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September 11, 2023
In the news

Esports as emerging sector boosting Malaysia’s economy

The global esports market size was valued at RM7b in 2022 and is projected to grow to RM32b by 2030

DATING as early as 1972, the first documented video game competition was held for the game Spacewar at Stanford University. Students were invited to an “intergalactic space war Olympics” with a year’s worth of Rolling Stones subscription as the grand prize.

Electronic sports, or more commonly known as esports, is a term used for video game competitions. They are frequently structured, multiplayer video game events, especially between professional players either individually or in teams.

In contrast to traditional sports such as football and badminton, esports athletes compete virtually through gaming platforms such as computers, consoles and mobile phones.

According to the International Journal of Communication 7, titled “Pioneering E-Sport: The Experience Economy and the Marketing of Early 1980s Arcade Gaming Contests”, the origins of modern esports can be traced back to competitive face-to-face arcade video game events.

Japanese multinational video game and entertainment company, Sega Corp, hosted the “All Japan TV Game Championships” in 1974, a countrywide arcade video game tournament that aimed to promote the play and sales of video games in the country.

PC World, a global computer magazine, said esports first gained popularity in East Asia, particularly China and South Korea (which licensed professional players in 2000), but less so in Japan, which has strict anti-gambling regulations that make professional gaming competitions illegal.

Furthermore, GameSpot, an American video gaming website viewership in esports was roughly 85% male and 15% female, with the majority of viewers aged 18 to 34 in the early 2010s.

For a long time, esports have been a part of video game culture. Video games were primarily a hobby until the late 2000s, when it experienced a huge increase in popularity as a competitive spectator sport.

Game makers were actively building video games to appeal to the professional esports subculture by the 2010s.

Tracking its origin in Malaysia, the Malaysian Investment Development Authority said in 2018 that the gaming industry contributed US$100 million (RM468 million) to Malaysia’s revenue and is predicted to expand at a 10.9% annual rate (CAGR 2018-2023), resulting in a market volume of US$168 million by 2023.

Malaysia is also ranked 21st in the world in terms of game income, with a total of US$633 million.

According to the Youth and Sports Ministry (KBS) Strategic Plan for Esports Development 2020-2025, the RM10 million stated in the Budget 2019 for the investment of esports was the first-ever annual budget announcement in South-East Asia (SE Asia) focused exclusively on the development of its kind.

With more than 14 million gamers, Malaysia has the best potential to lead the development of esports in the region.

The country has a large pool of gamers, a steadfast growth in esports players, an increasing number of esports events, and most importantly, support from the government.

KBS had also previously proactively engaged with the gaming community to devise an athlete development plan, to build a fair and inclusive ecosystem, as well as to magnify the scale of esports to a greater depth and level of attention.

The ministry had engagement sessions throughout SE Asia in understanding the market, its potential to develop in the country and the trends among the Asean youth and digital industry.

Malaysia is best suited to be the region’s hub as it is supported not only by the government but also the local gaming community, good infrastructure as well as high purchasing power in the digital market.

Development Of Esports in Malaysia

Asia Pacific University of Technology and Innovation (APU) head of School of Computing Assoc Prof Ts Dr Tan Chin Ike believed that globally, esports is a booming industry where skilled video gamers play competitively.

However, not only the competitive side adds economic and entertainment value as there are many facets of competitive esports such as shout-casting or commentating, esports management, event management, audiences and live-streaming.

In the same way that traditional sports have competitions, esports encompasses competitions across a variety of video games and one must recognise that the industry is real, growing globally and investable as well.

Tan said the global esports market size was valued at US$1.45 billion in 2022 and is projected to grow from US$1.72 billion in 2023 to US$6.75 billion by 2030. He opined that Malaysia is no different.

“We consume large amounts of digital content daily and esports is just another avenue for recreational purposes. Football, for example, has two major types of content being consumed — one is for example the English Premier League, where loyal football club fans watch on a weekly basis with much fervour. The other is our very own Malaysia League with its own passionate following.

“It is the same with esports as we have both international and local leagues with our local players now on the international stage. I believe esports will grow rapidly as a mainstay of content consumption and as mainstream entertainment for the digital generation in years to come,” Tan told The Malaysian Reserve (TMR).

He added that Malaysia has the infrastructure, enough talent pool and support to grow as a centre in SE Asia both in competitiveness and content development.

“With the rise of mobile gaming, network availability and esports, anyone with a smartphone can play games at anytime, anywhere,” Tan said.

This is further supported by the government’s allocation of RM13 million in Budget 2023 to develop the esports industry in line with the country’s aim of being a regional esports hub and pushing a lot of its resources into supporting it.

Furthermore, under the Higher Education Institution Sports Development Policy, the Higher Education Ministry has also begun implementing the Sports Centres of Excellence and Focused Sports Centres (FSC) development programmes at selected higher education institutions in 2010. Esports is featured under these FSCs with APU being appointed to lead.

Meanwhile, Coda Payments Pte Ltd director of communications Liz Adam said the gaming industry is central to the company’s business, and is inspired by the growth and dynamism that has come to define Malaysian esports, fuelled by the thriving community and talents.

Coda Payments is a cross-border monetisation solution for digital products and services and has been named the best payment solutions provider for the gaming industry by Global Brand Magazine.

Recognising the achievements of the industry in Malaysia, Coda Payments’ research had also identified Mobile Legends: Bang Bang (MLBB) as Malaysia’s most popular game across diverse demographics and is among the best-selling titles on Codashop Malaysia.

“We recognise that significant investment has gone into developing specialised venues like esports City and Battle Arena that facilitate large-scale tournaments and live-streaming of esports events.

“These are positive developments that must be supported by advancements in Internet infrastructure to sustain and accelerate the growth of esports activities,” Liz said to TMR.

She added that Internet connectivity has long been an issue in the past when it comes to gaming but with the emergence of 5G connectivity locally, she is optimistic about improvements and looks forward to seeing a consistent rollout across all parts of Malaysia.

Benefits to Malaysia

Tan said it is more of a multiplier effect. “Esports are mostly held in physical zones and that itself is a boost for the economy.

“For large-scale competitions, esports will be an immense boost for tourism as it will attract hundreds if not thousands of fans,” he said, adding that malls will benefit from events held in their centre courts while hotels could benefit from the competitors and fans that travel to see their favourite teams.

Food and beverage consumption as well as transportation usage are also factors that contribute to the growth of a country’s economy.

Thousands of jobs will be created to support such an ecosystem including esports players, coaches, event managers, referees, marketing, media and writers, among others.

“The same factors that one uses to gauge the effectiveness of hosting a regional sports event like badminton in Malaysia also should be applied to esports. Visibility, tourism and
economic viability,” Tan added.

On the revenue front, Tan highlighted that the big giants of competitive sports are South Korea, Japan and China which dominate at least 50% of the global market share.

However, SE Asia region is rapidly becoming one of the fastest-growing game markets in the world.

“The six major SE Asia countries (Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines) represent around 6% of the Asean games revenue. That is estimated around US$5 million and an estimated 270 million gamers — which is a lot of potential growth and revenue over the next few decades.

“I firmly believe that a lot of micro and macro factor economics are at play to increase and sustain this market potential including government support and incentives, infrastructure improvements, the rollout of 5G for mobile gaming and of course, an increase in disposable income post-pandemic,” Tan added.

Nonetheless, Tan said the biggest challenge for Malaysia in developing the esports sector, technology-wise, would be stable and affordable Internet and mobile data to have the required latency for competitions and streaming.

“We are good but not great. We need to make a lot of improvements,” he added.

Malaysia as Esports SE Asia Hub

Many perceive that playing games does not truly benefit individuals, let alone stimulate economic growth.

Hence, Liz believed that there is a need in changing the older generation’s mindset towards gaming.

“We believe that in addition to integrating elements of gaming in formal education, sustained nationwide educational campaigns targeted at this demographic will play a primary role in destigmatising gaming.

“It is crucial that such initiatives look at partnerships with healthcare professionals and industry experts to integrate efforts to promote healthy gaming,” she said.

On the other hand, Moonton Games’ marketing and business development lead for Malaysia Fikri Rizal Mahruddin said MLBB focuses on building the esports ecosystem in SE Asia.

Developed and published by ByteDance Ltd’s subsidiary, Moonton Technology Co Ltd (Moonton Games), MLBB is the leading mobile multiplayer online battle arena game worldwide.

This includes Malaysia, where it launched in 2016, and became the most downloaded free mobile game app among iPhone users in 2017.

Games entered the esports industry with the creation of the MLBB Professional League (MPL), which serves as a competitive platform for esports athletes to compete at MLBB international esports organisations such as the MLBB South-East Asia Cup and the M-series World Championship.

“I think esports in Malaysia is growing rapidly and we are putting a lot of resources to grow the scene in Malaysia,” Fikri told TMR.

He added that Moonton Games will organise the Wild Card stage of the M5 World Championship in Malaysia in November, the first Wild Card component in an M-series tournament.

This decision reflects the value of Malaysia as an important market and commitment to support the growth of the sector.

In terms of MLBB’s growth in Malaysia, Fikri said viewers have grown eight-fold in the last two years.

The peak concurrent viewers (PCU), which translates to people concurrently watching the game live from multiple streaming platforms, have grown from 40,000 to 280,000 within this period, which reflects Malaysia’s big potential for esports.

MPL season 11 in 2022 recorded 23 million views and recorded an increase of 24% PCU. From season 10 to season 11, average watch time also grew 23%.

“Our rule and responsibility are to grow the esports ecosystem in Malaysia. All this while, what we are trying to do is to not just ensure the main product (professional league) gets more attention, instead, we do our best to inspire more people to become professional players or attract a bigger audience.

“Now we are trying to grow this at a grassroots level, to develop new MLBB series and players,” Fikri added.

Furthermore, Moonton Games is also branching out to collaborate with other sectors and businesses that were never involved with esports and gaming previously, namely Hotlink, Nescafe, Garnier, Head & Shoulders, Mister Potato, ASUS and OSIM, among others.

“By getting sponsorship from all these brands, we realise that we need corporate help and collaboration to expand esports in Malaysia, hence, currently in stores there are several product collaborations with MLBB or MPL Malaysia.

“In a way, this will help to expand the ridge of MLBB outside of the gaming space,” said Fikri.

Apart from collaboration with the private sectors, Moonton Games also works closely with Esports Integrated (ESI) which is an agency under KBS and Malaysia Digital Economy Corp Sdn Bhd (MDEC), as well as local brands Stone & Co and Supersunday as merchandise partners.

“It is time for everyone to see esports as a great industry for them to be a part of,” he said. Additionally, Fikri believed that there are many talents in Malaysia that can potentially elevate the economic landscape via esports.

“Businesses also need to look into the different spectrums that they can get by being involved with the esports industry, such as owning a team or sponsoring an athlete, selling merchandise and contributing to the prize-pool.

“Although it has been around for a long time, the industry is still young and there are still plenty of opportunities to tap into,” Fikri added.

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