South East Asia leading the eSports explosion

Filippo Giachi, VP – Asia Pacific, Middle East & Africa

Competitive computer gaming, or eSports, has proliferated in the South East Asia (SEA) region over the past few years and is widely expected to become the biggest driver for future expansion of PC and mobile gaming going forward. The phenomenon offers not only a wealth of entertainment for participants and spectators but also significant commercial benefits for games and software developers presented with an opportunity to extend the life of their titles, keep players on the platform more engaged, expand advertising revenue and promote the use of physical venues used for eSports events.

The first eSports medals for playing titles including Dota 2, Starcraft II, Tekken 7, Arena of Valor and Mobile Legends were awarded at the 2019 Southeast Asian Games in the Philippines held at the Filoil Flying V Centre in Manila last December for example. Though the event was sanctioned by the International Olympic Committee, talks of including eSports as an Olympic event in the future are premature (for now) but nevertheless illustrate the rapidly expanding popularity of the medium.

Elsewhere the 2019 League of Legends World Championship Finals in South Korea attracted 100 million unique online viewers, surpassing the audience of 98 million who watched last year's Super Bowl in the US.

A recent report – Evolution of Mobile eSports for the Mass Market – compiled by market intelligence and research company Niko Partners estimates that 95% of PC gamers in the SEA region engage in esports, while 90% of mobile gamers actually play eSports titles (most often those in the 12-23 age range). The firm estimates that in 2018, mobile eSports games generated US$15.3bn (25% of all total mobile game revenue) on a global basis with US$5.6bn from China alone, and another US$450m from Greater Southeast Asia.

Market research firm Newzoo also puts South East Asia as one of the most active regions in eSports, with an estimated audience of 32m in 2019. And while the SEA region contributed just 3.1% of the published global game revenues in 2019 at US$4.3bn, that share will increase with the region likely to clock 22% growth in 2020 as more players get access to high-speed Internet connections with the emergence and expansion of the 5th generation (5G) cellular networks this year and beyond. Newzoo too concludes South East Asia is a mobile-first market, with two-thirds of its gaming revenue coming from mobile, compared to 24% on PC and 9% on consoles.

That is partly because mobile games have lower barriers to entry and higher install rates in comparison to their counterparts on PC and console, generally allowing for better economics and higher dollar-to-player value in producing eSports tournaments. Consequently, it is predicted that mobile esports will precipitate a shift from a limited number of high-profile, spectator-focused esports productions toward a much larger number of open tournaments carried out regionally and locally.

That leaves telcos and mobile operators responsible for providing the connectivity that links eSports players during multiplayer games and tournaments ideally placed to capitalise on the current commercial momentum.

A group of six operating in the SEA region - Singtel, Optus, Airtel, AIS, Globe and Telkomsel – have already pooled their collective resources to build an ecosystem of digital services such as mobile payments and gaming for customers. They have also committed to scaling up eSports, content creation and distribution, and fostering greater collaboration within the broader gaming ecosystem. A recent memorandum of understanding (MOU) for example promises that operators will work together to develop solutions and services for gamers and fans in the APAC region, including the provision of access to local, regional, and global esports competitions, as well as original content and exclusive programming.

SingTel unveiled its own eSports tournament – the PVP eSports Championship - in the summer of 2018 as a means to better engaging customers across its SEA footprint, additionally providing a mobile payment service that can be used to make transactions within individual titles. An estimated 13m viewers watched that tournament via SingTel’s network – a success that led to a further partnership between SingTel and SK Telecom designed to develop and provide digital gaming content, solutions and services across Singapore, Australia, India, Indonesia, Thailand and the Philippines.

SK Telecom and Comcast went one further in forming their own global eSports company (dubbed SK Telecom CS T1) in October last year [2019] in a venture worth an estimated US$92m which will be based in Seoul. And elsewhere Malaysian telco Maxis signed a sponsorship deal with top eSports outfit Team Secret, promising to develop exclusive gaming content with Team Secret, offer gaming smartphone bundles, and provide easy in-game purchase options for its Malaysian customers as part of the sponsorship campaign.

Telcos and MNOs have a prime opportunity to act as the gatekeepers for eSports played via their connectivity services and have the ideal mechanism in direct carrier billing (DCB) to help them draw revenue via mobile payments in a region where access to debit and credit cards amongst younger players is low – if not through bandwidth provision alone then via in-game purchases, advertising and premium content.

Games developers too need to facilitate a broad range of billing mechanisms to extend their own customer reach and grow their eSports revenue. Forging the necessary relationships with multiple operators in different SEA countries can be complex and time-consuming however, which is where a partnership with a third-party payment platform provider which manages those processes on the developer’s behalf could prove indispensable.