Although it’s only just begun, 2019 has already proven to shine a global spotlight on Southeast Asia, whether it be in light of the rampant rise of e-commerce, the region’s seemingly limitless potential for foreign investment, or the ‘startup fever’ that is continuing to the sweep the east.
The burgeoning digital gaming market has also started to solidify some serious roots in Southeast Asia. Digital gaming takes many forms but is generally characterised as video game competitions between both professionals and teams which incorporates virtual reality, blockchain protocol, and online wagering sites.
Let’s examine in more detail how that industry is shaping up and what the forecast is for this lucrative market.
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The statistics are solid
According to a report released by Newzoo, a prolific global provider of esports and gaming analytics, at just over 36%, the size of the esports audience in the region has the highest predicted Compound Annual Growth Rate (CAGR) between 2015 and 2019, leading the upward trajectory globally.
Now that 2019 is in full swing, new statistics released surpass these initial predictions. Market research firm Niko Partners predicts that the compound number of PC and mobile gamers in Southeast Asia will rise to a staggering 400 million, accumulating a combined revenue of $4.4 billion USD by 2021. Niko Partners was forced to revise their statistics to account for growth beyond expectations due to the strength of Esports and heavy hitting international games entering Southeast Asia’s market.
The influence of the ‘Big 6’
Although growth of the internet economy can be found throughout all parts of Southeast Asia, a group of nations dubbed the ‘Big 6’ has taken the reigns in terms of maximum growth, particularly in the digital gaming and e-commerce sectors. The nations that have earned this accolade are namely: Malaysia, the Philippines, Singapore, Thailand, Indonesia, and Vietnam, with over 98% of Esports engagers residing there.
Indonesia and Thailand take the biggest market share of gamers, followed by Singapore. However, in terms of revenue, Malaysian gamers take the cake, generating $589.4 million USD in 2017, the largest compared to all other Southeast Asian nations. Over half of this spending stemmed from mobile gaming, with PC gaming coming in next at 35%. Ultimately, these markets have the potential of offering multi-billion dollar earning opportunities for digital gaming startups in these regions.
Regional gaming giants
October 2017 saw Singapore’s gaming giant, SEA (formally known as Garena) raise $884 million USD in an initial public offering (IPO) for mobile gaming and PC operations. The success and level of growth of Sea’s user base can be, in part, attributed to the expansion of its digital services application, AirPay.
Additionally, Tencent Holdings–a multinational Chinese investment holdings firm, has invested in Sea through every step of the company’s growth. As a result of this capital injection, Sea has been able to license all of its games in the Southeast Asian market. As one of the most significant accolades to date for digital gaming, Sea became the very first technology company from Southeast Asia to be listed on the New York Stock Exchange, which is ultimately what lead to such a huge IPO investment.
In terms of other players in the region, local e-commerce giant Lazada brought the Razer game store to Singapore, which has since been opened in Thailand, Malaysia, Indonesia, and the Philippines. Streamline Studios in Malaysia followed suit in 2017 by collaborating with Square Enix and Capcom, two very large game companies in the region.
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Looking ahead
With increasingly favourable predictions coming from reputable research firms such as Newzoo, the rise and economic potential of esports needs to be examined in terms of growth of the digital gaming world. In late 2017, the Olympic Council of Asia (OCA) announced that esports would be considered an official competitive sport at the Asian games in 2022. The Asian Games is the world’s second largest sporting event behind the Olympics. And at the most recent Asian Games event held in South Korea, 10,000 athletes and 45 national delegations participated, demonstrating its major global recognition.
Due to popular demand, ‘esport academies’ have opened throughout China and Southeast Asia. They teach both the technique and strategy of esports to upcoming and potential competitors. The recognition of digital gaming and its penetration into the sporting world shows major economic potential for the sport, both worldwide and in Southeast Asia.
Taking into account that Southeast Asia’s mobile usage has hit an all-time high, is continuing to grow at a rate of over 3.5 million users per month, and with credit card penetration increasing in the region, it can be expected that digital gaming will continue its rapid upward growth trajectory over the coming years.