The gaming industry is booming right now. The pandemic decimated the retail, hospitality, tourism and so many other industries, but was a boon for the gaming industry across almost all verticals. From large game developers to peripheral makers, as well as chairs and more – there was a boom in users and buyers during lockdowns.

According to Newzoo data, 82% of the Southeast Asia’s urban online population are gamers and most are willing to spend on games. This makes this a highly lucrative market, but are we seeing the love for local developers?

Speaking to Xsolla, who recently launched a new solution for game developers, we tried to get some insight into how the a global company like them views the industry. A company spokesperson shared:

“The gaming industry has been seeing significant changes, from the increase in users and usage to the recent implications from the Apple versus Epic ruling. This has presented opportunities for game developers to scale up faster than ever before. Southeast Asia is primed to be one of the fastest-growing markets in the region with good broadband and smartphone penetration. This is why we see the region, especially Malaysia as a growth market for Xsolla as well and with the launch of our new solution called Xsolla Web Shop we want to help developers in the region reach a wider global audience of gamers that they might not have had access to before.”

While there seems to be interest in the region, questions do remain about what is the likelihood of building a thriving ecosystem. Also, can Southeast Asia keep up with the rest of the world in terms of talent, marketing dollars and more – to build a sustainable and growing industry?

The potential for the gaming industry in Southeast Asia

There’s no denying the potential for growth from a consumer standpoint, but does that really translate to a thriving local development culture.

Competition is stiff and global players like Sony and Tencent, to major casual game developers like Supercell and Niantic, have majority market share around the world. There does not seem to be large gaps in the market even on a local level. However, that doesn’t mean there isn’t a growing local development scene and we want to find out more.

However, game development houses are small companies in Southeast Asia. Estimates say that about 60% of game companies in Southeast Asia consist of less than 11 employees. To give you some context, Supercell has around 340 employees and companies like Tencent and Sony number in tens or hundreds of thousands (not all in gaming, but likely to be much larger teams).

To get a better sense of what is going on, we spoke to James Wong, Head of Marketing for Mason Games, a local developer that just launched two titles in the region. They are aiming to create hyper-casual Asian-inspired games for the Asian users. Joining the discussion is Kit Lau, co-founder and Director of Product Development of Dynamite Games and Cargo Studio. Cargo Studio is a Singapore-based game incubator started to help indie developers build and ship games more easily through their incubation programme.

We were lucky enough to get some insight from them about the local industry and to also better understand the potential of the local game development industry.

Southeast Asia isn’t bereft of game developers

We should also mention that the region does have their own ecosystem of locally produced games. Though they might not be household names, there are definitely some strong players in the market. Besides Mason Games, James shared a few developers like Kaigan Games in Malaysia that focuses on story-based gameplay. They have indie hits like Sara is Missing and Simulacra 1 and 2.

He also mentioned Malaysia’s Passion Republic Games, the creators of the upcoming arena brawler, GigaBash and from Vietnam, Sky Mavis who developed the NFT-based online game, Axie Infinity.

So why is it that we don’t know a lot about the local gaming industry? Both James and Kit were kind enough to share their insights with us.

Why should Southeast Asian consumers care about locally produced games compared to those by established developers?

Kit Lau (KL): This is always going to be a hard question to tackle, especially so when indie-developers address them with potential investors. In my opinion, game development is an art form. Why does a writer want to write a book? Why does an artist paint a picture? Indie game developers are game-makers who wish to create a livelihood doing what they love, crafting game experiences for people to enjoy. The motivations of an established developer tend to be for-profit while the motivations for indie-developers can be as simple as being able to continue developing games while putting food on the table. Every indie developer would love to see their game sell well, and many of these studios are also willing to put back a lot of these revenues to deliver more ambitious titles to their players. I often find that indie titles contain a little more soul and character, and developers are more willing to be experimental and bold with their design direction. It is, after all, the canvas they choose to display their artistic expression.

That being said, like any other art forms, you will find artists regardless of the cities or culture and there will always be game makers in your neighbourhood. Supporting locally produced games is a way of fuelling your local talents. With enough support and experience, you will start to see big publishers taking notice of them and eventually supporting them in creating larger projects. Every indie-team has the potential to be the next Supercell, we can only hope that it is the Supercell of ‘insert-your-country’ if we support our local developers enough.

James Wong (JW): A novel experience is what gamers seek when they play games. This applies to all video gaming platforms. At the end of the day, what matters is the gaming experience provided by each mobile game installed by the user. Great games don’t necessarily only come from well-established developers.

Take, for example, Flappy Bird. The game created a whole genre for itself, hyper-casual. The game was designed by an individual developer in Vietnam who rocked the world with its simplistic yet interesting gameplay. The game is fairly straightforward and does not feature cutting-edge graphics or sound design. And yet, it captured the attention of millions around the world. 

James Wong Mason Games
James Wong from Mason Games. Image courtesy of Mason Games

The Southeast Asia region has always been the go-to place for large studios to outsource certain parts of their triple-A projects. This is due to the growing talent pool that offers much more competitive pricing.

This goes to show how we have all the right ingredients to make awesome games right here in our region. We also have unique stories to tell. We have cultural and historical diversity that could be translated into an interesting storyline or gameplay. Our rich Asian history has always been used as an element in games and other entertainment media in the West. So, why don’t we tell the story for a change? Great games can come from anywhere, and it is in our best interest to start paying attention to regional potential as we’re slowly turning into a strong competitor in the digital economy space. 

All we need is the necessary funding and a viable business model to start working on fresh new ideas and turn them into exciting gaming experiences, be it on mobile or other platforms. 

How do you address the talent crunch in the market? Is there enough tech talent to compete with the global players?

JW: We are looking for the best talent from each respective country in the  ASEAN region and, if need be, we will set up a presence in that country. 

For example, Vietnam is further along in the hyper-casual games industry than Malaysia. Hence, the abundance of talent, especially in development, is apparent. This is one of the reasons why we plan to set up an office in Vietnam next year to house our development team there. We hope to grow in the coming years and become an attractive prospect to talented local graduates. 

KL: As far as my career in the games industry has shown me, while subjective, I am inclined to say that you will not find a lack of developers willing to join the game industry. We are definitely losing talents to the other industries because games do not pay as well. Like every vocation that is primarily passion driven, you will find that people are willing to work for less if they enjoy the work. This is one of the reasons salary for game-developers in larger entities can be kept low. Coming from a start-up and indie setup, I feel that game-developers can stand to earn more if they can find a way to branch out and create their own IP and brand. That being said, tech talent or not, crafting a fun experience on mainstream game engines like unity is not rocket science, creativity plays a larger role than technical competencies. 

Can you highlight the current gaps in the market that need to be resolved or fixed before Southeast Asia can compete on the global stage?

KL: First of all, SEA is a fractured market. Each country is distinct in every metric that market analysts care about. The diversification challenges the indie developers to build a soulful game for a substantial target audience. Language localisation, genre-preferences, aesthetic and artistic preferences vary across the region. Original content, though tasteful and rich, can sometimes be under appreciated.

Coming from an indie-developer standpoint, there are a few aspects of development I feel we may need to solve: 

  1. Ability to market effectively across different markets, platforms and languages.
  2. Raise investors’ confidence level as a whole through various means.

Once we are able to prove that our games are just as good as ‘the others’, by having numbers and figures to back up the claim, we will be able to improve our chances at unlocking substantial investments to grow the operations. One of the most effective strategies for an indie studio is to develop as many game projects as their budget allows. The notion of building a single big IP with all the money you have is risky and seldom works out. Each game project will teach you a different lesson and help you expand your perspective. The game here is not to build the whole rocket on your own, indie developers should be offering unique designs and creative means for space travel, hoping one of these ideas stick so well that somebody is willing to fund it into reality.

JW: I believe the main challenge for Southeast Asia would be the funding capabilities to compete with the world leaders, especially from Europe and the United States. Funding plays a vital role as building a game has a lot of moving parts in all of its development stages, and requires different input of resources both in-house and outsourced. Having secured funding would eliminate any unnecessary delays or compromise in quality to help developers build games that could compete in the global market.

Besides that, we need to look at language in games, so it would not be such a huge barrier to have wider acceptance within the very fragmented Asian landscape. At the moment, English is widely used as the language for most games. But there are developers out there who opt for using visual cues and design to convey meaning instead of employing one specific language. This helps gap the language barrier problem and opens up potential new gameplay opportunities.

Scoopy – The Ice Cream Adventure. Available on the Play Store from Mason Games

And finally, the government support system for the video games industry is not consistent across each SEA country, which presents unique challenges of its own. It’s difficult to foster an indie gaming studio scene as the foundation when there’s no support system built-in for the industry.

What’s next for the game development industry in Southeast Asia?

JW: Game development in SEA will see unprecedented growth in the next 5 years. We’re seeing hard data from reports in the region, as well as a shift in trends and accessibility that shows potential growth in the region. Here’s why we think that is the case: 

  • Shibuya Data Count also forecasted that the Compound Annual Growth Rate (CAGR) of the gaming industry in Southeast Asia will reach 8.5% in the 2020-2025 period. The six countries in Southeast Asia with the largest gaming markets, with no particular order, are Indonesia, Malaysia, Thailand, Vietnam, Singapore, and the Philippines.
  • A recent report by Newzoo showed that the region’s gaming market is on target to generate over $4.3 billion USD in revenue for the 2019-2020 year. As Southeast Asia continues to have a steadily growing online population, thanks to an increased number of smartphones, its mobile games market is the fastest-growing in the world. 
  • With the SEA region experiencing exponential growth in gaming and everyone is eyeing this lucrative market. This is great news as this means the ecosystem across all SEA countries will be strengthened and provide the ability for home-grown players to truly compete globally.
  • More types of games are accessible to SEA gamers as we’re seeing an improvement in their tech hardware. With better phones and better internet coverage, the future of game development is set for meteoric growth.
Cargo studios Season 2 incubation programme
Cargo studios Season 2 incubation programme. Image from their Facebook

KL: As publishing firms are consolidating and competing for unique and exclusive content, indie studios are sought after for their agility and risky-but-unique game ideas. While development costs in SEA remain one of the lowest in the world, we can expect more investors looking to create more entertainment products to feed the market’s appetite. The opportunities for indie studios lie in the ability to prove their capabilities through the titles they have developed and developing a trusting relationship with people from around the world.