New research from Coda, the global leader in content monetization solutions for gaming and digital publishers, and Niko Partners, the leading provider of market intelligence on the video game industry in Asia and MENA, dives into the evolving landscape of the gaming industry, and the opportunities in digital distribution and monetization strategies for mobile game publishers. The whitepaper also highlights the fragmented payments landscape, differing market dynamics, and the solutions games publishers should consider to maximize returns by leveraging alternative monetization strategies.
Primary app stores have been the cornerstone for app discovery, distribution, and monetization for over 15 years. Today, gaming and other digital content publishers want more versatile and flexible ways to sell their digital content. To do this, they develop strategies that are not only more holistic, but also wider in reach across diverse markets and robust in providing direct consumer insights. This shift is driving the growth of first-party web stores, where publishers sell directly through their own websites, and third-party web stores, where publishers partner with other digital marketplaces or e-retailers. In addition to lower costs when compared to primary app store fees, these new channels offer significant opportunities for monetizing content outside the confines of conventional app stores, enabling publishers to reach millions of gamers in markets with low credit card access and usage.
According to Lisa Hanson, President and CEO of Niko Partners: “Video games are a great way to unite the world, with gamers from all nations playing many of the same games. We need to recognize that purchasing power varies market by market, and that consumers like to have a choice about how they access desired content. Out-of-app monetization helps to unlock revenue in markets where gamers have different options compared to Western markets, from alternative payment methods to tighter budgets for game spending.”
In Southeast Asia, out-of-app monetization is estimated to account for 21% of all mobile game revenue, and this share is even higher in certain markets. For example, in China where Google is absent, third-party distribution accounts for 53% of all app monetization. While credit card payments through primary app stores serve a broad user base in many developed Western markets, a significant segment of Asian gamers opt for alternative payment methods, including e-wallets, phone carrier billing and calling card top-ups. To address the dynamic needs of these markets, and to unlock new revenue, publishers need to expand their payment options beyond those typically found in app stores.
Out-of-app monetization has for some time now been the key that enables Asian gamers access to in-game content. Western publishers who are slower to localize their monetization strategies risk losing out, especially to regional publishers who have well-developed strategies in place. Significantly, regulatory frameworks in Southeast Asia are moving towards breaking down barriers to entry and encouraging greater competition in tech. For instance, Indonesia and Thailand are revising their digital payment regulations, making it easier for alternative payment methods to flourish. This, along with growing concerns about the high costs involved in distributing through primary app stores, is fuelling the rise of the out-of-primary-app monetization market in the region. Coda’s global reach and local expertise translate to the ability to identify the best channel and payment selections for specific markets, titles and audiences around the world.
Shane Happach, Chief Executive Officer of Coda Payments, commented: “The gaming market is poised for continued growth, with projections to generate billions of dollars in Southeast Asia alone. At Coda, our goal is to catalyze this growth globally by partnering with publishers to diversify their monetization strategies beyond primary app stores and beyond borders. We arm publishers with the tools and insights they need to unlock alternative content distribution channels such as our gaming top-up marketplace, Codashop, and our 100% customizable D2C web stores, Custom Commerce. Through Coda’s solutions, publishers can grow their revenue by having meaningful access to new market segments and an expanded global reach.”
In 2023, the Southeast Asian games market generated US$5.8 billion in revenue, more than five times its value for the Southeast Asian region in 2010. More gamers have entered the market- there are 286 million mobile gamers in Southeast Asia alone and this number is expected to grow to 326 million in 2027 – but this means that more players are also inadequately covered by primary app distribution and payment methods.
Outside of developed markets like Singapore and Malaysia, it is estimated that between 40-50% of the adult population are unbanked but it is estimated that there are over 100 payment methods and providers in the region. Publishers intent on finding success here must be prepared to build these payment options into their funnel in addition to compelling awareness and top of funnel marketing activities if they hope to convert local gamers into paying users. But the payoff will be immense. In 2022, Southeast Asia generated a total of US$3.6 billion in mobile games revenue and of this, 21% came from web stores and alternative app stores.
To leverage this opportunity, crafting a successful campaign that encourages users to transition to a web store is crucial. Partners like Coda play a pivotal role in this process, offering developers and publishers access to a variety of marketing channels and support. This includes leveraging Coda’s local expertise and deep networks including influencers, player communities, and more.
Simultaneously, gamers benefit from purchasing outside the app as publishers incentivize web-based sales. These incentives include exclusive bonuses, unique in-game items, cashback offers, special promo codes, and more, all aimed at enhancing customer engagement.
This whitepaper by Niko Partners highlights that the gaming industry is in high transition, emphasizing the growing importance of alternatives for content discovery, distribution and monetization. As the landscape evolves, diversifying strategies outside of primary app stores is essential for publishers aiming to harness the expansive potential of markets like Southeast Asia. The ability to stay agile and responsive to these trends will be crucial for those looking to grow and scale their games globally.
