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Niko Partners 2022 Asia Video Game Industry Predictions

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Niko Partners Predictions for the 2022 Asia Games Market
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1. MENA-3 games market revenue will surpass $2 billion in 2022

Niko Partners initiated coverage on Saudi Arabia, the United Arab Emirates and Egypt for the first time in 2022. We call this region MENA-3 in our reports and expect combined games revenue across all platforms to surpass $2 billion this year. Growth will be driven by higher spending per user, additional government support across games and esports, and more gamers entering the market.

2. India will have over 400 million gamers in 2022 

We predict India will surpass 400 million gamers this year, accounting for over ¼ of total gamers in Asia. We also believe that India, the fastest growing market in Asia, will be the next market to reach $1 billion. Niko Partners has often talked about how the ITV markets, referring to Indonesia, Thailand, and Vietnam, would be the next billion-dollar games markets. These three markets have surpassed $1 billion individually over the past two years.

3. Game approvals in China will restart in early 2022 

China’s video game regulator has not approved any new titles since July 22, 2021. There were only 755 titles approved in 2021, compared to 1,411 in 2020. With the roll out of the national anti-addiction and real name identification system now complete, we expect approvals to restart in early 2022.

4. China’s regulatory approach will shift from reform to enforcement

China’s video game regulator introduced new policies in 2021, primarily aimed at curbing gaming addiction among minors. We expect the regulator to shift away from policy reform in 2022, as it looks to ensure compliance with current regulations. We are already starting to see a crackdown on companies that are curbing regulations and we have upgraded the risk of a Steam International ban in China to high.

5. Game companies in China will increase focus on exports 

Chinese game companies have dominated their home market and found success overseas with mobile games. With increased investment in AAA game development, local indie studios and the ongoing regulatory risk at home, we expect Chinese game companies to start finding success on all platforms overseas in 2022 and beyond.

6. Esports will become more legitimate in 2022

In 2017 the International Olympic Committee recognized esports as a sport, in 2018 esports was a demonstration event at the Asian Games in Jakarta, Indonesia and in 2022 Esports will be a medal event at the Asian Games in Hangzhou, China. This will lead to more investment in esports player pipelines and player development. 2022 will enjoy an increase in esports training, education, subsidies aimed at esports management, player development.

7. Cross Platform and Cross Play will be a staple of new titles in 2022

The success of multi-platform titles such as Genshin Impact, the widespread adoption of scalable game engines such as Unreal Engine and Unity as well as the demand for interoperability between devices has led to players valuing cross platform experiences with cross play. We expect some of the largest game studios in China, South Korea, and Japan to introduce titles that run across PC, Console, Mobile and Cloud with cross play enabled.

8. 5G will be available across all 14 markets we cover in 2022 

5G has been rolling out across numerous markets in Asia since South Korea launched 5G services in April 2019. This has led to increased download speeds, lower latency and helped enable cloud gaming on the go. Malaysia, Vietnam, India and Egypt are the four markets we cover that have yet to roll out 5G. We expect them to start their roll out by the end of the year.

9. M&A / Investments / IPOs will continue to play an important role  

2021 was a record year for game related investments, especially in China where the number of transactions doubled compared to the prior year. Tencent alone invested in or acquired more than 100 game related companies last year. We expect M&A / Investments to continue playing a notable role in 2022 and beyond as the value of IP, development talent and new technologies become more important. While there may be a lower number of deals closed in 2022, we believe the overall value will continue to remain high.

10. Gaming companies will capitalize on the metaverse trend better than tech companies, but it’s still too early for the concept

Metaverse became a hot word in 2021 with numerous tech and gaming companies embracing the concept. Niko Partners believes that live service video games have been building towards the metaverse concept for several years and that companies with experience in both video game development and social media platform operation will have an advantage when entering this space. We expect game focused companies to see the initial benefits of the metaverse trend while tech first companies will struggle to offer value to users. However, we don’t expect to see a true metaverse experience in 2022 based on the currently accepted definitions.

11. The convergence of video games and the entertainment industry further engages gamers 

The video game industry is building on the concepts of metaverse, pan-entertainment and transmedia which is leading to a convergence between games and entertainment. We expect to see more traditional brands, entertainment properties and artists take advantage of live service games in 2022. On the flip side, we expect to see more collaboration between video game IP holders and traditional entertainment such as movies, TV, and comics. This bi-directional approach will further engage gamers in the future.

12. Blockchain game adoption increases, but the space remains experimental 

Blockchain based games made headlines in 2021 and VCs have invested billions in them. The past year has seen the rise of blockchain based non-fungible tokens (NFTs) in games and the exploration of the Play to Earn (P2E) model. We expect to see new innovative game projects in 2022 and increased adoption of blockchain games. However, the numerous barriers to entry, lack of regulation and questions around sustainability will keep the space experimental in 2022.

13. The local game development scene will grow in developing markets 

Of the 14 markets we cover, Japan, South Korea, and China are considered game development powerhouses due to the hit titles released by domestic developers. The success of Vietnamese studio Sky Mavis (publisher of Axie Infinity) and a 2x increase in local game development studios in India since 2019 shows there is growing talent in these emerging markets. We expect to see the release of a hit game ($100m+ revenue) released by a studio from Southeast Asia or India in 2022.

14. The conversation regarding app store take rates will extend into 2022

The Epic v Apple case made headlines in 2021 and it indirectly led to Apple and Google reducing take rates for developers that earn less than $1m per year. In South Korea, a new bill required Apple and Google to offer alternative in app payment options. In China, TapTap made headlines for offering a 0% take rate and numerous developers have invested in direct distribution to avoid app store fees. As pressure continues to build, we expect platform holders to make further concessions in 2022.

15. Increasing government support towards local game development across SEA

In 2021, governments became increasingly supportive of the video game sector. Vietnam’s government took an active role in the creation of Vietnam Online Game Developers and Publishers Alliance (which will be formally established in 2022), Indonesia’s government showed support towards local game developers through fundings and infrastructure support, and Malaysia’s government continue to allocate specific national budget for gaming and esports. We anticipate more of this in 2022.

16. Korea and Japan to continue deregulation of the gaming and esports industry

Following Korea’s abolishment of the 10-year-old Shutdown Law and looking at Japan’s increasing interest in esports, we expect that both countries will continue to ease regulations or even move towards deregulation of certain laws or ordinances that hamper the growth of the gaming and esports industry. While an overhaul of the regulatory environment might not be feasible, small changes will be possible to occur in 2022.

Check our 2021 predictions accuracy here. All our predictions came true, except for #7 as a freeze on game approvals in China led to a lower number of import games being approved in 2021 vs 2020.

Asia

React Gaming to Offer LOOT.BET Esports Wagering Skin via HHRP in the Philippines

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Generationz Gaming Entertainment, a subsidiary of the React Gaming Group, has signed a white label revenue sharing agreement with HHRP Inc to operate LOOT.BET’s esports wagering platform in the Philippines, pending successful certification of the LOOT.BET platform by Gaming Laboratories International.

“We are thrilled to have HHRP as a partner for the Philippines market, HHRP being one of only four companies holding online gaming licences in a country of more than 109 million people,” Laurent Benezra, President and CEO of React Gaming, said.

“This agreement is part of our two-pronged growth strategy to expand LOOT.BET’s reach into the B2C and B2B markets. The advantage of the B2B market is that LOOT.BET’s platform will be offered to established customer bases, thus involving no customer acquisition cost on our part. Our partner will offer our white-label platform as its own to its customers and we will receive a portion of the revenue generated when those customers use the platform. The more popular our platform, the more revenue it will generate. The great thing about this model is that we can replicate it in multiple markets and with multiple online gaming providers at minimal cost,” Laurent Benezra added.

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Asia

BetMakers Signs Agreement with Royal Sabah Turf Club

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BetMakers has signed an agreement with the Royal Sabah Turf Club to provide its solutions to the Malaysian racecourse operator and its betting network.

Through the five-year deal, BetMakers will deliver a tote betting system along with content management services at the Tambalang Race Course and the Royal Sabah’s off-course betting network, via its Global Tote and Global Racing Network divisions.

BetMakers will be the exclusive rights holder for races held at the Malaysian club within both Tote and fixed-odds markets. BetMakers owns Global Tote, which it acquired from Sportech last year. Global Tote will deliver the Quantum to the Royal Sabah Turf Club as a SaaS solution, which will provide the club with the operational tools and training to distribute races to racetracks licensed by betting operators worldwide.

Lance Ku, Director of Sales & Business Development Asia for Global Tote, said: “Global Tote is very pleased to extend and grow our partnership with Royal Sabah Turf Club. The Global Tote solution offers advanced capabilities and features that will help them deliver a fantastic customer experience.

“Combined with Global Racing Network’s professional content management solution, Royal Sabah has a powerful route by which to pursue opportunities for growth.”

Datuk Peter Chin, Chairman of Royal Sabah Turf Club, said: “We have been very pleased with the services we receive from Global Tote and having the ability to turn to BetMakers for both our betting technologies and services, as well as for content distribution management, offers Royal Sabah Turf Club the most efficient, effective means by which to reach new markets for our racing, new content for our customers, and new revenue streams.”

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Asia

Mayhem Studios announces its first Battle Royale title

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Mayhem Studios announces its first Battle Royale title
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“Underworld Gang Wars” or UGW, which revolves around the rivalry between two gangs, launched through India’s largest drone show designed for a game reveal

 Mayhem Studios, India’s first studio for AAA games has announced its first title “Underworld Gang Wars” (UGW), a Battle Royale game set in India. With the characters and plot rooted in India, the game promises an exciting setting with some interesting characters inspired by stories of India.

Set in a truly Indian plot, the locations, the gangs and the icons represent an Indian context in a AAA game for the first time. The theme, weapons, and the maps of the game have been designed to offer a unique experience to the gamers.

The gameplay becomes intense in UGW as the underdog gang from the West wants to take control of the Eastern region from its arch-rival urban gang.

To provide an authentic experience, each region depicted in the game resembles a real location in India, be it the coal mines or the next-door apartment complex. It also has iconic landmarks including a fort, station, stadium and a racecourse.

Scheduled to be launched later this year, the game’s pre-registration window will open from 22nd May.

Commenting on the announcement, Ojas Vipat, CEO of Mayhem Studios, said: “We are thrilled to come up with the first Battle Royale Title that promises to offer one of the most relatable storylines for gamers. UGW’s unique locations and the highly relatable universe with great graphics are sure to provide a great experience for Battle Royale players. We are also excited to put together a blockbuster game with some unique stories of India for the world.”

Mayhem Studios has conducted India’s biggest game reveal through a drone show at Mumbai’s Mahalaxmi Racecourse. Through this drone show, the studio revealed the game logo and also created a QR code that directed the onlookers to the game teaser.

The event was also attended by leading gaming influencers and enthusiasts like Tanmay Bhat, Mortal, Scout and Dynamo Gaming.

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