Overview of the video gaming market in China and Southeast Asia. Includes background, forecasts, and key trends for online PC and mobile games.

1. Forecast
of
the
Future
of
Games
in
China
&
Southeast
Asia
Kevin
Hause
Niko
Partners
November
5,
2013
© 2012 Nikopartners

2. 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.
© 2012 Nikopartners

3. Agenda
• Market
overview
• Key
trends
in
China
– Mobile
– Home
– PlaSorms
• Southeast
Asia
© 2012 Nikopartners

4. Gaming
in
China
$25,000
350.0
300.0
$20,000
Online
Revenues
250.0
Online
Gamers
$15,000
200.0
150.0
$10,000
100.0
$5,000
50.0
$0
-­‐
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
© 2012 Nikopartners

5. Gaming
in
China
Top
Ranked
Leisure
Time
Ac;vity
Play
Games
Online
Video
Online
shopping
Chat
with
friend
Online
Watch
TV
Play
with
children
or
parents
Reading
1st
SporBng
and
Fitness
2nd
Watch
Movie
in
Cenima
Go
shopping
Karaoke
0
N=2000,
Tiers
1-­‐4
© 2012 Nikopartners
200
400
600
800
1000
1200

6. 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
China
Gamers
by
Type
Super
Hardcore
7%
Hardcore
8%
Occasional
36%
AcBve
22%
Semi-­‐
AcBve
27%
© 2012 Nikopartners

7. Gaming
in
China
• MMORPG
Rules
– Webgames
showing
growth
– Casual
games
had
big
growth
• Mobile
Growing
Fast
– Now
up
to
9%
of
all
game
revenues
– Not
enBrely
incremental,
with
Casual
games
impact
2013
Gaming
Revenues
by
Category
sns
+
casual
+
weibo
9%
sns
+
Mobile
casual
+
9%
weibo
10%
webgames
16%
webgames
15%
MMOGs
MMOGs
67%
74%
Source:
Niko
Partners,
2013
© 2012 Nikopartners

8. Revenues
by
Game
Type
$16,000
MMOGs
$14,000
webgames
sns
+
casual
+
weibo
$12,000
Millions
of
US$
$15,146
18%
Mobile
$10,000
$8,000
$6,000
$5,417
33%
$4,000
$4,275
42%
$2,000
$-­‐
© 2012 Nikopartners
$1,105
-­‐
3%
2011
2012
2013
2014
2015
2016
2017

9. 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
© 2012 Nikopartners

10. What
Makes
China
Different?
• Business
Models
– Time-­‐based
Play
– Free
to
Play
• Virtual
Items
• In
Game
Purchases
– Not…
• $60
retail
• Paid
Downloads
Spending
per
Month
on
Virtual
Items
in
Online
Games
101-­‐200
RMB
13%
11-­‐100
RMB
36%
Source:
Niko
Partners,
2013
© 2012 Nikopartners
201+
RMB
8%
0
25%
1-­‐10
RMB
18%

11. What
Makes
China
Different?
• 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
© 2012 Nikopartners

12. Genres
• MMO
– MMORPG
sBll
the
king
– MMO
non-­‐RPG
growing
fast
– Key
Btles
are
played
for
years
Hours
per
Week
Playing
Games
By
Game
Type
5
• Webgames
Hours
per
Week
4
– Browser-­‐based
– Not
necessarily
easy
– Faster
development
3
2
• Casual/SNS/Weibo
1
– Hot
category
in
recent
years
– But
falling
off
0
MMO
Non-­‐RPG
Browser-­‐based
Webgames
© 2012 Nikopartners
6
Casual
MMORPG

13. Key
Games
Top
20
MMORPG
by
Total
Number
of
Hours
Played
Rank
1
2
3
4
5
Game Name (CN)
梦幻西游2
问道
魔兽世界
天龙八部3
御龙在天
Game Name (English)
Fantasy Westward journey2
Asktao
World of Warcraft (CN)
Dragon Oath III
YuLongZaiTian
Play time (Hours) Game Operator
4,467
Netease
Guangyu youxi
2,550
Netease
2,426
Changyou
2,202
Tencent
1,251
Other
11,746
Total
24,642
Top
20
MMO-­‐Non
RPG
by
Total
Number
of
Hours
Played
Rank
1
2
3
4
5
Game Name (CN)
英雄联盟
穿越火线
地下城与勇士
梦三国
QQ飞车
Game Name (English)
Play time (Hours) Game Operator
League of Legends
Tencent
41,467
Cross Fire
Tencent
29,290
Dungeon-Fighter
Tencent
16,878
Dream of the Three Kingdoms
Electric Soul
9,241
QQ speed
Tencent
6,069
Other
15,599
Total
118,543
© 2012 Nikopartners
Source:
Niko
Partners
iCafe
Tracker,
Sept
2013
Sample:
400
iCafe
locaBons,
44,166
acBve
PCs,
305,033
Gamers

14. Trends:
Mobile
800
$4,500
Mobile
Gamers
(m)
$3,500
700
600
Millions
of
US$
$3,000
500
$2,500
400
$2,000
300
$1,500
200
$1,000
100
$500
-­‐
$-­‐
2011
2012
2013
2014
2015
• 42%
CAGR
through
2017
for
revenues
• Significant
impact
on
casual
game
market
© 2012 Nikopartners
2016
2017
Millions
of
Mobile
Gamers
Mobile
Games
Revenues
(US$
m)
$4,000
$4.3
B
680
M

15. 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
© 2012 Nikopartners

16. Trends:
Home
Play
Primary
Reason
in
Picking
New
Game
to
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
© 2012 Nikopartners
It
only
will
take
a
few
minutes
per
day
to
play
8%
I
will
be
able
to
spend
lots
of
Bme
on
it
14%
Best
game
of
its
genre
52%
It
plays
well
on
the
PC
or
device
I
use
7%
Friends
are
playing
it
13%
Doesn’t
require
high
spending
6%

17. 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
© 2012 Nikopartners

18. 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
© 2012 Nikopartners

19. Trends:
Tablets
1200
– 54%
of
Gamers
own
a
Tablet
– 33%
Own
2
or
More
– Dominant
Brands:
1000
800
• Apple
and
Samsung
=
90%
• Tablet
Usage
600
– Mostly
Not
Shared
–
80%
claim
personal
use
only
– Same
Game
Choices
as
Mobile,
for
now
400
200
0
Other
Tablet
GBA
© 2012 Nikopartners
DS
PSP
None
Number
of
Respondents
• Growing
PenetraBon
Handheld
Gaming
Device
Ownership

20. Southeast
Asia
• Niko
acBvely
tracks:
– Thailand
– Philippines
– Vietnam
– Singapore
– Malaysia
– Indonesia
© 2012 Nikopartners

21. 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)
© 2012 Nikopartners
• Southeast
Asia:
– Total
PopulaBon
(6
countries):
545
million
– 2013
Total
Games
Market:
$662
million
– Projected
5
year
CAGR:
17.4%

22. 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
© 2012 Nikopartners
$1,200.0
$1,000.0
$800.0
$600.0
Vietnam
Thailand
Singapore
Philippines
Malaysia
Indonesia
$400.0
$200.0
$-­‐
2011
2012
2013
2014
2015
2016

23. 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
© 2012 Nikopartners

24. 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
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

25. 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.
© 2012 Nikopartners

26. 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
Est.
2012
and
top
game
in
market
2012
share
Lyto
(Cross
Fire)
25-­‐30%
Megaxus
(CS
Online)
20-­‐25%
Kreon
(Point
Blank)
20-­‐25%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

27. Indonesia
• 19.6
million
gamers
in
2012
• $88.1
million
in
2012
online
games
revenues
– 25.8%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
35%
Survey
Sample
Size
for
Indonesia:
447
Gamers
Percent
of
Gamers
30%
25%
20%
15%
10%
5%
0%
© 2012 Nikopartners
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

28. 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
Key
online
operators
Est.
2012
and
top
game
in
market
2012
share
AsiaSop
(Sudden
Arack)
30-­‐35%
Garena
(LOL,
HON)
25-­‐30%
Cubinet
(Perf.
World)
25-­‐30%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

29. Malaysia
• 7.6
million
gamers
in
2012
• $44.1
million
in
2012
online
games
revenues
– 22.5%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
30%
Survey
Sample
Size
for
Malaysia:
2,708
Gamers
Percent
of
Gamers
25%
20%
15%
10%
5%
0%
© 2012 Nikopartners
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

30. 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
Key
online
operators
Est.
2012
and
top
game
in
market
2012
share
Level
Up!
(RO,
Crazy
Kart
40-­‐50%
Garena
(LOL,
HON)
20-­‐25%
Cubinet
(Special
Force,
CF,
DOTA)
20-­‐25%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

31. Philippines
• 21.0
million
gamers
in
2012
• $43.9
million
in
2012
online
games
revenues
– 21.8%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
30%
Survey
Sample
Size
for
Philippines:
878
Gamers
© 2012 Nikopartners
Percent
of
Gamers
25%
20%
15%
10%
5%
0%
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

32. 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
Key
online
operators
Est.
2012
and
top
game
in
market
2012
share
AsiaSop
(Sudden
Arack,
AudiBon,
WoW)
30-­‐35%
Garena
(LOL,
HON)
20-­‐25%
Cubinet
(SUN,
CubiGames)
20-­‐25%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

33. Singapore
• 1.53
million
gamers
in
2012
• $31.0
million
in
2012
online
games
revenues
– 14.0%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
30%
Survey
Sample
Size
for
Singapore:
1,197
Gamers
© 2012 Nikopartners
Percent
of
Gamers
25%
20%
15%
10%
5%
0%
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

34. 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
Key
online
operators
Est.
2012
and
top
game
in
market
2012
share
AsiaSop
(Point
Blank,
35-­‐40%
Dragon
Nest)
TRUE
(Special
Force,
FIFA
Online
2)
25-­‐30%
Ini3
(FlyFF,
BOOMz)
5-­‐10%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

35. Thailand
• 8.1
million
gamers
in
2012
• $133.0
million
in
2012
online
games
revenues
– 15.7%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
45%
40%
Survey
Sample
Size
for
Thailand:
4,054
Gamers
© 2012 Nikopartners
Percent
of
Gamers
35%
30%
25%
20%
15%
10%
5%
0%
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

36. 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
Key
online
operators
Est.
2012
and
top
game
in
market
2012
share
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%
Source:
Niko
Partners,
November
2012
© 2012 Nikopartners

37. Vietnam
• 15.7
million
gamers
in
2012
• $219.6
million
in
2012
online
games
revenues
– 15.6%
growth
over
2011
Hours
per
Week
Playing
Games,
excluding
Mobile
30%
Survey
Sample
Size
for
Vietnam:
3,848
Gamers
© 2012 Nikopartners
Percent
of
Gamers
25%
20%
15%
10%
5%
0%
0/mobile
only
Source:
Niko
Partners,
2012
1
-­‐ 7
8
-­‐ 14
15
-­‐ 21
Hours
per
Week
22
-­‐ 29
Over
30

38. 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.
© 2012 Nikopartners

39. 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
© 2012 Nikopartners

40. Thank
you!
• Contact:
– kevin@nikopartners.com
• Shameless
Plug:
– Updated
Southeast
Asia
Report
available
Dec
1
• Forecasts,
25k
user
survey,
interviews,
and
more
© 2012 Nikopartners