Southeast Asia: Gamedev Outsourcing Giant or IP Creation Hotbed?

Southeast Asia is a vast region that covers six primary game markets: Indonesia, Thailand, Vietnam, Singapore, Malaysia, and the Philippines. In 2023, the gaming market volume was $5.61B, where 66.4% of gaming revenue came from the mobile segment. This makes SEA the fastest-growing mobile gaming industry in the world.

Young But Promising Market

The SEA market is characterized by a stronger presence of independent developers. While the SEA game development industry may not possess the same level of expertise and established infrastructure as the world-leading markets, developers in this region are continuously enhancing their skills to deliver high-quality work.

Don Baey, Chief Business Development Officer, and Leslie Ng, Chief Strategy Officer | Creative Director at TrueWorld Studios Pte Ltd

In some parts of SEA, you find more young freelancing or hobbyist developers, especially those with little prior training. Some of these gradually form teams to become studios. You can see the trend of such studios working to improve their skills to grow and do higher quality work, whether as an indie creator or as a service.

The most popular companies in SEA that were mentioned by interviewees are the following:

SEA is a powerful outsourcing hub. Since prices are lower there than in the West, SEA outsourcing resources are popular among foreign game studios. For example, a lot of people in the region work on Ubisoft games like Assassin's Creed and Skull and Bones. There are also art houses that participate in the creation of games that require high-quality animation: Street Fighter and Mortal Kombat.

Nowadays, developers are becoming more active in developing their own IPs. The degree of IP development varies across the region, but every country has its own unique game style. Developers want to demonstrate their culture or make something creative and innovative. SEA is already famous for the following IPs: Baldur's Gate from Larian Studios (Larian Malaysia), Postknight from Kurechii, and Coffee Talk from Toge Productions. Indie game developers are more likely to develop their own IPs in the SEA region. Big companies usually don’t take this risk, choosing to license or buy existing IPs from film and animation.

Sameer Pandit, Director at Maxsoft Pte Ltd

SEA is known more as an outsourcing hub. Apart from the outsourcing model, everyone wants to develop their own IPs. They try to split it, so the core of their business is providing contract work to a lot of big publishers and developers, but at the same time, everybody nurtures this ambition of making something on their own and they keep on working on it on the side. Creating their own IPs is becoming a bigger part of how studios see themselves in the future.

Why Mobile?

The number of mobile game downloads is growing every year in the SEA region, and this figure exceeded 2.1 billion in Q1 2023, with 93% of downloads on Google Play.

Interviewees believe that the popularity of mobile games is due to the fact that everyone has a smartphone in SEA. PCs and consoles are still expensive devices for the majority of gamers, and that’s because the quality of life is lower there than in big markets like the US or Europe.

Alitt Khaliq, General Manager at NX3Games

Due to the stability and safety of the SEA region, people can entertain themselves and enjoy games. It also helps technology and accessibility. For example, everyone has a smartphone and internet there. The hardware and software aren’t so expensive in comparison to Europe. It’s 40% cheaper to build a good PC in the SEA region. There are also a lot of options to upgrade Android phones and get more storage due to cheap micro SDs, so people can play more games. Moreover, 5G isn’t absolutely required to play mobile games — 3G or 4G is enough. This all makes a difference in spending power in entertainment and games.

From a development point of view, mobile games require fewer resources: even a single developer can create a casual mobile game. And if one game isn’t popular among players, it isn’t too costly to switch to a new project. However, compared to PCs and consoles, mobile games require a significantly larger number of downloads to turn a profit. Interviewees believe that high development costs for PC or console games can be covered by getting funding from companies that want to support local studios. So, despite the greater investment and risk, the development of PC and console games is gaining popularity in the region.

Marketing Strategies

From a marketing point of view, there’s no huge difference between SEA and other regions. Developers are focused on both international and local markets. Local targeting is typical for countries such as Vietnam, Thailand, and Indonesia. However, interviewees don’t think that many people can understand games with local culture, so in order to achieve big success, studios try to reach a global audience, entering markets such as the US, Brazil, China, Korea, and Japan.

Danielle Ray, Narrative Designer at Metronomik Sdn Bhd

Danielle doesn’t see too many differences in how various SEA countries handle promotions. They tend to split marketing into two ways: global and local. Global marketing is pretty much the same as most other companies: it involves game pitching, so developers just show the usual stuff. Local marketing is used when a game was made specifically by people who live in a certain country like Malaysia, Indonesia, Singapore, etc. The game is promoted in this territory, and developers demonstrate to people that the product was created by locals which grabs more attention from players and government.

Localization poses a significant challenge within the SEA region. It’s really hard to unify games for all SEA countries because their cultures and languages are different. That’s why developers usually launch games in English since it’s a universal language, and then they make local promotions for each country (ads, banners, and social media content). But if the goal is to reach players in a specific country and gain cost benefits, then localization is required. However, it’s necessary to understand that entering the global market is more difficult for localized games.

Based on the EF English Proficiency Index, the Philippines, Malaysia, and Singapore have high to very high levels of English whereas Vietnam, Indonesia, and Thailand are more oriented towards local languages. So developers should pay more attention to localization if they want to target countries with low EF EPI.

Marketing channels are similar to the ones in Western countries. The most popular platforms are Facebook, Instagram, and TikTok. Interviewees believe that TikTok is more suitable for games in SEA because there are more organic users than on Facebook and Instagram.

While some companies reach out to influencers to promote games, the SEA region lacks bloggers with a focus on gaming. Typically, influencers in this region have lifestyle-oriented content, promoting a variety of products. So, it’s better to look for a target audience through game streamers.

Besides that, developers can provide players with a mobile demo version of a game. This will introduce the audience to the game and increase their awareness. According to interviewees, many SEA indie game developers create a monetization model only after launching a prototype, at least. Checking players’ interest through demos and building business around it allows them to survive.

YJ Jin, VP of Business, and Jannessa Jimmy Yangus, Service Strategy Planner at Zempot Malaysia

Indie developers should prioritize survival. Monetization strategies emerge after completing a project or at least a prototype. Some studios create games out of sheer passion, while others chase profits post-demo launch.

Southeast Asia: Gamedev Outsourcing Giant or IP Creation Hotbed?

Young But Promising Market

Why Mobile?

Marketing Strategies

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