Free-of-Charge Business Model to Attract More Paying Online Gamers in Malaysia says IDC

20 June, 2006

Kuala Lumpur, June 20, 2006 – IDC's latest study on the online gaming market in Asia/Pacific excluding Japan (APEJ) region revealed that Malaysia totaled US$5.33 million in subscription revenue in 2005, growing by approximately 52% over 2004. The Malaysia online gaming market continues to grow because of an increase in the number of games, service providers, and gamers. Moreover, there have been developments in the business model, games content, and usage pattern present in the local gaming space.

"In the early days, online games were available free for trial. Gamers will have to pay subscription fees to continue playing after the trial period ended. The necessity of paying subscription fees was a significant and frequently asked question of gamers. In 2005, the business model evolved from pay-to-play model to free for life, whereby gamers can now play for free and only pay for any purchase made. While this might not necessary increase the subscription revenue, it has definitely increase the gamers base. MMORPG remained as the popular preference in 2005,” said Elaine Lee, Analyst, Online Gaming, IDC Malaysia. “MMORPG genre has moved into new perspective, a rather more soft/cute appearance instead of the initial warlike strategy approach.”

With this operational setup, revenue generation is not anymore entirely derived from plain subscriptions but also from the sales of in-game items such as special weapons and avatars, whereby collecting rare virtual items allow a gamer to show off among his online peers. In most games, making friendship has been the objective given to the gamers. With the different chat channels, friend list, interesting emoticons, and unique character dressing, the gamers get to feel a totally different online gaming experience. Some might even take up avatars as a hobby!

In 2005, Malaysia held a 0.4% market share of the APEJ region's total subscription revenue of US$1.39 billion. The region's market is expected to grow at a compound annual growth rate of 21% from 2006 to 2010 reaching US$3.6 billion by 2010. The growth is driven by the rapidly increasing numbers of varied players in the online gamers ecosystem. Telecommunications service providers, online game developers, and even traditional information and communication technology (ICT) vendors are showing growing interest in this fast-emerging market. The region's market is expected to breach the US$2 billion mark by 2007, with the entry of several new countries into the region's online gaming radar, albeit the current lack of commercial values in India, Indonesia, and Vietnam.

Asia/Pacific Online Gaming Market Forecast, 2005-2010

Source: IDC, 2006

Size of bubble: subscription revenue in respective country in 2005 in US dollars

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