Another growth driver are the foreign investments pouring into key markets as video game giants establish branches in the region. Sony of Japan, for example, has opened Malaysia Studio as a part of Sony’s PlayStation Studio. China’s miHoYo, based in Shanghai, has a Singaporean arm, Cognosphere, now the publisher of video game blockbuster Genshin Impact. Deals have not been limited to investments. James Wong of Mason Games of Malaysia told Tech Collective that Southeast Asia has been the “go-to place” for outsourcing certain parts of triple-A projects because of the region’s growing talent pool and competitive pricing.
But what is really attracting investments and driving gaming growth in the region is e-sports, a fast-growing sector that is generating significant fast-growing revenues. A report from Tencent forecasts that e-sports revenue will reach a staggering US$72.5 million in 2024, representing a CAGR of 20.8 percent, nearly double the global growth rate (11.1 percent). E-sports were included in the Southeast Asian Games in the Philippines in 2019 and will again be featured at the postponed 2021 Games in Hanoi scheduled for May 2022. Rising viewership of e-sports on streaming platforms such as Twitch and YouTube is expected to boost the influx of investment into the gaming industry in the region. As more competitive video games such as Mobile Legends and Hearthstone gain the spotlight in regional sporting events, the potential for the video gaming industry will get even greater.
NFTs and the play-to-earn model
So, what lies ahead?
Non-fungible tokens (NFTs), non-interchangeable units of data stored on a blockchain or digital ledger, have been attracting a great deal of attention lately. This trend has not gone unnoticed in the video game industry, with companies trying to include NFTs in video games or planning to do so. The implementation of NFTs in video games has established a player base that is dedicated to the play-to-earn (P2E) model, meaning that playing video games can be source of income and even a way for an individual to make a living. In Southeast Asia, NFTs in video games are also gaining traction in the wake of the release of Axie Infinity, a globally popular Vietnam-made NFT-based online game that generated over US$2.3 billion in sales (as of October 2021) and attracted some 2.5 million players.
The P2E concept is changing the way video gaming is perceived not just by gamers and other enthusiasts (and their families and friends, too) but by all the players across the industry. A video game is no longer seen as a time-and-money waster. Instead, it could be used to gain profits, turning the medium into a legitimate revenue-earning stream, a way for a person to make much more than a few bucks. In e-sports world, the concept is not foreign as competitive games such as Defense of the Ancients (DotA) and Counter-Strike: Global Offensive (CS:GO) have featured collectible, rare items that could be sold at high prices. Often, P2E goes hand in hand with NFTs. In blockchain gaming, items (that players collect) can be represented as NFTs purchasable with cryptocurrency.
But there is a catch. NFTs in video games has divided opinions. Those who support them argue that it is a sustainable way to generate revenues, while those who oppose them think that the whole NFT concept is a scam and, because of the energy generated by the processing power (as with some cryptocurrencies such as Bitcoin), has a negative impact on the environment.
Concerns about the risks associated with NFTs and blockchain gaming are rising. In an online interview, technologist and games developer Lars Doucet pointed out that many games implementing the P2E model are akin to a Ponzi scheme, benefiting early players and investors over newer ones. Some video game companies are steering away from NFTs as they fear that should the bubble burst, players could be left holding worthless assets.
The keyword here is value. The question is: "Do NFTs create real value?" This is a question that game companies and players will have to answer before they get into the fray.
Trending: Female gamers and 5G
Another trend in recent years is the increase in female gamers gaining recognition within the community. Many are garnering attention in the e-sports and live-streaming scenes. An Asia Sports Tech survey showed that the female gaming community is huge in Southeast Asia, making up 40 percent of the region’s gamers. This has generated an ethos in the industry that embraces gender equality and inclusion.
Chase Buckle of market research company GWI noted that women are likely to be gaming on either smartphones or tablets. Women also have a heavy preference for multiplayer games and e-sports content. To create more inclusive gaming experiences means that developers and platforms need to prioritize convenience and reliability. Related to this, a survey conducted by Business Times of gamers in Singapore, Japan and South Korea found that female players valued engaging gameplay, reliability of network quality, and low latency (the time it takes for the gaming device to send data to the relevant server).
Finally, the emergence of 5G is expected to bring broader access to more players. The increasing market penetration of smartphones will widen access to multiplayer games. Cloud gaming technology has enabled players to play a video game anywhere even in a low-end, low-bandwidth system.
Developing countries such as Indonesia and Vietnam still face the challenge internet connectivity. Some areas are plagued by slow speed as well as unequal distribution of service. Those living in remote areas are particularly disadvantaged due to poor infrastructure. Many people are also simply unable to afford internet service.