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Gaming in Vietnam

A cyber cafe in Ba Dinh district, Hanoi.

A cyber cafe in Ba Dinh district, Hanoi.

A cyber cafe on Kim Ma street in Hanoi.

A cyber cafe on Kim Ma street in Hanoi.

Vietnamese people love to play games—on the street they play co tuong, a traditional chess-like game. Groups of older men will crowd around the two opposing players to comment on strategy and prior moves. In older times, the best co tuong players would travel to different villages in Vietnam to challenge other players to prove they were truly the best.

In Asia, gambling is very popular and it ranges from betting on national sports teams (like football–soccer) to betting on the winner of cock fights at the local hangout. Currently, Vietnamese people are not even allowed to enter a casino in Vietnam, although the local policies may be changing in the future. Trips abroad to Macau (for those who can afford it), and closer in Cambodia across the Moc Bai border (where casinos specifically target Vietnamese consumers) will have to satisfy the demand for lucky money–at least for now.

So while the older generations are focused on traditional elements of gaming, the youth have turned to technology in the form of video, computer, and mobile games. And recently, the world has turned to Vietnam for a massive mobile gaming hit that seemed to rise on its own. If you know anything about gaming in Vietnam then chances are that you’ve heard of Flappy Bird. If you have never heard of Flappy Bird, the mobile game took the world by storm earlier this year and propelled its creator, Nguyen Dong, to fame and fortune.

Mr. Dong’s curious tweets about the massive public interest in his game only fueled additional press inquiries and an even greater amount of demand to download and play his game. Eventually, he pulled the game off the market only to exclusively re-release it on Amazon’s Fire TV platform.

However, Vietnam’s gaming scene is comprised of more than just Flappy Bird. Besides a robust coffee and cafe culture in Vietnam there are thousands of cyber cafes where young Vietnamese gamers play DOTA 2, League of Legends, and an assortment of games distributed or developed by local and international companies. Additionally, there are a number of independent game studios in Vietnam, as well as companies like Gameloft, and VNG, Vietnam’s premier internet company (and formerly known as VinaGame–revealing its origins).

A Match Made in Heaven

Gaming in Vietnam is a $200+ million industry with very high annual growth over the last three years. Even in an economic downturn gaming isn’t very negatively affected. If anything, less business activity allows workers to spend more time playing games to get through a dreary work day. It’s common to see security guards and desk-based customer service workers take some gaming breaks to help pass the time.

App distribution spans beyond just the Apple App Store or the Google Play Store in Vietnam. Third party marketplace like Appota offer an alternative to official marketplaces. Based on conversations with Appota and MWork representatives, there are estimated to be anywhere from 5,000-12,000 developers in Vietnam, which includes big companies and independent coders across the iOS, Android, and Windows Phone platforms.

iOS devices are seemingly everywhere in Saigon and Hanoi—and they will only increase in popularity as the middle class continues to rise in Vietnam. As smartphone sales continue to increase across Vietnam and Southeast Asia, the user base for games will automatically increase as well. And as new iterations of iPhone models come out, the rich and fashionable Vietnamese consumers acquire them and gift their old phones to family—perhaps to younger cousins who otherwise would not have an iPhone.

A Closer Look: League of Legends in Vietnam

League of Legends is the most popular MOBA (Massive Online Battle Arena) game in the world and is played by millions of people; in Vietnam, Vietnam Esports, distributes the game through its Garena+ client.

MOBA is typically a top-down five-player versus five-player (5v5 PvP) match where each player controls a different “Champion” class that has special abilities. The game has a few different game modes which become available to the player as s/he “levels-up” his/her champion.

The game modes can be divided into 3 distinctions: 5v5/3v3 PvP “Classic” style; Co-op versus the computer (AI) variant; and custom, which is used for tournaments and custom game modes. The objective of the classic 5v5 game is to destroy the opposing team’s Nexus, a strategic item. This goal is accomplished by first attacking the other team’s turrets; powerful defensive structures that guard each of the corridors between opposing bases.

Players are aided in their effort by “creeps” which can be compared to a pawn piece in a game of chess. These characters are only dangerous to a player in the early portion of the game, when the players are weaker.

After destroying all the turrets leading to the enemy’s base in a lane, players continue to push forward to destroy various defensive structures until reaching and destroying the Nexus. League of Legends also has an online store where players can purchase champions, character skins, and other in-game items (these micro-transactions are how Vietnam Esports primarily earns revenue).

There are two types of in-game currency: RP (Riot Points) and IP (Influence Points). Both types can be used to purchase champions but only RP are used for skins (a way to change a character’s appearance). For players who don’t want to spend money on virtual items, characters cost from 475 IP to 6,300 IP. A dedicated player can reach Level 7 to unlock most of the maps and game modes over the course of two days.

Vietnam Esports’ Game Operations division primarily localizes international content into Vietnamese. Riot Games, the developer of League of Legends, updates the game via patches that need to be translated into Vietnamese. The division also manages two websites: http://lienminh360.vn/ which is more community focused and the official league in Vietnam website: http://lienminh.garena.vn/. Besides patch notes, players can also find guides and other content that introduce new players to the game (they are very open-ended so that players may develop their own style when learning to play).

The website also has a section for tournament information; the top tournament tier is the Garena Premier League (GPL), which consists of the best teams in Southeast Asia (SEA) and Taiwan. Below that is the Dell Championship Series A, which is for the top eight teams in Vietnam, followed by Western Digital Championship Series B (WDCS B): the semi-pro tournament circuit. A mini tournament, called the GCafe Cup, is hosted every week. The way a player rises from the amateur ranks to become a pro is by moving up through each of the tournament circuits–a very competitive process.

Mobile and Multi(player) Approaches

Mobile game developers and studios are more popular in Vietnam than traditional development houses because it is less expensive to develop an application than it is to develop a computer or video game, which often require a large amount of staff. In some cases, a good mobile development team can be made up of a team leader, a coder, and a designer (if there needs to be three people at all). Plus, technologies like Unity 3D are leveling the playing field for development teams (in terms of costs and time) which means that the game concept, game design, and game mechanics will be even more important for differentiating quality games from clones and other apps that are riding popularity waves.

If a game is not a global hit, then for it to be successful in Vietnam it has to be localized to fit Vietnamese user preferences and expectations for games. The advantage here is for Vietnamese workers who have worked in foreign brand studios in Vietnam and have left to start their own development team (and who know the culture better than foreigners). They will have lower costs across the board to bring a product to the market. The safest route is to take a successful game product in China and to localize it for Vietnam–which is partly how VNG became so successful; this is a great strategy to reduce risk, especially for new entrants into the Vietnamese market. However, being truly innovative, especially in a “fringe” space, requires taking a risk to be contrarian and right. It will be interesting to see which strategy younger Vietnamese developers choose–both in the short term and in the future.

E-Commerce in Vietnam

With a population of over 90 million, there is no doubt that the middle class in Vietnam is growing; in 2012 the middle class consisted of 8 million people and consumed $46 billion[1] up from around $20 billion in 2004.[2] Today, Vietnam is the 13th most populous country in the world—and almost one million people are born here each year.[3]

The mobile phone (and smartphone) continues to rise in Vietnam. There are approximately 140 mobile cellular subscriptions for every 100 people in Vietnam.[4] Vietnam is the second-fastest growing smartphone market with approximately 13 million iOS and Android users as of 2013. 40% of those are iOS users.[5] Mobile phones will soon overtake PCs as the most common web access.[6] According to 3rd party app store Appota, “on average, mobile users consume 4.5 hours of media daily of which 35% is on mobile devices.”

In terms of social media, Vietnam is one of Facebook’s fastest growing nations. Facebook has over 70% penetration rate for internet users which equals approximately 22 million people.[7] Furthermore, Google officially entered the Vietnamese market by establishing AdWords here in early 2013.

E-commerce is growing but consumers still prefer cash on delivery (COD) payment for online orders. For the most part, consumers are simply unwilling to use their credit cards. Of the total $700 million in e-commerce sales in 2012, only 11.8 percent of online consumers used a non-cash payment method.[8] For 2013, 74% of all online consumers had used COD as a major payment method.[9]

Why? Because consumers are suspicious about the quality of the products they have ordered and want to inspect the item before paying to make sure it’s what was advertised. Even at retail stores, buying a $15 rice cooker or $10 electric kettle may result in the floor staff taking out the item from the box and plugging it in, thereby proving to the consumer that it does indeed work.

As with much of Asia, the society here on a public level revolves around the concept of “glamour” or being able to show off that one is successful (which is closely tied to “saving face,” another HUGE deal in Vietnam—that can’t be stressed enough). This theme can take shape in several forms: ostentatiously counting money when one (usually the oldest male member at the table) goes to pay the bill at a restaurant, aggressively pushing past those already queued up to show that one doesn’t need or have time to wait around, or belittling service staff in front of others. Successful Vietnamese are willing to spend big money on luxury cars as they are often twice or thrice the price of the same or comparable model in the United States. However, wealthy Vietnamese also love a good deal and some may feel entitled to not pay the same price as everyone else (looking for special price) due to their VIP status. As for the normal folks, they will have to make do with daily deals sites.

Vietnam’s Groupon (Nhom Mua) skyrocketed in recent years, reaching over $30 million in total revenue in 2011 and over two million users in 2012—but ultimately crashed. Customers and merchants are generally wary of the group buying facilitators due to a history of mismanagement of the former leader, a large number of clones, and the customers that they drive to businesses are usually one-time consumers.

Generally, Vietnam is still a largely cash-based society so due to inflation there are some large denominations ranging from 100 to 500,000 Vietnamese dong (VND), with the latter being worth about $25.

Some figures about the local market:

  • Total Advertising Spending in Vietnam is a $770+ million industry.[10]
  • Digital Advertising Spending in Vietnam is $40+ million.[11]
  • E-Commerce spending was over $300 million by 2011[12] and has the potential to be over $2.5 billion by 2015.[13] Some estimates project that e-commerce spending can top $4 billion by next year.[14]

The challenges ahead for e-commerce in Vietnam are for consumers to be more comfortable using credit cards, the negative reputation Vietnam has for fraudulent activities in payment processing, and establishing effective trust verification and logistics systems for fulfilment as volume increases. New solutions and incentives different from those in the west will have to be proposed to Vietnamese consumers in order to entice them to embrace e-commerce more efficiently and wholly. As with most things, it boils down to trust.

For more information on the state of e-commerce in Vietnam see here: http://goo.gl/XoRroO

[1] OECD

[2] McKinsey & Company

[3] The World Bank

[4] The World Bank

[5] Appota

[6] Nielsen

[7] TechInAsia

[8] VECITA

[9] VECITA

[10] IMF

[11] Appota

[12] VECITA

[13] PwC

[14] VECITA