2018 to this year’s 69.4%. Naturally, the mobile-first nature of SEA’s games market means that publishers with a focus on mobile are dominating. And companies both local and overseas are vying for a piece of this high-potential growth region.
Is Mobile’s Dominance in Southeast Asia’s Games Market Sustainable?
For many publishers and developers trying to find success in the market, mobile is the go-to point of entry. There are many reasons for this; firstly, from a development perspective, the development process is often simpler for mobile titles, compared to console and PC. On a consumer level, smartphones are more affordable (low- and mid-spec devices, in particular), and consumers already use them for other aspects of life — social, business, and other leisure activities.
Most mobile games, including the most popular and highest-grossing titles, use the free-to-play monetization model. This model is not yet the standard for PC and console; although, it is becoming more popular. But that’s not to say revenues from these free-to-play mobile games are less sustainable.
Mobile is leading the charge for innovative monetization, and the most successful mobile titles, including Pokemon Go and Honor of Kings, can retain players — and payers — for as long as most of the biggest titles on PC and console. Many of these monetization techniques are also trickling into console and PC titles.
Despite mobile’s dominance and increasing market share, console-and-PC revenues are still on the rise in the region. PC-and-console developers are continuing to invest in SEA, in line with the population’s growing disposable income, giving consumers the means to spend more on entertainment and the technology that comes with it.
The growing population in the region presents an attractive opportunity for console- and PC-first publishers. Adding to this, Ubisoft and EA are already consistently ranked among the largest game publishers in SEA (by revenues), thanks to their widely known IP strong content offering on console and PC.
As SEA continues along its strong growth trajectory, it could also be the ideal environment for cloud gaming. After all, one of the promises of cloud gaming is easy consumer access to a range of titles, without them needing to own expensive, high-end hardware.
The technology could mark an inflection point of gaming in Southeast Asia, bridging the gap between AAA PC-and-console and the region’s mobile-first playerbase. As things stand, publishers are making less-demanding versions of their titles specifically for markets like SEA — PUBG Lite on PC, for example. Cloud gaming may disrupt this, bringing a range of high-fidelity games to Southeast Asian gamers.
Successful Local Publishers in the Mobile-First Market of Southeast Asia
Local company Sea Group (previously known as Garena) is one of the top publishers in the region, having previously built a name for itself by publishing and localizing Chinese company Tencent’s games in SEA. The company released its first original IP and title, Free Fire, last year. The title was a huge hit in Southeast Asia, dramatically spiking Sea Group’s revenues in the region, with Thailand accounting for the highest share.
Free Fire’s success was not just limited to SEA, however, with the game also performing well in another growth market: Latin America.
Sea Group’s success came at a critical time, as Tencent decided to self-publish PUBG Mobile in most markets in SEA, signaling that Sea Group could no longer rely on publishing Tencent’s games to solidify its position in the region. As of November 2018, however, Vietnamese company VNG has been the publisher for PUBG Mobile in Vietnam, leading to a significant increase in its revenues and made it one of the region’s notable local game companies.
Singapore-based publisher I Got Games (IGG) is another top player in SEA, with its large number of titles across PC and mobile; however, its mobile revenues are declining in the market — a result of the publisher’s aging roster of games, which include the popular Lords Mobile.
Finnish company Supercell has faced similar issues but has since started to regain its position, owing to the success of one of its more recent titles, Brawl Stars, in the region. This highlights the importance of releasing new games in offsetting player fatigue.
Chinese and Korean Companies Continue to Invest in — and Double Down on — the Southeast Asian Market
Tencent continues to be one of the region’s top-performing game publishers in terms of revenues, boasting strong year-on-year growth in terms of revenues, helped in no small part by the ongoing popularity of PUBG Mobile in the region. Tencent is also planting the seeds for future revenue success in SEA’s growth markets, thanks to PUBG Mobile Lite, which features less-demanding minimum specification requirements and download sizes compared to ordinary PUBG Mobile — perfectly accommodating for the devices in the emerging mobile (gaming) market.
Other Chinese companies are also making moves in the region. Two notable publishers are ZlongGames and GAMENOW; the former company had multiple had a slew of releases this year that fared extremely well in the market, RPG Laplace M and strategy game Langrisser chief among them.
Similarly, GAMENOW struck success in the region with MMORPG game Mu Origin 2. Chinese company EFUN, however, decided to shift its focus from SEA to South Korea earlier in the year, which is reflected in the company’s decreasing mobile revenues across the region.
Speaking of South Korea, some of the country’s developers are also performing very well in Southeast Asia. Gravity, a subsidiary of GungHo, has doubled down on the region, investing heavily to promote its IP in the region — particularly the Ragnarok franchise. The results are clear, with the company’s revenues skyrocketing since 2018.
Korean company NEXON also enjoyed increased revenues in the region, mostly thanks to Maple Story and FIFA ONLINE. This trend is echoed in the company’s global numbers, though, with NEXON boasting back-to-back record-breaking quarters.
The diversity — by location and games library — of games companies demonstrate the uniqueness of SEA’s games market. What’s more, the individual markets within Southeast Asia are singular and have vastly different preferences from one another.
Compare different markets within another region, for example, within Western Europe or South America, and you will find far more consistency. This makes targeting relevant markets within SEA vital for any company looking to rollout their game — or strengthen their presence — in the region. In future articles, we will be shining the spotlight on individual markets with Southeast Asia, as well as other successful publishers.
