Game on in ASEAN
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Information Technology / ASEAN 18 April 2013 Game on ASEAN Online-game Sector • An attractive market for North Asia players to expand operations • Organic and inorganic strategies could be in play • Our Pan-Asia top picks are: Nexon and Tencent. We are also positive on NHN, Gamevil and Com2uS over the medium term revenue contributions from ASEAN games is a trend that is being almost double over 2012 (14% in mirrored globally. We are seeing 4Q12 vs. 8% in 1Q12). Similarly, we firms with new business models estimate that 70-80% of Tencent’s entering the industry value chain. overseas subscribers for its popular DeClout is a company banking on its Ramakrishna Maruvada WeChat service are from ASEAN. expertise in cloud infrastructure to (65) 6499 6543 provide end-to-end services to game [email protected] For 2012-15E, we project ASEAN’s developers increasingly seeking to share of overseas revenues for the independently publish game titles. Thomas Y. Kwon Korea online-gaming companies to (82) 2 787 9181 ■ What we recommend [email protected] rise from 18% to 25%. An effective ASEAN strategy for the Jame Osman Organic and inorganic North Asian players could accelerate (65) 6321 3092 strategies. The industry, as it the development of some of the 2013 [email protected] stands in ASEAN, remains a highly investment themes we discussed in fragmented one with numerous our previous report (see Korea players that face the challenge of Internet and Online-Game Sector: ■ What’s new having to adapt platforms to meet Five key themes for 2013, 12 Daiwa’s coverage of the online-game diverse language and cultural December 2012), such as: 1) MIM market has concentrated on North barriers. Despite this, the top-3 monetisation, and 2) the expansion Asia, where most of the investment players in each country hold at least of Japanese/Korean mobile casual opportunities are today. However 50% of the market share in terms of games globally. Our key Pan-Asia with their home markets reaching concurrent users (CCU), suggesting picks are: Tencent (MIM relative maturity, many of the North to us that strategic tie-ups with such monetisation) (700 HK, HKD250, Asian players are beginning to look large players or acquisition-driven Buy [1]) and Nexon (online and at ASEAN in their quest for growth. strategies could become routes of mobile casual games) (3659 JP, In this note, we assess the potential entry into the ASEAN market. JPY1,091, Buy [1]). We are also beneficiaries from this trend. bullish on NHN (035420 KS, Key market characteristics. KRW296,000, Outperform [2]), ■ What’s the impact Asiasoft remains one of the leaders Gamevil (063080 KS, ASEAN a new target market. in the ASEAN region. It is currently KRW116,700, Buy [1]) and Com2uS The improvement in game-service defending its revenue market share (078340 KS, KRW58,800, Buy [1]), infrastructure in the region, driven by expanding beyond its which we think would benefit from a mainly by rising broadband and conventional portfolio of primarily rise in demand for mobile-game smartphone penetration, should Massively Multiplayer Online Role- content in ASEAN. facilitate the development of a playing Game (MMORPG) titles. critical mass of gamers. We expect to ■ How we differ see a corresponding ramp-up in Singapore-based Garena (Not listed) In our view, trends in the ASEAN game publishing by North Asian is one of the new entrants in the online-game sector are poorly players, leveraging on their superior market, appearing to have achieved understood among investors as it is expertise in game operations and rapid success through its offering of an under-researched area. Ours is monetisation know-how. This trend primarily Multiplayer Online Battle probably one of the few brokerage is beginning to take root as Arena (MOBA) game titles. The reports that examine the industry’s companies such as Com2uS saw burgeoning popularity of MOBA potential. See important disclosures, including any required research certifications, beginning on page 25 ASEAN Online-game Sector 18 April 2013 Contents List of players ............................................................................................................................... 3 Game on in ASEAN ..................................................................................................................... 4 The stage is being set for a new arena ..................................................................................... 4 Characteristics of the ASEAN online-game market ................................................................. 5 Market opportunities and threats ............................................................................................. 7 Importance of ASEAN to Korean players ................................................................................ 9 Valuation and stock picks ....................................................................................................... 10 Country characteristics ............................................................................................................... 12 Thailand .................................................................................................................................. 13 Singapore ................................................................................................................................ 13 Malaysia .................................................................................................................................. 14 Vietnam ................................................................................................................................... 15 Indonesia ................................................................................................................................. 15 Philippines .............................................................................................................................. 15 Profile of a gamer ....................................................................................................................... 16 Company Section Asiasoft Corp ........................................................................................................................... 19 DeClout ................................................................................................................................... 20 - 2 - ASEAN Online-game Sector 18 April 2013 List of players ASEAN online-game industry: list of companies by country Name of company BBG code Description Key Games Singapore Garena Not listed - Online-game publisher. focused mainly on MOBA games - League of Legends (LoL) (MOBA) - Plans to list in 2014 - Defense of the Ancients (DoTA) (MOBA) - Heroes of Newerth (MOBA) Cherry Credits Not listed - Provides a global micropayment solution to assist online content developers, aggregators and - SD Gundam (Casual) publishers - Dragon Nest (MMORPG) - Avatar Star (Casual) DeClout DLL SP - Expanding its Vertical Domain Cloud (VDC) offering, which leverages on its expertise in cloud computing to provide end-to-end services - Acquired a billing and payment system from Infocomm Asia Holdings - Full commercial launch of Games Cloud Domain likely in 2H13 Malaysia Cubinet Interactive Not listed - Online-game publisher with a presence in Thailand, the Philippines, Vietnam, and Singapore through - Eligium (MMORPG) online-portal CubiZone - Forsaken World (MMORPG) - Plans to launch a gamer portal focusing on web and mobile games using html5 technology - Steps (Casual) Thailand Asiasoft AS TB - Online-game publisher with market share leadership by CCU in Thailand, Singapore ,and Malaysia - MapleStory (MMORPG) through online portal Playpark - Audition (Casual) - Acquired assets of CIB Development Sdn Bhd (CIB) in Malaysia to become the market leader in the - Dragon Nest (MMORPG) country - Plans to enter MOBA market with launch of Chaos Online (April 2013) PlayInter Not listed - Online-game publisher - Ragnarok 2 (MMORPG) - Partnered with Garena in March 2012 to launch MOBA game LoL in Thailand - League of Legends (LoL) (MOBA) - Heroes of Newerth (MOBA) NC True Joint Venture between True - Online-game publisher - Guild Wars (MMORPG) Corp (TRUE TB) and NC - Portfolio of games primarily from partner NC Soft, a game developer based in Korea - Lineage II (MMORPG) Soft (036570 KS) - Love Beat (Casual) Indonesia Kreon Not listed - Online-game publisher that accounts for the biggest market share in Indonesia through online-portals - Point Blank (FPS) Klikgame.com and Gemscool - Lost Saga (Casual) - Dragon Nest (MMORPG) Lyto Not listed - Online-game publisher that is second-largest player in Indonesia - Perfect World (MMORPG) - Cross Fire (FPS) - Idol Street (Casual) Phlippines E-Games Not listed - Online-game publisher with the biggest market share in the Philippines - Cross Fire (FPS) - War of Weapons (FPS) - iDate (Casual/social) Level-up/E-Games Not listed - Online-game publisher under Playweb Inc that operates portal Level-up! - Ragnarok (MMORPG) - Merged with E-Games (formerly owned by IPVG Corp) in February 2012 - Eligium (MMORPG) - Cabal (MMORPG) Vietnam Vinagame (VNG) Not listed - Online digital-entertainment provider with businesses in e-commerce, online games, and social - Kiem The (MMORPG) networking through online-portal Zing - Gunny (Web) - Game developer for local and overseas markets - Thuan Thien Kiem (MMORPG) - First company to launch a licensed online game in Vietnam VTC Game State-owned enterprise - Government-controlled