Mobile games will generate revenues of more than US$7 billion in Southeast Asia by 2019, fueled by increasing broadband adoption and growth in mature markets.
The market segment generated more than US$1 billion in revenues last year across the region, which was the fastest growing for mobile games worldwide, according to Marc Einstein, head of Japan ICT research for Frost & Sullivan's Asia-Pacific ICT. The analyst attributed the growth to the increasing number of broadband users as well as adoption of smart devices and social media.
Einstein added that mobile games in Southeast Asia would grow at a compound annual growth rate of 48 percent with revenue largely driven by mature markets such as Singapore and Malaysia, though, developing economies Indonesia and Thailand also would see rapid expansion.
He further noted that Southeast Asia, where most countries today used feature phones, would see growing adoption of smartphones and tablets. More than half of Thailand's mobile population, for instance, currently already used smartphones, while Indonesia and Vietnam were clocking rapid adoption in this device segment, he said.
"The market for tablet gaming is also interesting in Southeast Asia," Einstein noted. "Although tablets represent a small number of devices in the region, they generate a games 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, we believe that smartphone usage will become mainstream in the region."
Google's Android platform dominated the region's mobile OS market and would likely remain so because of its affordability and popularity among low-end Chinese smartphones in developing markets. This, however, posed challenges to games developers who would need to decide which version of Android they should support, according to the Frost & Sullivan analyst, who noted this would become less of an issue with Android becoming less fragmented as a platform.
Payment channels, though, are proving to be a major challenge in the region.
With a low 10 percent credit card adoption across Southeast Asia, with the exception of Singapore and Malaysia, buying virtual goods proved difficult for most gamers in this region.
Einstein explained: "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 Southeast Asian market. In fact, bitcoins and other electronic payment mechanisms are becoming increasingly popular in the region."
In his report, the analyst also noted the increasing popularity of mobile chat apps such as Line and WhatsApp, as well as social media in the region. With their strong association with mobile games, growing adoption in these market segments would drive growth in the games, he said.