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With over 600 million people occupying 11 countries, the expansive region of Southeast Asia accounts for almost 10 percent of the world’s population. Still, the region punches below its weight, earning just 3 percent of $25.3 billion in global mobile games revenue—about $637 million in 2015, according to SuperData Research.

Many publishers choose a passive strategy in Southeast Asia based on these numbers and the attendant complications of a fragmented market. The region is full of a wide range of languages and cultures and boasts a low conversion to paying players in its most populated countries.

Recently, though, a wave of mobile gaming companies have moved in on the area, anticipating growth in the coming years—to $1.08 billion by 2018, according SuperData. As the market begins to swell, should publishers and devs begin to consider a Southeast Asia marketing strategy? We’ll let you decide.

Measuring the Market

Most Southeast Asian countries are very low income, with GDP per capita under $5,000 USD. Singapore stands out though, with a relatively sizable population of 5.5 million earning a GDP per capita of $56,113.

It’s quite common to hear developers say they only target Singapore in the region because of its high incomes, lack of payment issues (most Singaporeans have a credit card) and cosmopolitan culture. In recent years, however, mobile game growth across the rest of the region has happened at a faster rate than in Singapore. Chartboost’s metrics show a 76 percent year-over-year increase in bootups between 2014 and 2015 across Southeast Asian countries:

SEA_Country_Growth

Beyond Singapore

Though Singapore may be the current outlier, other countries in the region are rife for the taking. Developers should understand that while each area is very nuanced, if targeted properly, they could garner a return.

Malaysia

Singapore’s northern neighbor is the second most attractive target today for global publishers due to its relatively healthy economy—GDP per capita for the 30 million population is $12,243 (almost double Thailand’s and four times higher than the Philippines).

SuperData’s latest Asia report pegs Malaysia’s market at $99.6 million—a significant chunk of Southeast Asia’s total market. Malaysia is a fairly convenient market for game devs and publishers to enter, with a mix of Muslim and Chinese culture and a strong understanding of English among its inhabitants.

The downside is this: Malaysia already has 21.7 million smartphone users, a penetration rate that offers little room for growth compared to other Southeast Asian markets.

Indonesia

Indonesia, with a population of 256 million, is the highest-grossing country  in the region, according to SuperData. But with more 42.1 million smartphone users (more than the entire population of Malaysia), this means that revenue per user is extremely low.

Developers do see value here, though. Jakarta-based Touchten Games, for example, recently shifted its focus from the global market to self-publishing in Indonesia alone.

Indonesia based Touchten Games' Ramen Chain

Indonesia based Touchten Games’ Ramen Chain

“[Indonesia has] about 40 million smartphones,” says Touchten chief operating officer Rokimas Soeharyo. “But by 2018 it’ll more than double to about 100 million. That makes us very bullish about the market in Indonesia.”

While the number of mobile players is set to increase, the greatest challenge for Touchten and others in the area is monetization: per-capita incomes in Indonesia are quite low and few people have access to credit cards.

There are other issues as well: as in countries like India, both app download size and online requirements of games influence Indonesian consumers strongly.

Philippines

Just to the northeast of Indonesia, the Philippines’ 101 million people are likely Southeast Asia’s most Westernized. Influences from countries like Japan and Korea are prominent, but in general visitors notice a strong affinity for American culture and use of English over the native language, Tagalog.

Developers are often able to tell stories of Filipino gamers with fanatic dedication to their free-to-play games, but with a much smaller population than Indonesia and similarly low monetization, the country has mobile publishers less excited.

Philippine based Altitude's Run Run Super V

Philippine based Altitude’s Run Run Super V

“Everyone will tell you the Philippines users don’t pay,” says Gabby Dizon, CEO of Manila-based Altitude Games. “That’s not exactly true, they don’t pay using the usual channels. You really need to customize the payment, and that means some kind of partnership with a telco.”

When users do pay, the amounts may be small. “If you look at the total mobile ARPU, in the Philippines it’s about $3.50 per month, which tells you that a 99 cent purchase is a quarter of their monthly budget for content,” adds Dizon. “If you’re on the level of a Supercell, it’s a rounding error.”

Thailand

Thailand has a relatively strong strong economy compared to the rest of region—its nominal GDP per capita is $6,737, according to IMF numbers, more than double countries like Vietnam or the Philippines. Combined with a distinctive culture made up of 67 million citizens, the country is an attractive but challenging prospect for Western publishers.

“Thailand’s gamers are quite unique, so local publishers will continue to play a strong role,” says Andy Saroj Pichayapa, a business development manager at Thai publisher Ini3. “Western developers have [succeeded] before, but only with the right game content.”

In general, Thailand’s users are far more Eastern oriented than those in Indonesia or the Philippines. “In terms of graphics and artwork style, the majority prefers the Japanese/Korean style,” advises Pichayapa. “In general, RPG is the most well accepted [genre]”.

SEA_Category_Growth

Vietnam

On the spectrum of Western to Eastern, Vietnam, population 94 million, leans furthest East. The content preferences of its players are most similar to that of Chinese players—potentially inscrutable to Western developers. Despite growing mobile penetration and availability of cheap 3G, Vietnam also tends to scare off outsiders with reported low numbers of users converting to paying players and government policies hostile to outsiders.

However, JOY Entertainment CEO Anh Le disputes the low conversion numbers, saying that Vietnamese users can convert at rates nearly as high as Singaporeans—given the right circumstances.

we-are-heroes

Vietnam based JOY Entertainment’s We Are Heroes

Specifically, circumstances that include are multiplayer RPGs with Asian mechanics. Vietnamese users converting for these games is “more about habit,” says Le. “They played Chinese [web] games a lot in the past.”

Despite government involvement, Western companies can publish games on the Apple and Google stores freely, but users gained this way won’t monetize: Vietnamese companies are needed to handle the payments, which requires using a publisher with government approval.

Planning for the Future

While each of the above countries is growing fast in terms of smartphone and 3G/4G penetration and estimates show it topping the billion-dollar mark in a few years, the near term future for any single country in Southeast Asia is uncertain. Getting users to pay is the biggest obstacle, which requires Apple or Google to work with local providers and alternatives to credit cards. The second obstacle here, or, perhaps opportunity, is getting to know the people in the country. It will take a lot of legwork to create relationships, so focus on one country with bright prospects, like Indonesia.

The more conservative picture for the region is one of slow and continuous growth, much of it fostered by native companies that have the patience to learn what works for user acquisition and build in alternative monetization methods like carrier payment. “Even though it’s not officially allowed, [for local] publishers 50 percent of their revenue is coming from these [alternative] options,” says industry consultant Josh Burns.

What’s more certain, however, is that Southeast Asian economies are growing quickly, and ever more users are coming online for the first time—through smartphones rather than computer screens. For example, just in the Philippines homegrown smartphone brands like Cherry Mobile sell mid-tier units for under $100, leading eMarketer to project 62 percent growth in smartphone penetration by 2018, from 24.8 million to 39.4 million units.

With that level of growth, the market will certainly become viable—even if it takes another year or two.