Video gaming in China and South East Asia

© 2012 Nikopartners

Forecast of the Future of Games in China & Southeast Asia

Kevin Hause Niko Partners November 5, 2013


About Niko Partners •  We are a niche market intelligence firm with a strong

reputaBon for our experBse on the games markets in mainland China and Southeast Asia. –  Syndicated Research –  Custom Studies –  Consumer surveys of 10,000+ per year in China, 25,000+ in Southeast Asia –  Tracking data of 15,000+ iCafe systems

•  Founded in 2002, –  SEA coverage began in 2010

•  Offices in Shanghai and Silicon Valley.


Agenda

•  Market overview •  Key trends in China

– Mobile – Home – PlaSorms

•  Southeast Asia


-‐

50.0

100.0

150.0

200.0

250.0

300.0

350.0

$0

$5,000

$10,000

$15,000

$20,000

$25,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Online Revenues

Online Gamers

Gaming in China


Gaming in China

0 200 400 600 800 1000 1200

Karaoke

Go shopping

Watch Movie in Cenima

SporBng and Fitness

Reading

Play with children or parents

Watch TV

Chat with friend Online

Online shopping

Online Video

Play Games

Top Ranked Leisure Time Ac;vity

1st

2nd

N=2000, Tiers 1-‐4


Chinese Gamers •  Gaming is Pervasive

–  215 m Gamers in 2013 –  16% of Total PopulaBon –  35% of All Internet Users

•  64% of Chinese Gamers Play at least 7 Hours per Week

Occasional 36%

Semi-‐AcBve 27%

AcBve 22%

Hardcore 8%

Super Hardcore

7%

China Gamers by Type


Gaming in China •  MMORPG Rules

–  Webgames showing growth

–  Casual games had big growth

MMOGs 74%

webgames 16%

sns + casual + weibo 10%

Source: Niko Partners, 2013

•  Mobile Growing Fast –  Now up to 9% of all game

revenues –  Not enBrely incremental,

with Casual games impact

MMOGs 67%

webgames 15%

sns + casual + weibo 9% Mobile

9%

2013 Gaming Revenues by Category


Revenues by Game Type

$15,146 18%

$5,417 33%

$1,105 -‐ 3%

$4,275 42%

$-‐

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2011 2012 2013 2014 2015 2016 2017

Millions of U

S$

MMOGs

webgames

sns + casual + weibo

Mobile


What Makes China Different?

•  Consoles –  Banned Since 2000 –  Grey Market Exists

•  But, only 27% ownership among gamers

•  Even more limited game revenue

–  Recent Changes could affect market



•  Business Models – Time-‐based Play – Free to Play

•  Virtual Items •  In Game Purchases

– Not… •  $60 retail •  Paid Downloads

0 25%

1-‐10 RMB 18% 11-‐100 RMB

36%

101-‐200 RMB 13%

201+ RMB 8%

Spending per Month on Virtual Items

in Online Games

Source: Niko Partners, 2013



•  Internet Cafés –  Once “THE” gaming locaBon

–  Declining in usage, now 17% of total gameplay

–  SBll important: •  Social aspects (65%)* •  Tournaments (14%)* •  Faster Internet (15%)*

* 3Q 2013 Gamer Survey; n=2000


Genres •  MMO

–  MMORPG sBll the king –  MMO non-‐RPG growing fast –  Key Btles are played for years

•  Webgames –  Browser-‐based –  Not necessarily easy –  Faster development

•  Casual/SNS/Weibo –  Hot category in recent years –  But falling off 0

1

2

3

4

5

6

MMORPG Casual Browser-‐based Webgames

MMO Non-‐RPG

Hours p

er W

eek

Hours per Week Playing Games By Game Type


Key Games Top 20 MMORPG by Total Number of Hours Played

Rank Game Name (CN) Game Name (English) Play time (Hours) Game Operator 1 梦幻西游2 Fantasy Westward journey2 4,467 Netease 2 问道 Asktao 2,550 Guangyu youxi 3 魔兽世界 World of Warcraft (CN) 2,426 Netease 4 天龙八部3 Dragon Oath III 2,202 Changyou 5 御龙在天 YuLongZaiTian 1,251 Tencent

Other 11,746 Total 24,642

Top 20 MMO-‐Non RPG by Total Number of Hours Played

Rank Game Name (CN) Game Name (English) Play time (Hours) Game Operator 1 英雄联盟 League of Legends 41,467 Tencent 2 穿越火线 Cross Fire 29,290 Tencent 3 地下城与勇士 Dungeon-Fighter 16,878 Tencent 4 梦三国 Dream of the Three Kingdoms 9,241 Electric Soul 5 QQ飞车 QQ speed 6,069 Tencent

Other 15,599 Total 118,543

Source: Niko Partners iCafe Tracker, Sept 2013 Sample: 400 iCafe locaBons, 44,166 acBve PCs, 305,033 Gamers


Trends: Mobile

•  42% CAGR through 2017 for revenues •  Significant impact on casual game market

-‐

100

200

300

400

500

600

700

800

$-‐

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2011 2012 2013 2014 2015 2016 2017

Millions of M

obile Gam

ers

Millions of U

S$

Mobile Games Revenues (US$ m)

Mobile Gamers (m)

$4.3 B 680 M


Mobile Gaming in China

•  Fragmented game access –  73% of games downloaded from 3rd party app store

•  Expensive handsets –  Not subsidized –  Creates demand for lower cost devices, local players

•  Mostly casual gmes –  42% casual –  22% acBon/arcade


Trends: Home Play

•  Ship from i-‐Café to Home –  From ~80% to 17% of gaming

hours –  Due to berer broadband,

greater income/ lower PC costs

•  OpportuniBes: –  Ship in game choices –  Hardware growth

Friends are playing it 13%

Doesn’t require high spending

6%

Best game of its genre 52%

I will be able to spend lots of Bme on it

14%

It only will take a few minutes per

day to play 8%

It plays well on the PC or device

I use 7%

Primary Reason in Picking New Game to Play


Trends: Wechat •  Tencent CommunicaBons

PlaSorm –  Messaging, Plus –  Username based

•  Games Introduced –  Controlled by Tencent –  Example: Rhythm Master –  4th WeChat game

•  OpportuniBes –  Seeing separaBon from QQ

Chat


Trends: Consoles and OTT •  Ban Liped in September 2013

–  14 year old ban liped –  Shanghai FTZ

•  Immediate AcBon –  BesTV and MSFT JV

•  Internet-‐ready TVs –  BesTV, LeTV, Xiaomi, iQiyi, Hisense,

Lenovo

•  OpportuniBes –  Limited for now –  Business model challenges


Trends: Tablets •  Growing PenetraBon

–  54% of Gamers own a Tablet –  33% Own 2 or More –  Dominant Brands:

•  Apple and Samsung = 90%

•  Tablet Usage –  Mostly Not Shared – 80%

claim personal use only –  Same Game Choices as

Mobile, for now

0

200

400

600

800

1000

1200

None PSP DS GBA Tablet Other

Num

ber o

f Respo

nden

ts

Handheld Gaming Device Ownership


Southeast Asia

•  Niko acBvely tracks: –  Thailand –  Philippines –  Vietnam –  Singapore – Malaysia –  Indonesia


SEA compared to China

•  China: –  Total PopulaBon: 1.3 billion –  2001 Total Games Market: $10

million –  2013 Total Games Market: $11.9

billion (plus $1.2 billion mobile)

•  Southeast Asia: –  Total PopulaBon (6 countries): 545

million –  2013 Total Games Market: $662

million –  Projected 5 year CAGR: 17.4%


SEA Gamers •  Mobile games are hot •  PC online games are sBll

important •  Only Singapore has a true

console market •  Vietnam, Indonesia and

Thailand have very intriguing games markets

•  Vietnam games market most similar

–  Regulatory –  Game Type –  Café usage

$-‐

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

2011 2012 2013 2014 2015 2016

Vietnam Thailand Singapore Philippines Malaysia Indonesia


PC Online Games Revenue by Country

Country 2012 2013e 2014e

Indonesia $88.1 million $110.1 million $136.5 million

Malaysia $44.1 million $54.1 million $66.5 million

The Philippines $43.9 million $53.3 million $64.0 million

Singapore $31.0 million $34.0 million $37.0 million

Thailand $133.0 million $158.1 million $183.0 million

Vietnam $219.6 million $253.0 million $291.0 million

TOTAL $559.6 million $662.5 million $778.0 million

Source: Niko Partners, November 2012


PC online gamers per country Country 2012 2013e 2014e

Indonesia 19.63 million 22.75 million 26.00 million

Malaysia 7.62 million 8.70 million 9.90 million

The Philippines 21.00 million 24.96 million 28.72 million

Singapore 1.53 million 1.66 million 1.80 million

Thailand 8.12 million 9.04 million 9.97 million

Vietnam 15.65 million 17.25 million 19.00 million

TOTAL 73.7 million 84.4 million 95.4 million



Country informaBon: special notes •  Ranking of leading online game operators changes annually because more

and more hit licensed games enter the market, and some mergers have occurred too. –  NOTE: Niko’s 2012 data is disclosed here but the market share and rankings

will likely change in our 2013 report

•  Niko’s 2013 report includes more info on mobile games, but our 2012 report focused on PC online games so our data in this presentaBon reflects that.


Indonesia •  Largest economy in SEA and

largest archipelago with 6,000+ islands

•  70% of gamers live on Java island

•  Mobile very important •  10,000+ I-‐cafés for gaming •  6% paying gamers, ARPPU

$6-‐8/month

Key online operators and top game in 2012

Est. 2012 market share

Lyto (Cross Fire) 25-‐30%

Megaxus (CS Online) 20-‐25%

Kreon (Point Blank) 20-‐25%



Indonesia

•  19.6 million gamers in 2012 •  $88.1 million in 2012 online games revenues

– 25.8% growth over 2011

0%

5%

10%

15%

20%

25%

30%

35%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers

Hours per WeekSource: Niko Partners, 2012

Hours per Week Playing Games, excluding Mobile

Survey Sample Size for Indonesia:

447 Gamers


Malaysia •  Strong Chinese populaBon,

especially among gaming populaBon

•  Malaysia & Singapore open lumped together, share servers

•  MOL is regional online payments plaSorm leader and HQ in Malaysia

•  800 I-‐cafés for gaming •  10% paying gamers, ARPPU $4-‐5/

month



AsiaSop (Sudden Arack)

30-‐35%

Garena (LOL, HON) 25-‐30%

Cubinet (Perf. World) 25-‐30%



Malaysia


– 22.5% growth over 2011 Hours per Week Playing Games, excluding Mobile

0%

5%

10%

15%

20%

25%

30%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers


Survey Sample Size for Malaysia:

2,708 Gamers


The Philippines •  Mostly English speaking •  Gaming is very popular, but very

low spending •  20,000+ I-‐cafés for gaming and

home PC and BB penetraBon is very weak

•  Facebook gaming very popular •  4% paying gamers (lowest in the

region), ARPPU $4-‐5/month



Level Up! (RO, Crazy Kart

40-‐50%


Cubinet (Special Force, CF, DOTA)

20-‐25%



Philippines



0%

5%

10%

15%

20%

25%

30%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers


Survey Sample Size for Philippines: 878 Gamers


Singapore •  CommunicaBons hub of SEA •  Vibrant and legiBmate market for

consoles and PC offline games, plus online games and mobile

•  Regional HQ for many game companies

•  Internet penetraBon high at 75%+ •  Smallest market in absolute value and

growth potenBal •  17% paying gamers (highest in the

region), ARPPU $8-‐10/month



AsiaSop (Sudden Arack, AudiBon, WoW)

30-‐35%


Cubinet (SUN, CubiGames)

20-‐25%



Singapore



0%

5%

10%

15%

20%

25%

30%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers


Survey Sample Size for Singapore:

1,197 Gamers


Thailand •  MMORPGs very popular •  Infrastructure beyond major

ciBes is weak, so I-‐cafés are popular (20,000 esBmated).

•  High piracy for packaged games •  Local companies are strong •  15% paying gamers, ARPPU

$8-‐10/month



AsiaSop (Point Blank, Dragon Nest)

35-‐40%

TRUE (Special Force, FIFA Online 2)

25-‐30%

Ini3 (FlyFF, BOOMz) 5-‐10%



Thailand



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers


Survey Sample Size for Thailand:

4,054 Gamers


Vietnam •  Vibrant gaming culture •  3-‐year ban on new game licenses

was overturned in September 2013

•  Facebook parBally blocked but sBll popular

•  Web-‐browser games are popular •  15% paying gamers, ARPPU $7-‐9/

month



VNG (Swordsman 2, ZT Online, BOOMz)

50-‐55%

VTC (CF, AudiBon, FIFA Online 2)

20-‐25%

FPT Online (Special Force, Dragon Oath, TLBB)

10-‐15%

Garena (via partner) (LOL, HON)

10-‐15%



Vietnam



0%

5%

10%

15%

20%

25%

30%

0/mobile only 1 -‐ 7 8 -‐ 14 15 -‐ 21 22 -‐ 29 Over 30

Percen

t of G

amers


Survey Sample Size for Vietnam:

3,848 Gamers


Key Trends in SEA

•  Most InteresBng Markets: –  Growth: Indonesia, Thailand, Vietnam –  Gaming Interest: Philippines –  Strategic: Malaysia, Singapore

•  Mobile is taking share from PC casual games and will also command share from hard-‐core gamers, so we will watch this and compare to the trends in China.

•  Chinese games are very popular in SEA –  Niko started coverage of the region specifically because of the similariBes in trends and growth potenBal – there are many similariBes to be found.


Final Thoughts •  China is huge and conBnues to grow

–  $21 Billion by 2017 •  But shiping market

–  Mobile driving market, with 42% growth forward •  Taking share from Casual, Weibo •  Tablets will be interesBng watch

–  Ship from iCafe to home –  But MMO sBll rules

•  Southeast Asia is very interesBng for future –  Large, growing market –  Similar in key ways to China –  But will develop quickly –  Must be approached on market-‐by-‐market basis


Thank you!

•  Contact: – [email protected]

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