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.
Fragnova shows the positive side of Web3 technologies with its first game, Ambal Duels
Fragnova has announced that Ambal Duels, a free-to-play strategy card game, will be the first blockchain-enabled game to be built using the platform’s unique game development engine, Claymore. Using blockchain technology means the game will have immutable assets and modding functionalities, allowing the community to create their own content that they can choose to monetise, thanks to the direct-to-creator royalties distribution that’s fundamental to Fragnova’s approach.
Ambal Duels began life as a successful Kickstarter campaign for the fantasy-themed strategy card game Ambal Tournament. Ambal Duels is the first game to be built entirely using Fragnova’s decentralised model, and so is the platform’s first proof of concept game.
The game’s development is being led by Bernardo Bittencourt, a Founding member of Fragnova and the one-person team behind Salt Ring Games. “Bringing Ambal Tournament to the digital realm has been a passion project of mine, so I’m really excited we’ll be able to grow the game and share the fantasy world of Ambal with entirely new audiences. Fragnova is the perfect platform for Ambal Duels as the blockchain provides the ideal foundation for players to trade and collect cards. The platform’s focus on user-generated content and modding functionalities make Fragnova unique, enabling the community to express themselves creatively while keeping the game fresh with new content.”
Ambal Duels is a strategic card game combining online RPG elements to create a fast-paced and highly customizable gameplay experience. There are no monsters in Ambal Duels; instead, the game offers deep strategic options through spells and actions, putting players in the centre of the action. The tides of battle constantly shift thanks to blocks, interrupts and other unique mechanics, offering high replayability and evolving strategies.
Fragnova’s aim is for the revenues in games to be distributed more equitably to those who work on them through creating a decentralised gaming ecosystem underpinned by blockchain technology. When completed, Fragnova’s decentralised game development ecosystem will include a dedicated game engine called Claymore, a Gamer Store offering in-game items or playable experiences (similar to elements of Playstation Dreams), and the Creator Store, a marketplace for developers filled with assets like 3D models, scripts or audio.
As with any game developed on the Fragnova ecosystem, Ambal Duels’ developers and artists can realise the total value of their creations thanks to the integration of blockchain technology that tracks the usage of those assets or items.
“The game will allow people to see what our mission at Fragnova is all about and our long-term goal of bringing about decentralised game creation. I hope people will understand that just because the game is built using blockchain technology, it has nothing to do with Play 2 Earn or monetisation. Above all, we want to create a fun and enjoyable experience for our players. Blockchain is just a vehicle to help get us there and ensure game creators are fairly compensated,” said Giovanni Petrantoni, President and Founder of the Fragnova Foundation.
Macau Gambling Boss Denies Illegal Gambling, Criminal Syndicate Allegations
A well-known Macau gambling boss in China’s special administrative region of Macau denied charges including enabling illegal gaming, running a criminal syndicate and money laundering at the start of his trial on Monday.
Alvin Chau was chairman of Macau’s Suncity junket – which brokers the gambling activity of Chinese high rollers – until December 2021, a month after his arrest on a warrant from the eastern Chinese city of Wenzhou accusing him of operating illegal gambling activities on the Chinese mainland.
Macau is the only city in China where citizens are legally permitted to gamble in casinos.
Chau told Macau’s primary court that he did not operate any illegal gambling or commit money laundering. He said his business in the Philippines was also permitted by local authorities there.
Junkets are middlemen who help facilitate gambling for wealthy Chinese in Macau, extending them credit and collecting on their debt on behalf of casino operators. Marketing or soliciting gambling in mainland China is illegal.
Chau said no one from Suncity Group had promoted gambling on the mainland.
Chau’s Suncity was a major player in Macau until 2019, prior to the coronavirus outbreak, accounting for around 25% of total gaming revenues. That year, Macau casinos generated $36 billion in revenue.
The junket industry has collapsed in the former Portuguese colony since Chau’s arrest with all of Suncity’s VIP rooms shuttered last December. Many others folded, hit by poor sentiment and a lack of business due to COVID-19 related travel restrictions.
IESF Holds Asian Qualifiers for Mobile Legends: Bang Bang and PUBG Mobile
Malaysia and Kazakhstan Teams Advance to the World Esports Championships Finals
The International Esports Federation (IESF) held the latest round of regional qualifiers for the upcoming World Esports Championships Finals. The Malaysia and Kazakhstan teams have advanced to the WE Championships Finals for Mobile Legends: Bang Bang (MLBB) and PUBG Mobile, respectively.
The online qualifiers featured players from 16 nations competing in MLBB, while PUBG Mobile saw players from 22 nations. The 14th WE Championships will mark the first time the two games are part of IESF’s flagship event, reflecting the progression of the event and the overall mobile gaming industry, particularly among those without the resources or means to play on consoles and supporting IESF’s vision for a more accessible and inclusive Esports ecosystem.
The remaining regional qualifiers will continue throughout the fall before the world’s best players go head-to-head in Bali, Indonesia from December 1 to 12. This year is expected to be the largest and most geographically diverse installment of the WE Championships Finals to date, with 120 nations set to compete.
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