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Chinese Game Companies to Harvest 200 million Young Game Players in Southeast Asia

A microcosm of the popularity of Chinese mobile games in Southeast Asia

Taman Anggrek mall, the largest shopping mall in Jakarta, Indonesia, is one of the city’s landmarks.

On September 1, 2017, bursts of cheers came from this shopping mall with a huge flow of people: on that day, the electronic sports “Mobile Legends: Bang Bang Southeast Asia Cup” which held by Chinese game company Moonton was officially opened.

The competition venue was located in the middle of the hall, where at least tens of thousands of gamers gathered from all over Indonesia every day to witness the game. The seemingly informal playing field did not affect everyone’s enthusiasm at all: the makeshift spectator area was full of seats, and even the railings on each floor of the mall were crowded with spectators.

Mobile Legends Bang Bang Live
Mobile Legends Bang Bang Live

The underlying reason for such a lively scene is the extraordinary influence of “Mobile Legend” in Indonesia and even Southeast Asia: 67% of the 400 million downloads of the game in the world come from Southeast Asia. In Singapore, Indonesia, Malaysia, the Philippines and Brunei, nearly a quarter of the total population are registered users.

The popularity of “Mobile Legend” is just a microcosm of the popularity of Chinese mobile games in Southeast Asia.

For a long time, Southeast Asia has been one of the most popular destinations for Chinese firms to go overseas. The large population base and high proportion of young people create the market growth potential: in the first quarter of 2020, the downloads of mobile games in Southeast Asia soared to 1.82 billion, surpassing India to become the world’s highest download market.

Chinese companies with a keen sense naturally saw the opportunity to get rich in Southeast Asia. From the giants represented by Tencent to new forces such as Moonton and Lilith, many Chinese game companies have seized the market here. In the fierce competition between each other, they have to face the pressure of European, American, Japanese and Korean manufacturers from abroad.

Nowadays, mobile games launched by China’s game companies, such as “Rise of Kingdoms”, “Genshin Impact”, “PUBG Mobile”, firmly occupy the top ranks games in Southeast Asia. Take Indonesia, the most populous market in Southeast Asia (260 million), as an example: among its top 10 best-selling IOS games, eight products come from China. The Chinese manufacturers behind these games constitute a major force in the game world of Southeast Asia.

Indonesia IOS game list on April 8
Indonesia IOS game list on April 8

Looking back on this war, what determines the current pattern is not only the efforts of the individual, but also the process of the times.

The Southeast Asian Games Market is a Land of Honey for Chinese Companies

In fact, Southeast Asia, the “land of honey” of Chinese game manufacturers, was not so sweet at first.

The Development of Southeast Asia Game Market

Southeast Asia is mainly composed of 11 countries—Indonesia, the Philippines, Vietnam, Thailand, Myanmar, Malaysia, Cambodia, Laos, Singapore, East Timor and Brunei. There are 650 million people and 380 million Internet users here, but great differences in economy and culture exist among these countries, which makes it difficult for players to make money.

In the early days of China’s game going overseas, Southeast Asia is not the most ideal destination compared with mature markets such as Europe, America, Japan and South Korea.

On the one hand, the economic development of Southeast Asian countries is different. According to the statistics in 2018, Indonesia (per capita GDP $3893 dollars), the Philippines (per capita GDP $3103 dollars) and Vietnam (per capita GDP $2563) are still in low and middle income with the top three population.

People are more busy with their livelihood, and the habit and willingness to pay for playing games need to be further developed. In contrast, Europe and the United States have large-scale game paying players. Meanwhile, Japan and South Korea are high-value markets with a strong atmosphere of top up money.

Take Japan as an example. Some data show that the average payment rate of Japanese mobile game players is more than 60%, and the average annual cost is $312.97, about four times that of the United States.

On the other hand, in the early era of PC games, the low penetration rate of Internet and hardware once restricted the development of games in Southeast Asia, and also hindered the access of Chinese games to users.

The Driving Force of the Southeast Asia Game Market

However, the popularity of smartphones has changed the hardware conditions in Southeast Asia, and also creates the opportunity to skip the Internet era and directly enter the mobile Internet development stage.

The main driver behind it is still Chinese players. In 2014, vivo announced that it would enter Southeast Asia from Thailand, and in the same year, Xiaomi entered Singapore. And as early as 2009, OPPO has entered Southeast Asia. With these players’ seizing the market, smartphones are rapidly spreading in Southeast Asia, and low-cost mobile devices and lower traffic charges make it easy for more and more people to access the Internet.

Southeast Asia mobile games

Southeast Asia mobile games
Six countries in Southeast Asia make up the majority of the region’s mobile gaming market. The “Big 6” are Thailand, Vietnam, the Philippines, Malaysia, Singapore and Indonesia.

In Indonesia, for example, Internet users accounted for 17% of the population in 2009, and which had risen to 50% in 2017.

The rapid growth of Internet users in Southeast Asia has made it a rare mobile Internet “traffic depression” in the world. Especially in Europe, the United States, Japan and South Korea with fierce market competition and high promotion cost, Southeast Asia with relatively low customer acquisition cost is more like a “Blue Ocean” to be explored.

A Unicorn Compay- Sea

In terms of the improvement of the payment atmosphere, a landmark event is that the birth of the Internet Unicorn company, Sea, which started with games in Southeast Asia.

Sea
Sea Limited Listed NYSE

Sea was founded in 2009 as Garena (changed to Sea after listing in 2017), and its founder is Forrest Li, a Chinese born in Tianjin, China. Garena started as a game agent. Based on the advantages of the Southeast Asian market and familiarity with channels and local user preferences, making him win the agency rights of popular games such as “League of Legends” and “Fantasy Westward Journey”.

Garena caught up with the dividend of the rapid growth of Internet users in Southeast Asia and achieved a smooth development, which proved the improvement of the game’s ability to attract money in Southeast Asia. In 2015, through game distribution, Garena’s revenue reached $300 million, with a compound annual growth rate of 90% in the past five years.

Such achievements make Garena see the great potential of the Southeast Asian game market, and also let many Chinese game manufacturers begin to reevaluate the market value of Southeast Asia.

Chinese Game Companies’ Breakthrough: Ant VS Elephant

In 2014, Xu Zhenhua and Yuan Jing, who came out of the Tencent Games line, decided to start a business. They founded Moonton, and game development is still the direction.

However, in the domestic market at that time, the momentum of Tencent and Netease was fierce. The absolute strength of the leading companies squeezed the living space of small and medium-sized brands.

For a small team of 20 people, the size gap is just like ant versus elephant.

Chinese Game Companies Turn to Overseas Markets

Moonton, which wants to break through the encirclement, must find the direction of “misplaced” competition: they have set their sight on overseas, specifically emerging markets represented by Southeast Asia and Latin America.

At about the same time, some Chinese game manufacturers began to turn their attention to Southeast Asia.

In 2014, FunPlus, which has successfully set up offices in Vietnam, Indonesia and Singapore, began to focus on Southeast Asian markets. This year, the Southeast Asian version of “Allstar Heroes” named “Dot Arena”, which was represented by him, went online and made certain achievements — it once topped the best-selling lists of games in Singapore and Laos.

Dot Arena
Dot Arena

In addition, including Elex, IGG and Kunlun, a group of veteran overseas gamers are also promoting the launch of overseas versions of self-developed or agent products in Southeast Asia.

A Certain Methodology: Localization and customization

At this stage, with the development of mobile Internet, Southeast Asian users’ demand for entertainment content such as games is fully released, and the lack of local production capacity leads to the emergence of market gaps. At this time, the quality of China’s mobile games has achieved qualitative breakthrough— represented by “Arena Of Valor” and “PUBG Mobile”, phenomenal mobile games have been launched successively.

pubg

It makes China’s mobile game capacity naturally overflow to the Southeast Asian market, and even the Chinese team has formed a certain methodology and talent pool in the field of mobile games. This greatly improves the success rate of customized game products for specific overseas markets.

One example is that when Garena decided to launch its own research products, the founders set up a branch in Shanghai and set up a game team. It was this Chinese team that completed the research and development of Garena’s later cash cow project “chicken dinner” mobile game “Free Fire”.

Free Fire
Free Fire

At that time, in order to adapt to the situation that the mobile phone configuration of Southeast Asian users was generally low, “Free Fire” reduced the configuration of screen and other aspects initially, making it could also achieve smooth operation in the case of small download package.

Generally speaking, these players know that if they want to succeed in the Southeast Asian market, the overseas team needs to understand what kind of games are really needed.

In 2016, after the first game “Magic Rush: Heroes” gained some experience, Moonton launched the MOBA (multiplayer online tactical competition) game “Mobile Legends”. In addition to compressing the download package, the team also built multi-language packages in the game to match the needs of users in different regions.

Besides, “Mobile Legends” has launched heroes that fit the local cultural background for different markets. Gatotkaca, the King Kong God launched in Indonesia, is a figure in local mythology. And Lapu-Lapu, launched in the Philippines, is a national hero resisting the invasion of foreign colonists.

When promoting to various countries, Moonton has also formulated different strategies. For example, when observing that most Burmese players are new to smartphones and do not know how to download games, Moonton specially cooperates with local operators and mobile phone dealers to preinstall mobile phones to make it easy for players to use. In addition, in line with different festivals in different countries, the team also designed corresponding promotion activities in line with the local market.

The localization of products and services can optimize the user experience and enhance their sense of identity. Compared with the teams of Europe, America, Japan and South Korea, Chinese game players tend to put more emphasis on localization, which has become a powerful weapon for Chinese teams to face international competition.

When the competition comes to Chinese companies, the completion of localization is only the basic work.

Moonton’s Cost: $300000 a day

In 2018, the tightening of the China domestic game number policy and the restriction of Internet traffic accelerated a group of game players to go overseas.

In the Southeast Asian game market, the competition among Chinese companies is more serious. Just for chicken dinner games, Tencent’s “PUBG mobile” and Netease’s “Terminator 2: Judgment Day” have launched overseas versions in Southeast Asia one after another, and the promotion efforts were so strong that “Free Fire” had to avoid the edge temporarily.

At that time, the domestic phenomenon MOBA game “Arena of Valor” also launched the international version of “Arena of Valor” (AoV) in 2017, with “local tyrant” Garena as the agent of the Southeast Asia market.

Arena of Valor
Arena of Valor

There was no doubt that this has directly brought great pressure to “Mobile Legends”.

“Mobile Legends”, which was launched earlier in Southeast Asia, has a certain first-mover advantage. Especially in Indonesia and other markets with good data performance, Moonton has increased its investment in promotion. It has launched a large number of advertisements on local subways and small trucks on the streets,  brushing the sense of existence, so as to quickly seize the market.

Two years after its launch, “Mobile Legends” had more than 20 million monthly active users in Indonesia. At that time, the game had 50 million monthly active users around the world. And in 2018, the number of game users in Southeast Asia was no more than 200 million.

Moonton also spared no effort in other markets. At that time, the overseas promotion cost of “Mobile Legends” was more than US $300000 a day. It loses 10 million dollars a month. During the hardest time, Moonton owed as much as 200 million yuan of advertising costs.

AoV also launched the “cash ability”. After landing in the Southeast Asian market, it accelerated the rush to the list through vigorous promotion, and once ranked more than “Mobile Legends” in Thailand, Vietnam and other markets. However, in Indonesia, Malaysia and other markets, it has been unable to pull down “Mobile Legends”.

The key problem is that there are too many localized versions of AoV. AoV once launched 17 versions, trying to create customized products for each market. In contrast, “Mobile Legends” has only two versions: the international version and the Vietnamese version.

Too many versions increase the cost of promotion and operation, and separate users and weaken the social and competitive attributes of the game.

More importantly, the different versions have seriously affected AoV’s overseas layout of E-sports events.

The holding of E-sports events can effectively enrich the content of the game itself and expand the influence of the game in multiple circles. The person in charge of Moonton in Indonesia regards the hosting of E-sports events as a critical moment for the team when competing with other games.

E-sports events in VN
The Arena of Valor World Cup. Credit: TiMi Studios

In 2017, Moonton held its first electronic competition in Jakarta, Indonesia. The team once said that Moonton was the first company to hold professional E-sports events in Southeast Asia. Because of the imperfection of the local infrastructure, various situations often occurred in the early games. Once, the game was delayed for 4 or 5 hours due to the venue problem.

But Indonesian players still showed great enthusiasm. They were willing to stand in line under the high temperature and even sit on the ground watching game with relish. After seeing the players’ demand for E-sports events, Moonton made the events alliance and routine.

In contrast, AoV, who also sees the importance of e-sports, is a little weak. After all, when the AoV versions used by both sides are different, how to make the rules of the competition and how to hold the competition will become a big problem.

One step may be worse. Today, in the Southeast Asian market, “Arena of Valor” has not got rid of the situation of being beaten by “Mobile Legends”. According to the Q2 Southeast Asia mobile game revenue list released by Sensor Tower in 2020,  “Arena of Valor” ranked fifth, while “Mobile Legends” ranked second.

Competition in Southeast Aisa Game Market Will Continue

Today, the game market in Southeast Asia is far from the end.

According to Newzoo, in 2019, the Southeast Asian game market was valued at $4.6 billion, up 22.0% year on year. Another data is that in Q2 last year, the revenue of mobile games in Southeast Asia exceeded US $600 million, twice that of Latin America and the Middle East, and it is also the emerging market with the highest revenue in the world.

The Southeast Asian market with huge potential is successively holding out high-profit enterprises. In the past year, “Free Fire” generated $810 million in revenue, of which about 29% came from Southeast Asia.

When this “sweet cake” continuously exudes temptation, the competition around it will not stop. Not long ago, ByteDance announced the acquisition of Moonton. Some people think that this is a peep of ByteDance on the Southeast Asian game market.

If ByteDance tries to cooperate with TikTok in Southeast Asia, new changes may take place between the content and channels of overseas games.

Angel Zhang

Editor in Chief of FirmKnow.

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