Indonesia Mobile Game Industry _________________________

By Phuong Vu November 2013

IDG VENTURES VIETNAM

Overview Market

•  Indonesia is “Asia’s Next Big Opportunity” high growth rate and young population (average age is 25)

•  Feature phone still accounts for 80% of mobile phone users(Nokia commands the biggest share with around 40 million mobile internet users (potential feature phone gamers)

•  Internet-capable feature phones remain an incredibly popular means of getting online

•  Internet usage in Indonesia is still in the early phase with the dominance of social network and messaging. There is many potential for gaming

Source: TechinAsia

Indonesia Smartphone Phone Market

Smartphone users

Smartphone share

For mobile phone vendors: •  Samsung is the smart phone market leader •  Apple's market share is tiny For platform: •  Android is the dominance platform with roughly 60%

Smartphone ownership rise to 24%

Mobile phone reach 84% of population

Smartphone users will reach over 100

million in 2017 (Android dominance) èFeature phone will

still be present

Source: IDC, eMarketer

Indonesia Game Industry Overview

Client Based Web based Mobile game

8-10 million players ARPPU ranges from $3-$12 Around 20 players Market sizes ~ 95 million

Approximately 12 million players ARPPU ranges from $0.5 to $2 Dominated with Facebook Games, especially Zynga Poker is the most popular Market size ~ 24 million

•  The game industry is still very new (immature) •  The market is less than that of Vietnam •  No exact data about the industry (no proper research have been conducted)

Most player is local content provider act as publisher ARPU ranges from $0.2-$0.8 Average lifetime revenue of good games is around $8000

Source: Collected

Indonesia Mobile Game Players

Local Content Providers

Foreign publishers

•  Most LC Providers are indie developers (~20 employees)

Mobile Payment Ecosystem

•  PayPal users and credit card holders are rare.

•  60 million bank customer &16 million credit cards holder (compare to ~240 million population)

•  Not a popular payment method, users want linear/ easy method

Online payment

Direct carrier billing

•  SNS, carrier credit, etc.

•  Telcos demand huge shares for transactions (~60%) •  Common credit balance around $0.5-$1. Most

credit top-up is $1

•  Most common payment method as of now

Platform Distribution

OTT

Local Content Distributors

Traditional Appstore •  Limited iOS users in Indonesia •  Google Apps does not yet support Android developers in Indonesia

who wish to monetize their apps through direct sales or in-app purchases.

•  The only way to make money from an Android app in Indonesia is to

integrate advertising into the app

•  Gameloft appstore partners with telcos to let user purchases apps/ items

•  Jalan Tikus: biggest appstore startup. 1 million monthly active users.

•  Speedup, Smartfen: exclusive for specific smartphone and tablet devices.

•  TemanDev: created by largest teco, Telkomsei. Helped local startup to market products.

•  Market share between LINE, Kakao Talk, Whatsapp and Wechat.

•  However, LINE is the the dominance platform distribution.

•  Kakao Talk just brought its social gaming platform to Indonesia in May

Feature Phone Platform Distribution

•  6-10 million users •  Social gaming network: gaming, friends, interaction •  Easy integration using HTML •  Wide distribution (reach users of top

telcos in SEA •  Effective Monetization (monetize with SMS

billing •  Funded by Singtel & Softbank

•  65 million users globally (35 million in Indonesia) •  Social gaming network: gaming, friends, interaction (stronger social

interaction compare to Kotagames) •  Partner with major telcos such as Telkomsel & major handset

brands in Indonesia •  Also launched on Google’s Android to answer to the growing market

needs

Source: Companies website, collected

Indonesia Top Game Apps

•  Top grossing apps are dominated by foreign players.

•  Top publishers are consistent across different platform as US and Japan is main players

•  LINE has a really strong presence in Indonesia both as an OTT and a mobile gaming platform

•  The poor performance of local developers are mainly due to the fact that Google Play doesn’t support local developers to sell premium games and in-app purchases, while a majority of developers as well as players are from Android platform

Source: Appannie

Indonesia Gaming Composition

•  Casual games and Strategy games are very popular in Indonesia

•  Strategy games with western storyline is doing very well and looks similar with each other

•  Card battle gains decent attention from players but could better compare to gaming trends in Asia

•  There are definitely a lot of room for innovation and diversification of gamers

Source: Appannie, collected

Challenges in the market

There is still no solid payment channel system to monetize

Low Infrastructure, there is a big gap between big cities and smaller cities

Big market population, but low ARPU

Feature phones popularity come with limitations: can’t handle heavy animated artwork

How to tap in the market?

Recipe for Great Feature Phone Games

Source: TMG

How to tap in the market?

Highly recommend developing partnership with telcos

•  Telcos serve the biggest paying service for first time internet mobile users •  Telco, such as Telkomsel, has their own Appstore to promote games & apps. It’s the easiest way to distribute

products to a large pool of customers.

Aggressively engage in the mobile feature phone market

•  It’s not about who has the money, but who is willing to pay. With feature phone users, they have less money to spend, but they are more willing to spend

•  Feature phone users are accustomed of paying for content (different with smartphone cultural where everything is free on the internet)

•  It is simply targeting a very large pool of potential users (80% of mobile users)

•  In three to five years, Android will start to take over

TMG, a mobile social game providers for feature phone in Indonesia shows higher

revenue potential compared to US giants Zynga

Source: TMG

How to tap in the market?

Localize our best products into Indonesia market

•  MC Corp has a very strong portfolio of strategy and RPG games and should localize it to the Indonesia market

•  Indonesia mobile game market does not just lack RPG games, but also lack games with story line from Asia/China