Small and medium-sized Chinese mobile game firms are looking for opportunities in Southeast Asia
By Huang Jiangqin
On January 15, 2023, Filipino team ECHO secured victory in the grand finals of the Mobile Legends: Bang Bang (MLBB) M4 World Championship 2022. The esports event was held in Jakarta, Indonesia, and featured 16 teams from 13 countries and regions including Indonesia, the Philippines, Malaysia, Singapore, Cambodia, and Myanmar.
Statistics showed that viewership of the M4 World Championship reached new heights. Total viewing time exceeded 79.68 million hours, and peak concurrent users (PCU) reached 4.26 million, an increase of 33.5 percent over the previous edition, which marked a new PCU record for MLBB competition and made the game a world top 3 esports event.
According to Esports Charts, a leading esports data analytics platform, the world’s top four most popular mobile games are all MLBB-related events, and the MPL (Mobile Legends: Bang Bang Professional League) Indonesia Season 9 ranked first with a PCU hitting 2.84 million.
The immense popularity of MLBB in Indonesia is a concrete example of Chinese mobile games succeeding in the Southeast Asian market. Home to a huge internet user base, Southeast Asia has in recent years become a favorite destination for overseas expansion of Chinese gaming firms. Data from Sensor Tower, a major source of market intelligence in the mobile app ecosystem, showed that in 2021, total mobile game downloads and revenue in the region increased by 6 percent and 15 percent, respectively, compared to 2020, and the market size continued to grow.
Developed by Shanghai-based video gaming company Moonton Games, MLBB first launched in Indonesia in 2016 and inspired the organization of a franchise league the following year. It has now become one of the most popular multiplayer mobile games in the country. As of 2020, total downloads of MLBB worldwide reached 281 million, with the Indonesian market alone exceeding 100 million according to Sensor Tower data.
The popularity of MLBB has continued to grow since the game was released in the Southeast Asian market about six years ago. In 2017, Kaesang Pangarep and Gibran Rakabuming Raka, sons of Indonesian President Joko Widodo, expressed enthusiasm for the mobile game in a YouTube video. In 2021, with 47 million downloads and more than US$100 million revenue, MLBB secured the second place in Southeast Asia in terms of both downloads and revenue. Such huge business success was surprising considering it was made by a Chinese game company with a registered capital of a little over 1 million yuan (US$144,000).
“The leading mobile games in China are mainly developed by domestic industry giants,” said Liu Wuhua, CEO of Yangfan Chuhai, a service provider for Chinese internet firms’ global expansion. “The situation in the Southeast Asian market is different. Many of the top 52 Chinese gaming companies operating in Southeast Asia are not large companies.” Liu has overseen marketing promotion for several well-known Chinese-developed mobile games. He told China Report ASEAN that his investigation into the top 100 most downloaded and most profitable mobile games in Southeast Asia demonstrated that in addition to leading market players like Tencent and NetEase, smaller game developers and publishers such as Moonton Games and Boke Technology have also achieved commercial success and seized a considerable market share in the region.
In 2021, Sausage Man, a battle royale game presented by Chinese firm XD Inc., generated 15 million downloads within 30 days of its launch in Southeast Asia, making it a top 20 Chinese mobile games in the region. Shortly after it was released in the Southeast Asian market in 2022, a Chinese-developed restaurant management game called My Hotpot Story rose to become the most downloaded and most profitable iOS app in Thailand, and the Android version of the game also became a chart-topper in terms of Android downloads and a top 10 most profitable Android app in the country. The sheer popularity of the game sparked widespread discussion of Chinese hotpot and other Chinese food.
“The developer of My Hotpot Story is just a small studio in China,” said Liu Wuhua. “It’s quite impressive that their product has proved popular with millions of players in Southeast Asia.”
In 2021 alone, 48 Chinese-developed mobile games ranked among the top 100 best-selling games in Southeast Asia with combined sales of about US$980 million, accounting for 54 percent of the top 100’s total revenue. Already, the market share of Chinese game firms in the region has reached 50 percent. The Southeast Asian market has become the central battleground for the Chinese gaming industry and an ideal destination for small and medium-sized developers to overtake industry giants and expand business outside China.
Winning Localization Strategy
The geographical and cultural proximity between China and Southeast Asia gives Chinese game companies certain advantages in overseas expansion, but an effective localization strategy is still crucial.
Gaming device configuration is the first point needing careful consideration. High-definition games are usually well-received by Chinese players with fast internet connections, whereas poorly-equipped users in Southeast Asia are more likely to enjoy a better customer experience when the game can be quickly loaded on a mobile phone.
Xie Yaofeng, head of Moonton’s esports business in Indonesia, explained that acquiring a good understanding of local infrastructure and network conditions inspired them to reduce the file size of MLBB to ensure a good start in the Southeast Asian country.
“That explained the relatively poor picture quality and weak visual effects of MLBB in the early days,” said Xie, adding that a game smaller in size is much easier to download regardless of the configuration and performance of the user’s mobile phone. A round of MLBB generally lasts about a half hour, which meets local user needs. “A mobile game like this offers the young people not only an option for filling their fragmented leisure time but also a platform to make new friends.”
Localization is not always so easy. Southeast Asian players with diverse cultural backgrounds showed different interests and behaviors than Chinese users. Seeking practical solutions for such challenges, Moonton worked with local gamers and professional personnel on game content localization, which succeeded in raising player satisfaction from 60 to 90 percent and effectively improving the retention rate. According to Moonton’s official website, the company has made serious efforts to optimize operations in Southeast Asia including innovatively designing the game content, user interface, characters, and visual effects and registering official game accounts on local social media platforms.
On payment paradigms, Moonton publisher Cai Xuwei noted that compared to Chinese users, players in Southeast Asia tend to pay in smaller amounts. “For example, Chinese customers usually buy shampoo or body wash by the bottle,” Cai explained. “In Southeast Asia, many buy shampoo in small packs and cigarettes as singles. So our team refined the payments on MLBB to be as detailed as possible to adapt to the local market.”
“Many game firms found it quite challenging to implement successful localization in Southeast Asia,” noted Cai. “Our first-hand experience in the regional market suggested that thinking outside the box is key to mapping out a winning localization strategy.”
Indonesia a Hot Destination
“Southeast Asian countries tend to be the first stop for many Chinese internet companies eyeing the international market, and among these countries, Indonesia has the most mature esports market,” Liu Wuhua said.
With a population of 270 million anchored by the young, Indonesia has good reason to be such a promising land for mobile gaming. The booming e-commerce sector in the country ensures generous advertiser spending. ECPM, or effective cost per mille, is revenue earned by an app publisher or developer for every thousand ad impressions displayed on the app. According to Global Development Director Li Dengjie of Mintegral, a programmatic advertising platform owned by China-based technology firm Mobvista, the average eCPM is higher in Indonesia than in other populous Southeast Asian countries, which makes it economically attractive for leisure mobile game developers.
A July 2022 report released by the London-based specialist social media agency We Are Social showed that Indonesia is now home to the world’s third largest group of video gamers. As of February 2022, 94.5 percent of the country’s internet users between 16 and 64 years of age were active players of video games. Indonesia currently has nearly 170 million gamers, and this group has only been growing stronger, according to statistics from the Ministry of Communication and Information Technology of Indonesia.
With a growth rate of over 20 percent in 2021, Chinese leisure mobile game developers experienced their fastest overseas expansion in Indonesia. By the end of 2021, Chinese-developed games accounted for 36 percent of Google Play’s top 500 apps in Indonesia, and Moonton’s MLBB, miHoYo’s Genshin Impact, Boke’s Higgs Domino Island, and Lilith’s Rise of Kingdoms were featured.
Sandiaga Uno, Minister of Tourism and Creative Economy of Indonesia, announced at a January 7 MLBB M4 World Championship press conference that the country’s esports industry had been valued at about US$2 million, a number expected to double by 2025 thanks to growing momentum in recent years. “We hope for more esports events, more job opportunities, and a more complete business ecosystem through implementation of new policies,” he emphasized.
The Hard Mode
In July 2022, a document on promoting the high-quality development of China’s foreign cultural trade was jointly issued by the Chinese Ministry of Commerce and 26 other government departments. The document said that China will make vigorous efforts to boost trade of digital cultural goods, foster the competitive advantages of online games exporting, and build world-leading gaming brands. The national foreign cultural trade base (Shanghai) launched a special project to provide Chinese game firms with more than 40 services in five areas including policy support, copyright services, legal guarantees, market research, and marketing channels.
Facing a slowing user growth and an increasingly crowded domestic market, more and more Chinese game developers and publishers have ventured into the international market. A maturing overseas mobile game market, however, means steeper difficulties after enjoying a generally short-term honeymoon period.
“In the early days of overseas expansion, the first-mover advantage was always characterized by leveraging the demographic dividend to enjoy less intense market competition,” said Li Dengjie. “With more products launched afterwards, stronger competition coupled with foreign users’ growing demand for higher-quality games makes a sound localization strategy key to lasting market success.”
Li believes that earning a place in the international market in ‘the hard mode’ requires Chinese gaming firms to improve their ability to enhance the uniqueness of their products, better customize games, spark public discussion on social media, and convert spending on user acquisition into profits. “The overseas market doesn’t guarantee easy money,” cautioned Liu Wuhua. “Small companies should think twice and avoid unrealistic expectations for success when going global. Seize opportunities only after gaining a deep understanding of the target market to fit into it perfectly.”
“In terms of game development, Chinese firms need to understand which styles of games are most downloaded and most profitable in different countries and select the type their team is best equipped to produce,” said Liu. “To create trending topics, they should follow the latest events on social media and find out what catches young people’s attention. The relatively open market in Southeast Asia is an ideal destination to break new ground, and mobile game companies should also pay attention to potential opportunities in the era of Web 3.0.”
“The government and industry association have an important role to play in terms of talent development,” added Liu. “Relevant policies are needed to encourage newly minted graduates to seek employment opportunities in the gaming industry. And with policy support, good platforms like China Digital Entertainment Expo and Conference (ChinaJoy) can also contribute to resource pooling and marketing conducted by Chinese game developers aspiring to go global.”