Southeast Asia Is The Worlds’ Fastest Growing Games Region

Apr 17, 2015

When the games industry talks about Asian markets, it’s generally about the established regions China, Japan and South Korea. However the new market reseach report from Newzoo has indicated that, not only are there countries where gaming is growing more quickly, these territories could also prove to be more profitable than the established regions. Total revenues in Southeast Asia reached almost $1.1Bn in 2014, with six key countries accounting for 99% of the total revenues generated in the whole region: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. At a Compound Annual Growth Rate (CAGR) of +28.8%, the region is expected to grow to $2.2bn in 2017, double that of last year. Largely, that growth is down to the rapid modernisation of the region, particularly the growth in internet users. Because these are territories which have lacked some of the infrastructure to provide extensive, stable wired internet, their economies are leapfrogging directly to mobile internet, much in the same way that India and South America’s have.

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In addition to its sheer size and potential, Southeast Asia is very interesting to monitor over the coming years for another reason. Many Japanese, Korean and specifically Chinese game companies have had mixed success in trying to conquer the West. Many have since shifted their attention to countries in Southeast Asia that are closer in terms of geography and (game) culture. At the same time, Western companies have spotted the potential and set up local offices and localized content. Southeast Asia will undoubtedly be a key battleground for global players in the games space.

Underlying this exciting growth is the overall region’s thriving economy and increasing online connectivity, but growth varies locally across the “Big Six” countries.

Key regional facts illustrate the growth potential. The population of Southeast Asia is estimated at 626 million. Only a small share of these people have access to internet: 29%, representing 179 million consumers. In this group, gaming is extremely popular. Over 70% plays games. Of these 126 million gamers, 60 million spend money on games. In 2014, these 60 million consumers spend an average of $18.40 on games totaling $1.1bn. These KPIs differ enormously per country in this very diverse region. Thailand will remain the largest games market in terms of revenues in 2017, followed closely by Indonesia and Malaysia. Similarly, Vietnam will grow in line with the overall Southeast Asian market to maintain its market share of 14%. Singapore will continue to grow, but lose some of its market share to faster growing countries, namely Indonesia and the Philippines.

Understanding Growth in a Broader Context
Newzoo’s report puts country-by-country KPI data into a broader cultural and economic perspective. Some key insights include:

Quantity and Quality: The sheer size of the Southeast Asian population, its rapid rate of urbanization (1.4% average annual rate of change compared to China’s 0.5%), and its young and tech-savvy demographic, are all factors favorable for growth.
Strength in Numbers: Indonesia’s demographic strength pushes the country ahead of the pack. Its enormous population of nearly 253 million accounts for 40% of the entire Southeast Asian population. While Indonesia still has the lowest internet penetration rate in the region, it already has the largest online population, indicating huge future growth potential.
Increasing Connectivity: Between 2004 and 2014, internet access in the Philippines grew more than 800%, the fastest rate in the region, due primarily to the boom in mobile internet.
Mobile Takeover: With the rapid increase in (mobile) connectivity in Southeast Asia, it is no surprise that mobile phone games are catching up with PC/MMO games in terms of revenues. Vietnam is quickest on this trend, with mobile phone games seeing a CAGR 2013-2017 of +87.7%, becoming the biggest segment in terms of revenues by 2017.

Relevant Links:
SEA Package: Southeast Asia Country Data & Full Report
FULL 75-Page Report: Introduction to the Southeast Asian Games Market
Read more at http://www.newzoo.com/insights/newzoo-report-1-1bn-southeast-asian-games-market-to-double-by-2017/#O3ERgO8zBg0AOFof.99