Online and mobile gaming is booming and content providers (CPs) as well as telcos are all vying for a larger slice of this lucrative pie, according to market observers.

Malaysian online gaming market was estimated to have grown by 46% and generated about US$8 million (RM30 million) in subscription revenue in 2005 from US$5.5 million in 2004, said International Data Corporation (IDC).

Online gaming market in the Asia Pacific raked in US$1.09 billion in subscription revenue in 2004 and is forecast to grow by 26% in 2005, with subscription revenue reaching some US$1.37 billion, it said.

Mobile gaming end-user spending in the Asia Pacific was estimated to have grown about 45% to reach US$1.4 billion in 2005, the ICT intelligence and advisory firm told FinancialDaily.

It’s big business indeed. Small wonder then that CPs and telcos are dishing out more products and services to tap into this market.

In the past few weeks, several Malaysian companies have announced that they are expanding their presence in the online and mobile gaming industries in Malaysia as well as the region.

DiGi Telecommunications Sdn Bhd said on Jan 19 that it has formed a partnership with Nokia Pte Ltd to provide the world’s first mobile massively multiplayer online game (3MOG), which enables cross-platform online gaming between users of mobile phones and personal computers.

“The move is considered healthy for DiGi as it will provide new products and content for customers,” said Mayban Securities Research.

“This is also in line with the growing availability of more sophisticated hand phones that can provide the platform for the games service and the growing number of young customers that would be target market for online gaming,” the research house.

However, it does not expect a substantial take-up rate at this point, as consumers are expected to tighten their purse strings in view of high inflation.

On Jan 24, mTouche Technology Bhd teamed up with M-Mode Bhd to develop and provide mobile games to the growing mobile games market.

Just a day earlier, M-Mode, a CP providing a variety of mobile content including games, announced that its operations in China have launched two online games for China Unicom’s subscribers recently via Chn.net, one of the licensed service providers in China.

Internet and e-commerce-based MOL AccessPortal Bhd (MOLAccess) recently signed a distribution agreement with Gamania Digital Entertainment (HK) Co Ltd, an online game operator in Hong Kong with 12 game titles, for the distribution rights for selected Gamania titles in Malaysia and Singapore.

“Malaysia’s mobile gaming industry is still at its infancy compared to the likes of Hong Kong, Singapore and Japan.

Nevertheless, it is growing by leaps and bounds, in line with the ongoing transition from 2.5G (generation) to 3G and the growing profile of young and trendy subscribers between ages 18 and 30, who are more receptive to innovation,” said OSK Research’s analyst Jeffrey Tan.

Such developments come under the ambit of value-added services (VAS), which telcos are banking on to mitigate the pressure from traditional voice average revenue per user (ARPU), he said.

“The growth prospects for VAS are tremendous given that it currently accounts for less than 20% of overall mobile revenues.

An essential component to this growth is the availability of intermediaries, known as CPs that relieve telcos of the development cost. The CPs take a cut from traffic generated and/or usage,” he said.

According to IDC, with a compound annual growth rate (CAGR) of 19.7% from 2005 to 2009, the Asia Pacific online gaming market will more than double its existing subscription revenue market size by 2009.

It noted that the CAGR for Malaysia is more aggressive, growing 39% over the next four years to reach US$18 million in 2009.

“The Asia Pacific online gaming market has grown into an incredibly diverse and interesting market over the past several years. It will continue to be an attractive playing field for existing, hardcore, and serious online gamers and, at the same time, appeal to a new demographic of individuals who would never be considered as gamers, but have adopted casual content with enthusiasm,” it said.

IDC said in Malaysia, the growth in online gamers and subscription revenue would spur the increase in the number of online gaming service providers.

“These service providers will be in a better position to capitalise on the opportunities created with improved broadband infrastructures and payment systems.

“Online gaming service providers have to and are expected to continue offering more supporting products and services for their online games, such as ring tone and music video downloads, add-ons to games like changing avatars, and limited special packages with unique capabilities to particular games,” IDC said.

As more players enter the fray, CPs and telcos would face stiff competition. M-Mode, which posted a 47% drop in net profit at RM198 million in its third quarter ended Sept 30, 2005, said the mobile data services industry would continue to be “challenging” in view of more players emerging locally and abroad.

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