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Nov, 2020     

ASEAN GAMING PART 2: Game On!

This market seems to have a lot of preconditions to achieve massive growth over the next 2-3 years. If the right supply side levers are pulled, this opportunity could multiply 2x by 2024E.


1. ASEAN has a higher share of female gamers compared to global average, the % paid userbase for Females also is comparable to male users – indicating a lucrative opportunity that may largely be untapped

The persistence of male gamer stereotype in the society and the fact that traditionally video games were designed by males for males has always eclipsed the idea of presence and popularity of female gamers in society.

However, now is the time to realize the scope of the opportunity presented by female gamers.

ASEAN, has a significantly higher share of female gamers than the global average, presenting a lucrative opportunity since a promising portion of the female users already are paid users.

​Split of Gaming population by Male/Female, % split

Split of Gaming population by Paid/Free users, % split

2. Share of payment modes has seen a significant shift owing to COVID towards digital modes; we expect a lot of this change to sustain in future as well

Vouchers purchased from offline stores figured prominently in the payment mix for gaming over digital payment methods due to the belief that these methods are more complex.

However, COVID driven digitization wave has made a large portion of users try out digital payment channels and familiarise themselves with it.

Now having realized the convenience of online channels and being familiar with it, we expect the payment mix to remain skewed towards digital methods and move further in that direction in the medium term.

Payment mode mix, % split

3. eSports which was gaining in traction over past 2 years, has continued its rise and is moving to a complete online/virtual execution

Electronic sports, popularly known as e-sports has historically struggled for legitimacy in comparison to other traditional sports, but now with increased viewership and money inflow, it has started gaining acceptance in this region over the past 2-3 years:

Esports featured as a demonstration sport at the 2018 Asian Games held in Jakarta, Indonesia from August 26 to September 1, 2018.

Following that year in 2019 esports featured as a Medal sport for the first time at the 2019 ASEAN Games held at Metro Manila, the Philippines from December 5 to December 10, 2019.

Over the last two years, esports has started gaining traction in ASEAN

4. Firms are striking interesting partnerships to ride this wave of growth; start-ups are gaining support and raising funding

During COVID, companies have witnessed a great rise in users both active and paid and in order to maintain this base, gaming companies are trying to come up with innovative and engaging collaborations to keep their customer base intact and entertained.

Rising prominence of esports industry has left many with a desire to own a slice of this pie. The industry offers various investment opportunities and many Investment firms and even celebrities are showing interest in some of these start-ups.

Gaming firms are striking partnerships with content platforms

New gaming start-ups are raising Funding

5. The growth is not without its share of challenges; however more monetization levers and move towards direct distribution augers well for profitability

Despite having immense potential for growth, the gaming industry in Southeast Asia has its own share of obstacles. There are multiple factors influencing the success of this industry in the region, like the ability of home-grown companies to please local as well as global gamers, overcoming the hurdle of digital payments etc.

Other organizational factors like fighting the challenges posed by COVID and diversifying the workforce are also key needs of the hour.

However, monetization levers have increased considerably over the years, companies now have plenty of options to choose from. In fact, they can now opt for hybrid strategies based on what works best for their games, it could be a combination of IAP & IAA or Subscriptions and Pay Walls. This along with a shrinking value chain, which leads to direct distribution, augers well for profitability.

The new value chain has also led to creation of new business models like Free to play, subscription-based models, etc.

Challenges faced by the gaming industry

Traditional Gaming Value chain

6. This opportunity with the right supply side impetus could multiply 2x by 2024E

The user funnel for online gamers had significant room to expand in 2020 and beyond.

With more users coming online thanks to COVID, the funnel has expanded in size and presents a massive opportunity.

Growth in active and paid users will help drive growth in the market with increase in user revenue and also increase in advertising revenue that can be generated at the back of a much larger userbase.

This market seems to have a lot of preconditions to achieve massive growth over the next 2-3 years. If the right supply side levers are pulled, this opportunity could multiply 2x by 2024E.

User Funnel for Online gamers

Notes:

  • Figures representative of 6 ASEAN nations – Indonesia, Vietnam, Singapore, Malaysia, Thailand, Philippines
  • Revenue figures also include Ad based revenue which accounts for 35-40%+ of overall revenue pie

ASEAN Gaming industry size (2019-24E), $ Bn

Note: Figures representative of 6 ASEAN nations – Indonesia, Vietnam, Singapore, Malaysia, Thailand, Philippines