Game on in Asean
Asean governments, especially in Vietnam, Malaysia and Singapore, are providing significant support to game designers, aiming to attract talent to develop an industry that is booming alongside demand for mobile games in China.
Japanese game developers are also aggressively setting up offshore game design centres in Southeast Asia to tap into the regional talent pool and save costs.
Kan Supabanpot, the co-founder of Bangkok-based Studio Hive, said developers from the West, Japan and China were looking to outsource to India, Asean and Eastern Europe. Game design in those centres is now cheaper than in China, the biggest game producer in Asia, with similar or even better quality.
"Game developers from the West used to believe that the cost to design a game in China was comparatively cheap compared with elsewhere but the reality now is that making a game in China has become too expensive for Western and Japanese game developers to outsource there, and that is why they are coming to Asean," he told Asia Focus.
Most of Studio Hive's clients are from Japan. It has worked with Japanese companies including Square Enix Holdings to co-produce the world-famous Final Fantasy role-playing games. It has also worked with the US company Blizzard Entertainment on Hearthstone, an online collectible card video game. As well, it holds the sole licence in Thailand to develop books and toys based on Marvel Comics.
"Huge triple-A games such as Final Fantasy are produced by around 300 to 400 people in various studios around the world," Mr Kan said.
Unlike other animation fields, game developers sometimes struggle to find design studios that can be trusted with their intellectual property and gaming secrets; they are looking for trusted partner rather than acquiring talent from the region.
Generally, if the first contract goes well, a game developer is unlikely to seek a new studio for its next project unless the cost is too much or there is better quality elsewhere, which reflects why jobs that used to go to China are now coming to Southeast Asia.
"China's gaming industry still remains the biggest in the world but the real onscreen jobs are now coming to Asean," said Mr Kan.
"Tencent Holdings is the biggest player in China with total control and it is the largest gaming company in the world with various stakes in many game developing companies including Blizzard. It now owns League of Legends which is currently the biggest game in the world."
The shift in work flows from the West to Asean and elsewhere, along with the growth of the gaming industry back home, has pushed Chinese game developers to upgrade. They have been investing in developing new story lines for homegrown games but the majority of game players still prefer story lines from the West.
This has led some Chinese developers to change their approach, buying an entire project from the West and producing it themselves domestically, or outsourcing the work to India and Southeast Asia instead.
"A good example is Tencent which acquired Legendary Pictures' Warcraft, the upcoming [movie] adaptation of the World of Warcraft video game, last year," Mr Kan said.
"Two or three years ago China would either co-produce with the West or help them outsource the project elsewhere but their tactic now is to buy the whole thing and outsource it themselves."
Massive internet penetration in China is fuelling the gaming industry there, especially games on smartphones, and Mr Kan believes this will support growth in the development side of the gaming businesses in Asean.
"The gaming industry in Asean should continue to expand given the increase in the level of gaming education and acceptance from society," he said. "For example, many universities in Thailand now offer game production courses now but the main problem is still the commitment and mentality of the talent.
"Most of the game designers that have just graduated here in Thailand do not gladly accept comments or do not want their work to be edited to fit the clients' needs, which is one of the big problems when the level of competition is so high."
Vietnam, meanwhile, has taken the lead in attracting Japanese firms, he said.
"Most of the jobs that are being offered from these Japanese developers that are opening offices in Asean are mostly part-time and labour-intensive," he said. "Vietnam has started way ahead of Thailand in terms of providing incentives and education for this field."
According to VentureBeat, gaming revenue in 2014 totalled US$784.4 million in Vietnam, Thailand, Singapore, the Philippines, Malaysia and Indonesia. Niko Partners, a market intelligence specialist covering the games industry in Asia, expects combined PC and mobile game revenue to increase from $1.8 billion in 2015 to $3.3 billion by 2020. It also expects mobile game usage and revenue to overtake PC online games in Asia by 2018.
The research company said Indonesia, Thailand and Vietnam would see the highest revenue and growth, while the two most popular games in Asean are Dota 2 and League of Legends.
Mr Kan said government officials in Singapore and Malaysia who are in charge of promoting the gaming business are now looking for talent at gaming shows and events around the world. They are offering incentives far more than those offered by the Thai Board of Investment.
In addition to offering better tax incentives, Mr Kan said Vietnam, Singapore and Malaysia were active supporters of inbound and outbound gaming events to help promote the industry, along with business matching workshops that help raise awareness.
Singapore has the most developed infrastructure and has attracted big names such as Ubisoft, the French producer whose portfolio includes Assassin's Creed, Far Cry and Tom Clancy's Ghost Recon, to open a regional studio in the country.
In 2014, Lucasfilm, the company founded by Star Wars creator George Lucas, launched a Singapore unit to make digital animated content and visual effects. It is currently working on films including Transformers 4 and Avengers 2.
Bandai Namco Entertainment, the Japan-based arcade and video game maker known for console games such as the Tekken series and the popular Dynasty Warriors series, also opened an office in Singapore in 2013.
"Singapore is one of the best places right now to launch startups and expand tech companies ... and anyone who loves making video games within the region usually heads to Singapore for this big opportunity," the Straits Times quoted Henry Yeh, managing director of gumi Asia, as saying.
Ian Pang, a senior producer with Bandai Namco, said Singapore had its government to thank for the infrastructure that has allowed the tech and gaming industry to flourish.
"Ten years ago, there were no such things as game schools or specialty game courses. Now, there are schools like DigiPen and a number of polytechnics that are offering these courses also," he said.
Mr Kan said Thailand's government should further support the gaming industry and place it on the Thailand 4.0 economic agenda. Citing Tencent as an example, he noted that the company actually started life as a game developer before it became the leading provider of internet value-added services in China.
"The Thai government budget for the industry via supporting bodies such as from the Department of International Trade Promotion (DITP) at the Commerce Ministry, is meagre when compared to what Singapore's Pixel Studios and Malaysia's MDEX (Malaysia Digital Enterprise Exchange) are offering," he said.
"Singapore is more aggressive in promoting this activity than others in Asean because they realise the huge potential, while Malaysia is even more aggressive to the point where MDEX actually goes out to look for projects and helps strike deals with game developers in Japan and the West to provide jobs for the gaming industry in their country."