Can Singapore Sling U.S. Games into the Asian Market?

Electronic Gaming Business, June 16, 2004

For U.S. game companies hunting for expanded markets, no prey is as potentially lucrative and as elusive as the Asian market. Korea and Japan represent some of the most evolved gaming markets in the world, yet precious few U.S. titles pop into the Japanese console bestseller lists or grab the attention of the millions of MMOG fanatics in South Korea, who prefer domestic products.

Recent estimates from IDC project that the Asian online gaming market will surpass $1 billion by 2005, led by growth in China and South Korea. Compared to those mega-markets, the gaming population in Singapore is barely a blip on marketers' radar. Nevertheless, the trade powerhouse is hoping to lure Western game companies into using its famous port city as a gateway into these exploding Asian markets.

"We understand better the gamers in the region," says Thomas Lin, director of games and entertainment, Infocomm Developement Authority of Singapore (IDA). Singapore is focusing on digital cinema and games as two key verticals for development. It sees a market of 9 million to 10 million gamers in the Philippines and Thailand alone, and is offering its location and talent base in a kind of consultative and co-publishing role to U.S. companies. While the gaming base in Singapore itself is quite small relative to other nations in the region, "we play a lot of Korean and Japanese titles," says Lin. According to IDC, while Singapore generated only $800,000 in online game subscription because of its small size, an astonishing 35% of its Internet users do subscribe to some online game service.

U.S. titles often fail in this region because of a cultural disconnect. "A lot of U.S. companies have games that say I will be the most advanced player and I want to rule it all. But in Korea the games that have done well allow the gamers to form themselves into units, guilds and work in teams to solve quests. Culturally, the western and eastern minds are not necessarily aligned." There is also a great deal of variation in gaming habits and distribution. While Korea is famous for being the most wired nation in the world (70% broadband penetration, according to Softbank, see "Why the East is Different"), game use is divided between Internet cafes and home and MMOGs are insanely popular. Japan, on the other hand is primarily a household gaming market with greater console use than most other Asian segments. China is primarily a cafe-based market, and one of its major challenges is customer support that is failing to keep up with white hot growth rates.

For these many markets, Lin envisions Singapore as a test bed for U.S. companies looking to translate titles into this region. Asia is not of a piece, he warns, and different tastes dominate the various nations. "Hack and slash may not work as well for team-based Korean tastes," he says. "Localization and customization is not just translation. It is understanding what kinds of games and game play will be most appealing to the Asia Pacific markets."

One interesting initiative aimed at getting U.S. companies up to speed faster in the market is the recently announced Games Bazaar. The IDA is offering an inexpensive pay-as-you-use model for hosting online games aimed at the Asian markets. The first six months of hosting will be subsidized up to 80% by Telco Singtel and HP. Lin thinks game companies can take this opportunity to test game concepts in the region. "We invite publishers to put titles into this environment so that over a period of six months at affordable rates they can figure out where their gamers are coming from." The Games Bazaar offer will continue for the next two years.

Singapore is trying to recreate digitally its own historic role as a shipping and trading hub for the Asia Pacific region. Much of the gaming in this region goes on from the Internet cafes, which are notorious for trafficking in pirated games. Lin says that Singapore wants to be a digital exchange for the region that helps facilitate both payment and digital rights management. He foresees a system whereby Internet cafes install copies of a vendor's games on all of their machines but pay only when gamers use them.

Whether Singapore can succeed as a hub for Asian online gaming is unclear, since no major U.S. game publishers have announced any partnerships in the new initiative.

Contact: Thomas Lin and the IDA, www.ida.gov.sg, dx@ida.gov.sg

Online Gaming Subscription Revenues in Select Asia-Pacific Region Countries
(2003)
South Korea  $397.1 million
Taiwan       $170.4 million
China        $159.7 million
Hong Kong    $21.9 million
Singapore    $.8 million
Source: IDC

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