China leads video game sales amongst top three Asia Pacific markets
China led video games’ growth amongst Asia Pacific countries, with software as its driving factor. This was due to mobile games, which in 2016 overtook online games in value terms, with sales rising by 60% due to the large number of new game launches. Hardware sales have also seen higher growth in recent years, due to interest in AR/VR headsets and the release of static consoles. Japan and South Korea followed China in terms of video game sales and both countries saw strong software growth due to mobile gaming. However, Japan’s growth began to slow around 2014, as slower video game hardware sales, in particular hand-held, offset some of the country’s mobile gains.
Source: Euromonitor International
Mobile gaming leads the rest of the market
Amongst the remaining Asia Pacific markets, growth was led by video game software, specifically arising from the growth of mobile gaming. Taiwan and Indonesia were amongst the fastest growing countries, as Taiwan benefited from the availability of high-speed mobile and broadband based internet to support online and mobile gaming, as well as growth in the number of female gamers. Indonesia, in addition to growing mobile game sales, saw a lot of growth in games that appealed to dedicated gamers such as Tree of Savior, Phantomers, Kingdom Under Fire II, and Closers Online.
Digital growth puts non-store retailing on top
Internet retailing continued to be the leading channel for video games in 2016 with a value share of 78% in the region, thanks largely to consumers switching from playing video games on physical to digital formats for greater convenience, both in terms of software for static consoles, and the shift from handheld console gaming to mobile. In-game purchases are gaining share at the expense of game sales for all types of games software, and are driving the strong increase in internet retailing within Asia Pacific. This trend is strongly driven by the dominance of mobile games, where in-game purchases are the major profit sources.
With the high availability of free-to-play games, consumers are no longer inclined to spend on paid games. At the same time, the mainstream of mobile games is changing to the more complex type of RPG games which require competition with other players and growing the characters that induce higher spending on in-game purchases.
Growth momentum to slow in all markets but India
China is expected to lead video game growth in Asia Pacific, with video games expected to post a value CAGR of 13% at constant 2016 prices over the forecast period. Growth momentum is expected to slow somewhat as the majority of existing players shifting from online games to mobile games slows down, and the development of mobile games declines after this transition. In India, which will be the second-fastest growing market in absolute growth terms, consumers enjoy globally popular titles such as Candy Crush Saga and Clash of Clans.
Local Indian gaming studios also continue to explore this opportunity, and are launching different localised games. Octro, a mobile gaming company, launched Teen Patti, a game based on a traditional Indian card game, which has been immensely popular and has continuously appeared in the top five grossing games in India’s Google Play store. In other countries growth will continue to be led by mobile gaming. In some developing markets internet infrastructure is becoming more effective, stable and able to expand coverage nationwide. This will further boost the potential for mobile gaming as well as online gaming in these markets.