Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Coronavirus induced lockdowns confined people into their homes, forcing them to explore ways to entertain themselves indoors. Gaming became a top leisure activity during this time, and Asia alone has a $70 bn gaming market — teeming with opportunities in mobile, social, cloud and eSports gaming. The Asia gaming industry is among the fastest-growing region in the world, as per Google Consumer Insights, with several opportunities for developers, marketers, and strategists.
In 2022, video games are not limited to consoles and computers, a sizeable portion of the revenue is brought in by mobile games. Gaming market research firm Newzoo in a report said it expected 52% of 2021 global gaming revenue to come from mobile games. It also expects the global gaming market to grow to $204.6 bn by 2023, with mobile gaming leading the charge.
Asia gaming opportunities
Market intelligence firm Niko Partners in a report said it expects mobile and PC games revenue from Asia to hit $41.8 bn by 2025, with over 940 million gamers in the continent. Asia presents a major opportunity for game developers, publishers and other stakeholders as consumer demand increases along with disposable income and improvements to infrastructure.
Japan, Singapore, and Chinese Taipei (Taiwan) are regions with the highest ARPU (average revenue per user), while India and South Korea are seeing exemplary growth. Niko says India, Indonesia, Thailand and Vietnam are the fastest-growing markets for the gaming industry.
China is the biggest gaming market (PC, Mobile, Casino etc), with revenue of $49.25 bn, as per Newzoo’s list of top 10 gaming markets. Japan and South Korea are the two other Asian countries that make it to the list. Meanwhile, the easy accessibility of smartphones has pushed mobile gaming in the region. Newzoo expects players from the APAC region to spend $57.9 bn in 2021.
Each region in Asia has major behavioural and cultural differences. As pointed out by a Google Consumer Insights report — China has massive and a highly engaged gaming market, India has seen mobile gaming growth of the highest levels, Japan has players who spent an average of $300 on gaming, South Korea has is seeing a cloud gaming revolution, Taiwan has linear growth across mobile, console and PC gaming, and lastly, Vietnam is seeing a lot of young gamers driving the growth in the sector.
Newzoo says Southeast Asia is the world’s fastest-growing games market, and naturally, industry stakeholders want a big piece of the pie.
Asia gaming deals
Game developers, publishers and marketers in Asia are vying to capture Asia’s gaming market, and several companies are on an acquisition spree to consolidate the gaming ecosystem.
Japan’s Sony, which makes the popular console PlayStation, recently acquired Bungie, the developer of ‘Destiny’ and creator of ‘Halo’, in a deal valued at $3.6 bn. Sony wants to retain the talent at Bungie and is offering some 900 employees of the US-American game developer additional incentives, reports Nikkei Asia. The deal “is structured to incentivize the shareholders and other creative talents to continue working at Bungie after the acquisition closes,” Sony’s CFO Hiroki Totoki said.
This deal comes shortly after Microsoft announced the acquisition of Activision Blizzard for $68.7 bn. Microsoft had also acquired American ZeniMax Media, the parent company of Bethesda — the developer of ‘Doom’ and ‘Fallout’.
Coming back to Sony, the company acquired Finnish studio Housemarque and US-based Bluepoint Games in 2021.
Similar trends are being seen in wider Asia. Earlier this year, China’s Tencent acquired Polish developer and publisher 1C Entertainment. Tencent also took a majority stake in Canada-based Inflexion Games in early 2022. Last year, Tencent said it was acquiring British video game developer Sumo Group for $1.26 bn.
“Tencent has increased the pace of its investments and acquisitions over the past year (2021), as it looks to strengthen its position and push into new growth areas for the company,” said Daniel Ahmad, an analyst at Niko Partners.
Tencent is the world’s largest video game publisher and owns the popular MOBA game League of Legends, Clash of Clans maker Supercell, and has a 40% stake in Epic Games – the developer of Fortnite.
One of the most recent deals in Asia is Japan’s Square Enix selling off its three major Western game studios — that developed games like ‘Tomb Raider’ ‘Deus Ex’ and ‘Thief’ — to Swedish video game holding firm Embracer.
Why is there a flurry of gaming deals?
The sudden surge in gaming deals in Asia as well as around the globe is due to the rising interest around metaverse — which big companies see as a new market to develop using gaming talent. Nikkei reports that game developers with their CGI skills and ability to craft virtual spaces are key to developing the metaverse infrastructure.
Last month, Sony announced an additional investment of $1 bn in Epic Games to bolster its metaverse ambitions. “As a creative entertainment company, we are thrilled to invest in Epic to deepen our relationship in the metaverse field, a space where creators and users share their time,” said Sony Group president, chairman, and CEO Kenichiro Yoshida.
Japan’s Bandai Namco, the video game publisher behind ‘Pac-Man’ and ‘Elden Ring’, is spending $130 m to develop a metaverse featuring elements of its flagship ‘Gundam’ game. The ‘Mobile Suit Gundam’ will offer a fusion of digital and physical experiences for players — converging games, videos, live music and other content with physical arcades and plastic model shops.
Another aspect is in-game monetization, where blockchain and cryptocurrency are shining. Users can buy and own digital clothes, cars, jewellery, and other digital objects and even sell them for a profit. In late April, Japanese blockchain gaming start-up double jump.tokyo raised $24 m to develop games incorporating cryptocurrency for major gaming companies.
“Given the rising social aspect of gaming, combined with video-game publishers’ ability to monetize increased engagement, we see significant upside for the industry on a go-forward basis,” said Brian Nowak, Equity Analyst at Morgan Stanley.
