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Game lag: Poor digital infrastructure, human capital hinder gaming growth

Jakarta Post - August 19, 2020

Mardika Parama, Jakarta – Poor digital infrastructure and a lack of human capital are hampering gaming industry growth in Indonesia despite opportunities to expand during the COVID-19 pandemic, the Indonesian Game Industry Association (AGI) has said.

The AGI's chairman Cipto Adiguno said on Wednesday that the gaming and digital industry had the potential to outpace other economic sectors as they were less impacted by the COVID-19 pandemic, but the lack of infrastructure made it hard for the industry to seize the opportunity.

According to the AGI's calculation, companies that develop gaming products, referred to as the intellectual property (IP) subsector, have seen their revenue increase by more than 50 percent since the pandemic hit Indonesia in early March.

"We have opportunities right now, as our businesses are not as impacted as other industries. However, we don't have sufficient infrastructure and our talent is not trained for this market," Cipto said during an online webinar held by the Tourism and Creative Economy Ministry.

Market tracker SuperData reported that spending on digital video games globally hit a record high of US$10 billion in March since the COVID-19 pandemic. It also noted that spending rose 15 percent on mobile games – mostly smartphone games – to reach $5.7 billion in March.

Similarly, mobile market analytics AppsFlyer noted that more people were making in-app purchases for online games in Indonesia during the pandemic.

Despite significant revenue growth in the IP subsector, Cipto said companies who designed games to be used for companies' marketing and product showcasing, dubbed the "gamification" subsector, had seen a significant decline by up to 75 percent as exhibitions and events are called off amid the pandemic.

"As there are currently no events being held, customers are deferring their payments, which affects companies' cash flow. We can say that the financial damage in this subsector is pretty high," he said.

According to a survey conducted by the AGI of Indonesian gaming companies in March, some 30 percent of respondents said they lost Rp 101 million (US$6,926) to 300 million in profits because of the pandemic while 10 percent reported losses of Rp 25 million to 50 million.

The Tourism and Creative Economy Ministry's movie, television and animation director, Syaifulloh, acknowledged that the creative and digital sector were not ready to fully transform their business models and adapt to the changes that have been wrought by the pandemic.

"When COVID-19 hit the industry, the companies still needed time and funds to adjust their operations," he said during the online webinar.

While the pandemic has inflicted revenue declines on parts of the gaming industry, it has also reduced the disadvantages of the gaming industry in Southeast Asia in regard to product marketing, Philippines Game Developers Association (GDAP) chairman Alvin Juban said.

With gaming conventions going online because of the pandemic, Alvin said developers did not have to spend a huge amount on traveling abroad and exhibiting their products, thus reducing the gap between large gaming corporation and small-scale developers.

"Reaching clients through online platforms has become very effective. This is where we have to invest our resources if we want to expand our businesses and generate more investment from people around the world," he said.

Source: https://www.thejakartapost.com/news/2020/08/19/game-lag-poor-digital-infrastructure-human-capital-hinder-gaming-growth.html