The pandemic has led to the emergence of cloud-based gaming, which has shown robust growth in Southeast Asia. Cloud gaming allows users to stream high-end games to smartphones with fast network connectivity, eliminating the need for regular hardware upgrades. Using this technology, players can access gaming content without having to download it onto any device. Gaming on the cloud is similar to playing on a console or PC, although all of the processing and graphics are handled by the cloud rather than a console. Cloud gaming is similar to streaming movies on Netflix, but the user has more control.

Growth drivers

The cloud gaming industry has existed for almost a decade, but only recently has it gained traction. According to Statista data, the number of mobile online gam­ers in Southeast Asia will rise to 250 million by the end of 2021, with $1.4 billion in gaming revenues, making Indone­sia, Malaysia, Thailand, Vietnam, Singapo­re and the Philippines the six most significant countries for mobile gaming in Southeast Asia. This number is estimated to cross the $5 billion mark by 2023.

Several factors are contributing to this growth, including influencer partnerships, in-app advertising, innovations and gaming partnerships. The increasing popularity of players in various sports and the inc­rea­sing investment in internet infrastructure are also two of the primary factors con­tributing to the market’s growth.

The following are the major factors contributing to the industry’s growth…

Cloud adoption

The growing popularity of cloud infrastructure has resulted in the abundance of computing, storage and communication resources that are dependable, cost effective, and low maintenance. These cloud computing capabilities may be used for a variety of purposes, with gaming services being one of the fastest growing cloud co-mputing industries. The market is experiencing multiple cloud gaming platform launches.

Smartphone adoption and internet accessibility

The growth of the cloud gaming market can be attributed to the growing proliferation of affordable smartphones and internet penetration. According to App Annie’s “State of Mobile in 2020” report, mobile is positioned as the most popular gaming platform in 2020, with over 55 per cent market share and $100 billion in mobile gaming spending across all app stores. In addition, the report suggests that cloud ga­ming is set to become more prevalent ac­­ross smartphones, a large part of the glo­­bal mobile gaming market. Moreover, Ericsson reports that Southeast Asia acc­ounted for roughly one-third of the wor­ld’s total internet user population at the start of 2020. With more than 50 million new users coming online for the first time in the region over the past year, these au­diences will play an increasingly significant role in shaping the next phase of the internet’s growth. The expansion of the internet market in the region is expected to have a positive impact on the market growth of cloud-based gaming.

5G deployment

Increasing spending by governments in different countries, especially in developing economies, on the development of 5G in­fra­structure is expected to foster the growth of the cloud-based gaming market through 2025. It is expected that cloud gaming services will also increase in the market, taking advantage of the ubiquity of mobile, the speed of 5G connections, and the proliferation of unlimited data plans to provide AAA quality gaming to smartphone users. By 2025, Ericsson predicts that the number of 5G mobile subscriptions in the Asia-Pacific region will reach 1,545 million. In South­east Asia, it is anticipated that 5G will en­hance user experience and drive the gaming market by providing 100 times faster performance than 4G networks.

Language

The increase in the penetration of the gaming market in Southeast Asia has also been largely influenced by language. Resi­den­ts of the Philippines, Malaysia and Sin­gapore are conversant in English, and this familiarity makes exploring the gaming segment easy. The government has also provided plentiful support and created a lucrative environment for growth. In Sin­gapore, Malaysia, etc., governments have invested in gaming education, skill de­ve­lo­p­ment and game design centres to capitalise on the demand.

Current status

StarHub, a telecommunications company in Singapore, has unveiled NVIDIA Ge­Force NOW, which is a first-of-its-kind cloud gaming service. GeForce NOW is a gaming cloud that allows players to access over 800 titles on any device without requ­i­ring any additional storage space or speci­a­lised equipment. All games played throu­gh this service will be processed by the cloud, via StarHub’s 5G network. The Star­Hub Cloud Gaming service is available to all subscribers regardless of subscription status. With NVIDIA GeForce NOW, us­ers can experience games at 1080p and 60 fra­mes per second on any device.

In Indonesia, Gamestream, a global bu­siness-to-business cloud gaming company, has announced an expansion of its partnership with Telkom Indonesia, to provide cloud gaming services through GameQoo in Java, Bali and Madura. GameQoo leverages Gamestream’s cloud technology and gaming portfolio and offers over 100 fa­mo­us games from companies such as Disney, Co­de­masters and Deep Silver. The service is being rolled out across Indonesia to over 9 million consumers and can be play­ed at ba­n­dwidth speeds as low as 4 Mb per second. As Indo­nesia has a population of 280 million and does not have widespread acc­ess to 5G gaming hardware and infrastructure, this makes the service ideal for 4G mobile network infrastructure.

Meanwhile, Thailand’s largest mobile carrier, AIS has teamed up with cloud ga­ming specialist Blacknut and Gameloft Distribution Solutions to offer a new cloud gaming service. The service, which is part of AIS’s new 5G offering, went live on October 1, providing clients access to over 400 games, with new titles added eve­ry month. In Thailand, cloud gaming may now be accessed on mobile devices with PC and console-quality gameplay, with decreased latency and considerably faster data rates thanks to the availability of 5G and the additional capacity it provides.

Market growth and outlook

The gaming industry in Southeast Asia is highly competitive, owing to the existence of several small and big firms in the market. Established gaming companies such as Microsoft, Sony, EA and NVIDIA, as well as cloud gaming pioneers Vortex, Liquid­Sky, Parsec and Shadow, are aiming to com­pete with Google, Amazon, Alibaba Clo­ud and Tencent. Moreover, the cloud gaming industry is highly concentrated, with only a few players obtaining a significant market share. To remain ahead of the competition and expand their reach, these companies use methods such as product in­novation, service innovation, mergers and acquisitions. Asia is a market that pla­ces a high priority on price. However, in order for cloud gaming to be feasible for providers, pricing points, lag and latency, processing and infrastructure optimisation must all be addressed.

The advantage of many Asian nations is that they do not have preconceived no­tions about what gaming ought to be. The adoption of new-age technologies is going to be superfast, because what gaming off­e­rs is pure, uninhibited, unhindered interactive entertainment.

Going forward, cloud gaming platfor­ms are expected to bring in a number of benefits to gamers, who will be able to play a wide range of high quality titles without any expensive hardware. With greater reach and monetisation options, developers, publishers and platforms will ex­perience more profits. As for other in­dus­tries, the companies that own the ma­jority of the value chain, including IP and infrastructure, will achieve the most success.

Over the projection period of 2021 to 2026, the Southeast Asian gaming industry is anticipated to grow at an annual rate of 8.5 per cent. Cloud gaming has a $3 billion potential in Asia, but robust and dependable IT infrastructure, such as edge data centres, will be needed to make the game streaming technology a reality.