MBD RESEARCH TEAM

WWW.VNG.COM.VN
Report Overview

1. Thailand Overview
2. Mobile Game Industry Overview
3. User Outlook
4. Competition
5. Payment
6. Media
 PART 1
Thailand Overview
Thailand Market Data Overview
Overall Market Statistics (2016E)

Population & Economics

Population GDP GDP Growth GDP/capita
68.2M $ 405B +3.2% $5,925

Internet
Internet Penetration Smartphone Penetration
55% 64%

Mobile Game
Debit Card Credit Card 3rd-party
Revenue Users ARPU/year
Penetration Penetration Payment
$ 180M 19.6M $ 9.2 55% 8% 40%

Source: National Statistical Office, Statista.com, Estimates

 PART 2
Mobile Game Industry
Overview
Thai Mobile Game Industry
Mobile Game Market Value and Drivers

1/ No. of Users – little room for growth:

 High Internet and Smartphone Penetration
$252M  Early mass marketing of easy-to-play game
$180M
2017F Rev.
2016 Rev.
2/ ARPPU – rising fast:
 More hardcore
 Open competition

2016 2017F % Growth 3/ PU% - restrained growth:

Revenue $180M $252M +40%  Growing mobile game industry
 However, hardcore trend restrains PU% growth
#mobile gamers 19.6M 20.2M +3%
Paying rate 50% 54% +8%
ARPPU (yearly) $18.4 $23.1 +26%
Source: Newzoo
Thai Mobile Game Industry
Top Grossing Games

NEW GAMES 2016/17 OLD TITLES MAINTAIN HIGH RANKING HONORABLE MENTIONS

Brave Heart: Tale of Lost City MU Origin-TH Last Empire-War Z

1st release: Jan 8, 2017 1st release: Sep 15, 2015 1st release: Dec 4, 2015
Publisher: Efunfun Publisher: Kunlun Publisher: Long Tech
Revenue: $1M in 1st month

Garena RoV: Mobile MOBA LINE Let’s Get Rich Boyaa Texas Hold'em Poker
1st
release: Dec 26, 2016 1st
release: Jul 3, 2014 1st release: Oct 15, 2011
Publisher: Garena Publisher: LINE Publisher: Boyaa
Revenue: Top 5

Poke Saga Summoner War Clash of Kings

1st
release: Dec 9, 2016 1st
release: Apr 21, 2014 1st release: Jul 3, 2014
Publisher: Chao Zhang Publisher: Gamevil Publisher: Elex Technology
Revenue: Top 5

Yokai Saga Seven Knights Lords Mobile

1st
release: Jan 17, 2017 1st
release: Oct 1, 2015 1st release: Jun 27, 2016
Publisher: Netmarble Publisher: Netmarble Publisher: IGG
Revenue: Top 5

Piggy Boom-One Year Crisis Action Gardenscapes - New Acres

1st
release: Aug 30, 2016 1st
release: Nov 4, 2015 1st release: Jun 4, 2016
Publisher: Aladin Fun Publisher: CMGE Publisher: Playrix
Revenue: $500K+/month
 PART 3
User Outlook
 Mobile Game User Profile
By Phone System

HANDSET MARKET SHARE OPERATING SYSTEM STATISTICS AVERAGE SPECS

Price: ~300 USD

Others
15%
14%
Samsung J700F
Iphone 5S
Huawei 51% (vers. 5.1)
5%
Samsung
40% Scr. size 4.0 5.5
86%
Oppo Processor 1.3GHz 1.5GHz
14%
49%
dual-core octa-core
Apple RAM 1.0GB 1.5GB
26%

Mobile Game Download Share Mobile Game Revenue Share Battery 1560 3000
mAh mAh
 Huawei is the fastest growing brand

Source: Appannie, inMobi, Bangkok Post, Estimates

Mobile Game User Profile
By Genre, Theme & Artstyle

GENRE POPULARITY THEME POPULARITY

(Among Top 30 Grossing) (Among Top 30 Grossing)
10% 5% 2%
3% Fantasy
3% 3%
3% 30% Modern (farming, lifestyle, cartoon, card)
MMORPG
38% 13% AR War

ARPG 13% Martial Art

CBG Manga
SLG Disney
Casual
3 Kingdoms
20%
Sports
15% 40%

ARTSTYLE

Source: App Annie - Oct 2016, Thai industry insiders

What Games are popular?
Key Words Related Information

RELATIVE IP POWER IN THAILAND

6.0

5.0

4.0

3.0

2.0

1.0

0.0

KOREAN JAPANESE CHINESE WESTERN ESPORT

Source: Google Trend
 PART 4
Competition
Publishing: PC
Local Companies have PC legacy, much like VNG but did not transition well to mobile/social

Name Est. Share Top Game Name

Asiasoft 20-25% - Game distribution for Blizzard e.g. Diablo III
- Publishing: CABAL Online, Maple Story, Audition,
Heroes of the Storm, etc.
True (True Digital + NC True) 15-20% - Special Force, Magic World 2, Karma Revo, etc.
Ini3 5%-10% - Flyff, Pangya, 3K2, Mstar, BOOMz, etc.
Garena 35-40% - Heroes of Newerth, League of Legends, FIFA
Online 3, Point Blank, etc.
Cherry Credits 5% - Perfect World
Publishing: Mobile
Foreign Publishers dominate

Top Mobile Game Publishers by Revenues

Market Share By Publishers’
Countries
LINE
12% Others, 21.7%
Netmarble
China, 24.6%
Rest of market 10%
40%
Kunlun
9%
Thailand, 1.7%

Singapore, 2.7%
GAMEVIL
Rest of top 20 Finland, 3.9%
4%
13%
ELEX Technology US, 17.1%
4%
Supercell Korea, 14.0%
3%
Activision
Garena
2%
Blizzard Japan, 14.4%
3%

No. Publisher Name From Rev. (US$)

1 LINE Corporation Japan 14,016,232
2 Netmarble Games Korea 12,281,195
3 Kunlun China 10,654,437
4 GAMEVIL Korea 4,868,459
5 ELEX Technology China 4,369,704
Appannie data, excl. revenue from 3rd-party payment Source: App Annie from Oct 2015 – Oct 2016
 Publishing: Mobile
Implications for VNG

How much we might earn based on future app ranking User Behaviours
iOS:  Fast content consumption
Grossing Monthly Revenue Adjusted
Indexed
rank (Appannie) monthly revenue
#1 324,383 540,638 100  Simple thinking/shallow content consumption
#3 196,783 327,972 61
#10 54,449 90,748 17
#20 25,370 42,283 8  Less aggressive than Vietnamese gamers
#50 5,955 9,925 2
#100 2,782 4,637 1
 Sensitive to topics like religion and royal family
Android:
Grossing Monthly Revenue Adjusted
Indexed  Top payers pay big -> Chinese monetization works:
rank (Appannie) monthly revenue
#1 393,368 655,613 100
#3 268,903 448,172 68 • 1% of top casual paying users make up 50% revenue
#10 56,920 94,867 14
• 1% of top MMORPG paying users make up 80% revenue
#20 50,066 83,443 13
#50 31,812 53,020 8
#100 11,066 18,443 3  Laos people can read Thai and play games on Thai stores

To adjust for 3rd-party payment from App Annie data:

Adjusted revenue = Revenue / 60%
(Official store payment in TH is ~60%)
Source: App Annie, LINE, Thai industry insiders
 PART 5
Payment
Payment
Mobile Game Payment Landscape in Thailand

Share of Mobile Game Payment

Local payment provider Market share Strengths
- Technically stronger
~47.5% - Better support
Store- 3rd-party,
Android, 30%
- More analytical
40%

- Stronger in media
~47.5% - Around for longer
Store-iOS,  may have more experience
30%

Official Payment Methods Payment Methods Costs Note

 Share: 80-90%
Credit/Debit Card Virtual Credit Card Pre-Paid Cards 14-20%  Distribution channels: 7-Eleven (7,000
outlets), Tesco Lotus (900 outlets),…
True, AIS - 30%  Telecom market share: AIS(45.6%), Dtac
SMS
Dtac - 35% (29.6%), True (22.1%), others (2.7%)
 Fixed cost: 10-30 Baht on each
Direct Carrier Billing Bank 10%
transaction
 True Money Wallet (55% market share) is
Ewallet -
the biggest, next is LINE (15%)
PART 6
Media
Media
Key Media channels/ companies

Facebook is believed the most effective UA channel LINE is most popular for IM, strong at casual games
 38M users  33M MAU, LINE Game: 14.4M followers
 Middle-age and old people still use Facebook in TH  Stronger than FB messenger when it comes to IM
Age 13-19 20-29 30-39 40-60+ %Female Work with LINE Not work with LINE
% 23% 37% 22% 18% 63%
 Experience from working with  No push later on, Thai office
big publishers e.g. Netmarble cannot make decision on push

 Reacheable to mass users  Only mass targeting

 Payment tool connected to 3rd-  Only succeeded in casual games

party channels
Sanook as a leading media company  Lower profit margin for VNG
 33M users on all channels  Good early push (can reach
70k/day for one week)  Hard for VNG to build its own
 Sanook.com – Joox – Online Station brand in Thailand
Age 18-23 24-40 41-60 %Female  Go with LINE at market penetration phase
% 16% 63% 21% 50%  Go with LINE for casual games only
Media
Offline Marketing and Events are Important

Game Magazine Esport/Game Show/Offline Event

100k/week 50k/week
Game, Cartoon Game, App

MRT Subway/Convenient Store (Banners, TV Screens,...) Live Streaming

THANK YOU
 Industry Value Chain
Some Key Players

Developers Publishers & Platform Distribution Channels Users

Operators
Overseas

49% Rev. 51% Rev.

16-34 Medium Low

Age Income English
Payment skill

Ad Networks PC-originated
Non-incentive Korean, Japanese
IPs

Fantasy & Modern

Themes
Local Incentive
MMORPG
Genre
 Mobile Game User Profile
By Demographics

USERS BY GEOGRAPHICS USER (millions) BREAKDOWN BY INCOME MONTHLY SALARY

High 4.1 Max: US$ 15,479
 Cities: 34% population
 Users are mostly from big Medium 10.6 Avg: US$ 2,679
cities e.g. Bangkok, Chiangmai,
Chonburi Low 5.1
Min: US$ 286
 Users from Bangkok at times
account for >50% revenue of 0.0 2.0 4.0 6.0 8.0 10.0 12.0
Netmarble

 Countryside: 66% population

 Users from rural areas are few USER (millions) BREAKDOWN BY AGE ENGLISH USAGE
as internet is slow and people In proportion to
are not often exposed to 55+ 0.6
mobile game marketing
population:
45-54 1.8 Very Low
35-44 3.5

Population of some big cities:

25-34 7.3
Province Population % Population
Bangkok 8,597,808 12.8% 16-24 6.5
Nakhon Ratchasima 2,625,500 3.9%
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Ubon Ratchathani 1,849,969 2.8%
Source: NSO, Statista, Estimates
UA: Adways Campaign
Adways Shares Campaign for a Chinese Game

Google Play

Source: Line/Adways
China-developed game
Category: Strategy Game

Media Run By Adways Thailand

Media Period
LINE Free Coin 50,000 installs 7 Aug 2015
App Driver 3,500 installs 6 Aug 2015 - 16 Aug 2015

Other Media
Media Period
Incentive 14,500 installs 5 Aug 2015 - 17 Aug 2015
Non-incentive 15,000 installs 5 Aug 2015 - 17 Aug 2015
Facebook 51,000 installs 28 Jul 2015 - 17 Aug 2015