SEA mobile games revenue to hit US$7bil by 2019: Frost & Sullivan

  • South-East Asians generally play the same games, social media element important
  • Challenges are fragmented Android space, while payment remains a key issue
SEA mobile games revenue to hit US$7bil by 2019: Frost & Sullivan

THE mobile games industry in South-East recorded impressive growth and reached over US$1 billion in revenue in 2014, according to Frost & Sullivan.
Recent analysis from Frost & Sullivan shows that this was also the fastest growing region for mobile games in the world, driven by the rapid increase of broadband users, usage of smart devices, and social media.
In a statement, the consultancy firm said the top mobile games trends that will shape the industry in 2015 and beyond are:

1) Revenue in South-East Asia will surpass US$7 billion by 2019

The mobile game industry in South-East Asia is the fastest growing region globally, and surpassed US$1 billion in 2014, growing at a very healthy CAGR (compound annual growth rate) of 48% from 2015 to 2019.
Revenue is still largely attributable to the more mature markets in the region such as Singapore and Malaysia, but Indonesia and Thailand are quickly expanding, while the least developed markets such as Laos, Cambodia and Myanmar are still in the nascent growth phase.

2) Smartphone and tablet usage will become mainstream by 2019

The adoption of smartphones and tablets are still driving growth in the market, as many countries in South-East Asia are still primarily feature phone markets.
This is changing quickly however, as markets like Thailand are now over 50% smartphone markets and Indonesia and Vietnam are also rising rapidly.
The market for tablet games is also interesting in South-East Asia because although tablets represent a small number of devices in the region, they generate a gaming ARPU (average revenue per user) of 4.2 times that of a smartphone in the region, and hence are an important part of the market.
By 2019, smartphone usage will become mainstream in the region, Frost & Sullivan predicts.
3) Android development will become easier

Android is by far the dominant mobile OS (operating system) in the region and will stay so for a long time to come due to its affordability and the high popularity of Chinese low-end smartphones in developing markets.
This creates a problem for game developers in terms of understanding which version of Android certain games should support, Frost & Sullivan noted.

For example, only 6% of global Indonesian Google Play users are using Android 2.3 but the number of users in Indonesia is over 25% and is also disproportionately high in Vietnam, Thailand and other markets.
However, Android as a platform is becoming less fragmented and this will eventually become less of a burden for developers.

4) Payment is still a major problem

Payment channels are increasingly becoming the major impediment to revenue growth in the region as smart devices become mainstream.
As a region, credit card penetration is extremely low, as all countries in the region excluding Singapore and Malaysia have credit card penetration of less than 10%.
This makes purchasing virtual goods extremely difficult for most gamers in the region. Furthermore, prepaid distribution for Apple and Google vouchers is still not available in most countries on a large scale.
These factors mean that e-payment solutions present a big opportunity in the South-East Asian market.
In fact, bitcoins and other electronic payment mechanisms are becoming increasingly popular in the region.

5) Mobile chat platforms are still a major force in the region

Chat applications are extremely popular in South-East Asia and have a large impact on the game market.
LINE is particularly popular in the Thai market and most of the popular games are downloaded from their platform.
Singapore, Malaysia and the Philippines are still mostly using WhatsApp, although Facebook Messenger has also become popular recently.
Many Indonesians still use BBM due to the legacy of BlackBerry service in that country where Vietnam has its own homegrown app Zalo.
As WhatsApp and Facebook Messenger venture further into the value-added service space, they will have a larger impact on the local gaming market.
These platforms are quickly expanding into new areas such as taxi applications, music apps, e-commerce and even electronic payments, so Frost & Sullivan expects these platforms to continue to be at the forefront of digital innovation going forward.

6) Social media is particularly important in SEA

Social media is extremely important in South-East Asia compared with other regions in the world.
In fact, in terms of the cities with the largest number of Facebook accounts, Jakarta, Bangkok and Kuala Lumpur are all in the top 10 Facebook cities globally, while Jakarta itself is the city with the most number of Facebook accounts in the world.
Therefore, the games market in South-East Asia is heavily linked with social media, and games with social features are particularly popular in the region.

7) SEA markets generally play the same games

As seen in the graph below, there are many similarities in the popular games among countries. The top game in almost every market in the region is Clash of Clans from Supercell, which mirrors the global trend.
Thailand is unique in that LINE’s Let’s Get Rich is the top grossing game, which is logical given the huge popularity of the LINE service in that country.
In terms of other popular games, South-East Asia often sees Chinese language games amongst the top grossing games due to Chinese communities. Korean games from companies such as Com2us are often also popular due to the cultural affinity many youth in the region have for Korean culture.

SEA mobile games revenue to hit US$7bil by 2019: Frost & Sullivan


South-East Asia will definitely be an exciting gaming market to watch in 2015. The region is home to over 600 million potential gamers, economies are growing and disposable income is rising, Frost & Sullivan said.
This increase in income is leading to higher purchasing of smart devices which are then being used to play games.
Payment is still an issue in the region, and spending rates and ARPUs are still relatively low, and this is an issue that needs to be addressed, but overall the outlook for the region is very positive, Frost & Sullivan said.
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