South East Asia and Other Emerging Markets

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South East Asia and Other Emerging Markets

• John De Margheriti, CEO
• Phil Adam, President
• padam_at_bigworldtech.com

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(No Transcript)
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South East Asia China
South East Asia gamer market represents 38 of
Chinas
Source IDC ASEAN Online Gaming 2007-2011
Forecast and Analysis, iResearch China Online
Game Research Report 2006
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Malaysia

• Malaysian Chinese in major cities such as Kuala
  Lumpur, Penang and Johore Bahru favor Chinese
  games.

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Singapore

• Singaporeans play the full range of online games
  from Japan, Korea and the west.
• High numbers of PCs in the home, credit cards,
  English language, good bandwidth and a western
  outlook mean that Singaporeans are able to play
  major western MMOs such as World of Warcraft.

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Thailand

• English language presents something of a barrier
  to playing western games.
• There is a strong preference for Korean and some
  Chinese games.
• Thais, because of the influence of Japanese
  cartoons and TV programs, tend to favor
  anime/manga themes. They like cutesy.

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Vietnam

• Overall, China is favored as a source for online
  games. Korean games are also present.
• As in Thailand, localization and
  culturalization of games is mandatory.

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The Philippines

• The elite and middle classes are fluent in
  English and thus playing tastes go across the
  board with games sourced from Asia and the US.

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Major Insights

• In countries where credit cards make sense,
  budget 5-10 for credit card fraud.
• Western games in English can do well in Singapore
  as well as Malaysia and the Philippines
• The key to the region is localizing and
  culturalizing content, especially for Thailand
  and Vietnam which promise to be perhaps the
  largest markets in the region.

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Major Insights

• Indonesia, is a potentially huge games market
  currently frustrated by economic and
  infrastructure problems. With Indonesias
  population of 210 millions localizing in Bahasa
  Indonesia rather than Bahasa Melayu would be the
  choice for the Malay language market represented
  by Malaysia, Indonesia and Brunei

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• With the exception of Singapore, credit card
  penetration is not extensive.
• The trend across the region is to use prepaid
  cards or similar cash/non-credit models for game
  play.
• In terms of game play, free to play and item
  payment models are the clear trend and preference

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Regulation and Attitudes

• All of the subject countries are concerned, on
  both social and government levels, at the
  possible harmful effects of internet content,
  including online games, upon youth.
• All of the subject countries employ internet
  filtering, to one extent or another, to prevent
  access to pornography and subjects believed to be
  violent or subversive.

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• In terms of game content violence is a
  significant issue. Official responses to content
  control range from Singapore that encourages
  self-censorship in the industry and prefers to be
  reactive responding only when community
  complaints make content an issue.
• Vietnam, on the other hand has a vigilant
  licensing process that can result in a game being
  refused a licence

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• An indication of concern for violence, in
  Thailand, the FPS Special Force casual game was
  required to omit blood visuals.
• Thailand shares Singapore's approach but the
  issue of game content is quite active in Thai
  society with the Police Drug Enforcement Agency
  recently arguing that since online games by their
  nature were addictive some form of stronger
  enforcement regime was called for.

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Singapore

• Population of 4.59 M (mid 2007).Approx 25 of
  whom are foreign workers with permits to work.
• Internet penetration is 79 (3.5 mil),
• 78 of households in Singapore had at least one
  computer (i.e. desktop/laptop) at home.

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Singapore

• The number of households with 2 or more computers
  increased by 10 percentage points from 28 in
  2005 to 38 in 2006.
• Computer usage is more common among the young.
• 85 of the resident population aged 10 to 14
  years are computer users, compared to 68 for the
  15 to 59 years age group, and 28 for the above
  60 years age group.

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Singapore

• Overall, the proportion of computer users aged 15
  years and above remained at 65 in 2006
• Who plays online games?
• 58 10-14 yrs
• 31 15-59 yrs
• 0 65 yrs.
• LAN cafes 69 (many of which are tourist oriented
  operations with minimal game playing).

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Singapore

• Western style product in English is preferred in
  Singapore
• Warcraft DoTA for LAN cafes and Maple Story for
  the home are the most popular games played. DoTA
  has a CCU of 70-80k
• Most MMOs have very low CCU ie 2000

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Malaysia

• Population
• 24.8 million
• Significant Cities
• Kuala Lumpur (3.7 mil)
• Kelang (.68 mil)
• Johore Bahru (.68 mil)
• Internet penetration
• 60 (15 mil internet users)
• past growth to 2007 302.8.

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Malaysia

• 15-24 year olds account for 35 of users. (2006)
• Internet cafes 3,000 (est)
• Broadband users 1.1 mil

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Thailand

• Population
• 65 million
• Significant cities
• Bangkok (6.3 mil),
• Nonthaburi (.3 mil),
• Chiang Mai (.17 mil)
• Internet penetration
• 18 (12 mil internet users)
• past growth to 2007 268

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Thailand

• Internet cafes
• 12,000
• About 50 of the games market is in Bangkok
  (4,000 plus of the nations estimated 12,000
  internet cafes are in Bangkok.)
• Broadband users
• 1 million
• 12-13 more games will be added in the next
  quarter.

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• 15 million of the total population of 65 million
  play online games. This might be a bit of a
  stretch as the best estimates for internet
  connections in 2007/8 are around 12-15 million.
• Currently there are 65 games in the Thai market
  of which 51 are online.

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• The maximum CCU for Thailand would be about
  300,000.
• High CCU for games is usually in the 50,000 range
  with popular games like Special Force and
  25,000 for Audition

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Vietnam

• Population
• 85.3 million
• Significant cities
• Ho Chi Minh City (HCMC) (5.8 mil)
• Hanoi (3.5 mil)
• Haiphong (.58 mil)
• Da Nang (.45 mil)
• Internet penetration
• 21.4 (18.2 mil internet users)
• past growth to 2007 9,013

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• 72 of 18-30 year olds are internet users (2007)
• Internet cafes
• 20,000
• Broadband users
• 1.2 mil
• The government has limited games licenses to 9 at
  present.

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Estimates

• These are our estimates from talking to the
  industry
• 50 Million in revenues (2007)
• estimated to grow to 83 Million by 2010
• Average revenue per player - 50 per year
• 2 million regular players

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The Philippines

• Population
• 91 million 
• Significant cities
• Manila (11.5 mil)
• Cebu (.76 mil)  
• Internet penetration
• 15.4 (14 mil internet users), growth to 2007
  600
• Internet cafes 14,300
• Broadband users 329,000

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• Ovum, made the following observations about the
  Philippines in 2007 (data to 2006)
• The Philippines was the second fastest-growing
  market for broadband worldwide in 2006 (after
  Greece).
• This was primarily due, however, to the fact that
  broadband is just taking off in the country, and
  Ovum said growth could be significantly higher if
  regulators allow more competition that would lead
  to cheaper services.

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• Total broadband growth in the Philippines from
  2005 to 2006 was at 157.
• The Philippines had 127,942 subscribers in 2005
  and this number grew to 329,216 as of end-2006.
• This was despite the fact that broadband uptake
  has been slow in the Philippines,

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• There is no cable infrastructure in the country
  and the national regulator is limiting foreign
  investment in the network infrastructure and
  mass-media services,
• Digital subscriber line (DSL) is still the
  dominant broadband technology used in the
  Philippines. Cable made up only a small portion,
  roughly 13, of the market.

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• The cost of broadband services in the Philippines
  is also expensive relative to average monthly
  disposable incomes of subscribers.
• The highest monthly fee in the Philippine market
  in 2006 was 96.08, with the lowest at 17.28.

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• The number of subscribers is expected to increase
  to 1.89 million by 2011 from around 127,000 in
  2005 for a compounded average growth rate of 63.
  Competition it was would bring down the cost of
  broadband, making it available to the mass market

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Brazil

• SE Asia and Other Emerging Markets

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The Market Size

• 190 Million people (2007)
• 5th Largest Country
• 6th in terms of Population
• Internet penetration
• 42.6ml
• 8.1ml Broadband (less than 4)
• Projected to exceed 10ml by 2010
• 52ml US (all game revenue 2008)

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The Issues

• Piracy
• 61 of all software is pirated
• 335 raids (2500 computers confiscated) in Jan
  2008 in Internet Cafes (LAN Houses)
• Taxes are 30 on retail software purchases
• Government (Jan 2008)
• Ban on Counterstrike and EverQuest
• - considered Harmful to Consumers Health

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Street vendor selling illegal software right in
front of police

Piracy is at least 90 for game CDs that come on
the retail market.
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Other Hurdles

• Payment
• Cash Cards or Downloadable form with bank draft
  which detracts from Western style subscription
  models
• An online banking system is in place that allows
  the user to choose their preferred bank and use a
  digital pin code to confirm their purchase
• An easy, secure and ubiquitous games payment
  solution for Brazil would be a breakthrough.
• Erik Goossens, Real Games VP Studio Operations

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The Products

• Brazilian Portuguese is the national language
• English is spoken by many in the elite/educated
  classes.
• Most MMOGs are localized for the Brazilian
  market.
• Nevertheless, there is a strong affinity for
  North American culture and products (and a
  continuing connection with large Brazilian
  communities in Canada and the US).
• Although most MMOGs on offer appear to be South
  Korean in origin, several are US titles.
• The games market is also oriented to providing
  services and products to western countries.
• Vivendi, EA and other western games publishers
  all have Brazilian offices.

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The Opportunity

• Brazil appears to be on the same evolutionary
  path, games-wise, that occurred in western
  countries.
• The demand is there but is constrained somewhat
  by the consumer's buying power, taxes, legal
  issues (especially between telecoms and ISPs) and
  the infant state of the developer community.
• Things are changing fast and opportunities have
  been noticed by some of the main players in the
  northern hemisphere.

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• India
• SE Asia and Other Emerging
• Markets

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The Market Size

• 1.3 Billion Population
• 45 under the age of 20, 70 under 35
• Internet penetration
• 60m
• 2.52m Broadband users (less than 2)

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The Issues

• Some Issues Of Doing Business In India
• Bureaucracy.
• Political uncertainty.
• Infrastructure.
• Law Order.
• Corruption and the Justice System.

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The Games Market

• Mobile. As of December 2006 there were 150
  million mobile subscribers in India
• (nearly double from the same time the year
  before) with a subscriber growth rate of 6
  million per month.
• Growth may slow eventually due to affordability
  reasons.
• Games-wise, mobile games represent the great
  majority of titles and commercial returns.
• The mobile game scene is active, innovative and
  maturing. Mobile games developers think globally
  and think export.

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Consoles

• The console scene has some developers/importers
  but, essentially, Sony, Nintendo and Microsoft
  have ignored India.
• There is an active grey market but the legal
  market is constrained by relatively high prices
  and consumer price sensitivity.
• Legal sales of consoles are a dribble.

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PCs

• The PC market is growing but still does not quite
  have enough critical mass to provide the range of
  games and related services to satisfy the
  consumer.
• In terms of hardware, high figures for PC (and
  laptop) take up are hyped in the press but the
  reality just does not match.
• Demand is certainly there. Industry observers
  estimate that the games market is growing at
  60-80 a year.
• Most titles are in the puzzle, arcade and first
  person shooter sector. Strategy games such as
  Civilization is a relatively big sector.
• For example in 2005, many gamers were saving up
  to buy Age of Empires III when it came out.

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Online Access Issues

• 50-60 of online users are concentrated in six
  major metro areas in the west and south which
  have the best connectivity in India (which may
  not be saying much).
• Dial-up is favored and broadband penetration
  remains in a somewhat disappointing state far
  below industry and government targets.
• All platforms, especially PCs, are hobbled to
  some extent by limitations of the telecoms
  infrastructure, e.g.
• Regional telecoms disparities poor hardware
  penetration in the home and slow speeds
• Lower than expected penetration of broadband in
  particular and to some extent the conservatism
  of the consumer (or at least that of the
  generation that controls the subscription and the
  pocket money).

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Internet cafes

• Internet cafes represent a significant dynamic
  that has to be addressed by any games
  developer/publisher.
• Internet cafes offer affordable access even in
  the lesser cities.
• Internet cafes also are a major provider of
  broadband access to the masses.
• Culturally, Indians are affiliation-oriented and
  internet cafes provide an important social
  framework for social interaction through
• tournaments, player leagues, clubs and other
  forms of games related social involvement.

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Payment

• Piracy is at least 90 for game CDs that come on
  the market.
• Debit card payment, cash or use of prepaid cards
  look like the most viable means at present
• Some in the games industry still appear
  interested in subscription models observed in
  overseas markets.
• Internet cafes represent a most convenient shop
  front.

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Opportunity

• While this is a large consumer base, the
  opportunity appears to be farther down the road
  outside of the mobile gaming market.