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VietNamNews

Online gaming industry targets $1 billion revenue

Update: February, 01/2021 - 08:17
According to a report by the Ministry of Information and Communications, last year the online gaming industry doubled its revenues from 2015 to VNĐ12 trillion. — Photo kinhtedothi.vn

 Compiled by Thiên Lý

The online game market has become red hot due to a phenomenon that many domestic mobile game publishers have launched their A games at the same time.

Some of them are among the top 10 in Southeast Asia in terms of revenues.

The new games include Tuyết Ưng-VNG from VNG, Ngạo Kiếm Thanh Vân from Shoha Game and Thần Vương Nhất Thế and Võ Lâm Kỳ Hiệp Mobile from VTV, all of which are expected to fetch considerable revenues.

This suggests there will be fierce competition in the online game market this year and that the industry is developing very strongly.

According to a report by the Ministry of Information and Communications, last year the industry doubled its revenues from 2015 to VNĐ12 trillion.

VNG’s share was VNĐ6.7 trillion and Garena’s was over VNĐ3.2 trillion.

An official from the Authority of Broadcasting, Television and Electronic Information (ABTEI) said in the last five years the number of jobs created by the industry increased three-fold.

The ministry report said 25,000 people work for the industry while there are over 32 million players in the country.

More than half of Việt Nam’s population is under 25, one of the main demographics in terms of customers for the gaming industry.

VNG chairman Lê Hồng Minh expected online gaming to achieve revenues of $1 billion before 2027.

Vietnamese studios have already created many world-class products, he said, citing the example of global sensation Flappy Bird a few years ago, created by Nguyễn Hà Đông.

The question is whether Việt Nam can exploit all this potential.

Analysts said the country lags well behind since it started much later than others such as the US, China and South Korea.

But it has been growing very quickly in recent years, and several  Vietnamese mobile game publishers like VNG and VTC rank among the top 10 in the region.

Smartphone penetration in Việt Nam is very high with more than 50 per cent of the population using them.

High-speed internet coverage including 4G continues to be widespread, allowing users to play on the go.

Internet cafes are mushrooming around the country, with several large centres focusing on gaming opening in places like HCM City, Hà Nội and Đà Nẵng.

In recent years international gaming tournaments such as the World Cyber Games and local competitions have mushroomed, attracting more and more eyeballs.

The latest factor to strengthen the industry’s belief it could hit the $1 billion revenue mark is the Covid-19 pandemic.

With many countries ordering people to stay at home to combat the pandemic, the gaming and e-sports industry has been growing exponentially not only in developed countries but also in developing ones like Việt Nam, which offers investors some advantages.

For instance, it has talented engineers who cost much less than those in developed markets. They are good at developing casual mobile games like Caravan War and Tiles Hope, which, though often simpler in terms of quality, graphics and user interface, are exported to foreign markets.

The demand for casual games is huge.

Experts also said however that Việt Nam’s online games industry still faces many challenges.

One of them is that the market is dominated by foreign games, with 87 per cent coming from abroad.

Chinese companies account for 69 per cent of all multiplayer games released in the Vietnamese market.

Other big providers are South Korean and US companies.

Among the most popular games during the Covid-19 outbreak, according to local data analytic company Reputa, were two produced by Chinese companies - battle game Areana of Valor (3rd) and shooting game Call of Duty Mobile (4th).

The US also has two entries in the list, multiplayer online battle arena game League of Legends (2nd) and online sports simulation game FIFA Online 4 (5th).

But many experts said by far the biggest obstacle is the proliferation of unlicensed games.

Lê Quang Tự Do, deputy director of ABTEI, said revenues from unlicensed games are estimated to be $325 million a year, or equal to those from legal games.

Experts said the Vietnamese game market suffers badly due to unlicensed games, a majority of which are released through app stores on mobile devices.

Unlicensed games, or bootleg games, are those released mainly for 8-bit and 16-bit consoles, which are not licensed or endorsed by the console maker.

These games are generally produced in breach of someone else's copyright, usually an unauthorized port of a game from one console to another.

The plethora of unlicensed games in the market is also causing unhealthy competition between game companies, affecting their revenues and then profits, Do said.

A spokesman for the ministry attributed foreign companies’ domination and the flood of unlicensed games to a lack of resources, including human, that prevents local companies from creating enough games to meet market demand.

This also explains why Việt Nam is always in the list of countries that download the most apps from stores like AppStore and Google Play.

While Việt Nam is an attractive online games market, investors need to do due diligence before venturing into it.

The Government recently approved amendments to decrees on the management, provision and use of internet services and online information like 72/2013/NĐ-CP and 27/2018/NĐ-CP.

The proposed changes are expected to remove some of the factors that stymie the development of the gaming industry and cause unhealthy competition.   

In box

Under current laws foreign companies that want to publish their games in Việt Nam must obtain a licence. It takes 20-30 days to complete the licensing process, which involves various state management agencies including the communications ministry the Ministry of Culture, Sports and Tourism and the Youth Union.

Companies applying for a licence have two options: they can either tie up with local studios or establish a branch or representative office in Việt Nam.

Under Decree 27/2018/ND-CP, the Government requires that Vietnamese companies in co-operation with international partners who have servers in Việt Nam to store users’ personal information must provide this data when sought by the authorities. VNS

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