Growth in Game Development in Malaysia Increases Need for Talent
- The global games market will generate $187.7 billion in 2024, representing +2.1% year-on-year growth. PC and console game revenues will account for 51% of global market revenues. Mobile gaming will account for 49% of this year’s global revenue, growing +3.0% year on year to reach $92.6 billion.
- The global games market will reach a forecasted $213.3 billion in 2027
- More than 1,900 high-paying jobs had been created in the sector in 2023
- Malaysia’s video gaming industry projected to hit US$649mil revenue in 2024
- Malaysia has 20.1 million gamers in 2020, the majority of whom 75 per cent — play mobile games, and 66 per cent use personal computers as their digital game platform
- The Malaysian government remains committed to providing unwavering support to the gaming industry, offering financial incentives, and regulatory frameworks that protect intellectual property (IP) rights.
According to Newzoo’s Global Games Market Report 2024 report, the market will grow by +2.1% year on year to reach an estimated $187.7 billion. Gaming will captivate an anticipated 3.4 billion enthusiasts this year, with its influence extending throughout the expansive media and entertainment landscape.The global games market will reach a forecasted $213.3 billion in 2027 with a 2022-2027 CAGR of +3.1%. The PC market will likely grow at an even pace after 2025 and will be responsible for approximately 22% of the total market by then.
Demand for technology talent largely outstrips supply in Malaysia, leading to increased competition for talent, according to a newly released report. According to Randstad’s 2024 Job Market and Salary Guide for Malaysia stated that gaming was a serious business and the government has provided strong support, including allocating RM30 million in the 2024 budget to promote Malaysia as an e-sport development hub. The 30 million ringgit is expected to be used for grants or incentives for big game developers and producers to open a local office as well as investing to employ local talents to work on internationally famous titles.
The presence of a growing talent pool has attracted major developers, including PlayStation, Streamline and Bandai Namco, to set up studios in Malaysia. Their teams have been part of many AAA games such as MLB the Game and The Last of Us for Playstation Malaysia, and Street Fighter 6, Cyberpunk 2077 and Armored Core 6 for Streamline Studios.
In addition, US-based game commerce and payment company Xsolla opened a new office in Kuala Lumpur in 2023, making it one of the company’s largest offices. UK-based game developer and publisher Double Eleven also opened a studio in Kuala Lumpur in 2022, drawn by the talent that Malaysian developers provide.Alongside these industry giants, a thriving start-up scene further adds to the dynamic landscape.
We’re also seeing private-sector initiatives to develop local talent. For example, this includes gaming commerce company Xsolla’s launch of the Xsolla Curine Academy. There is also the joint partnership between virtual production company 3Particle Solution Sdn Bhd and Asia Pacific University of Technology & Innovation (APU) for talent development programmes centred around extended reality (XR), augmented reality (AR), and virtual reality (VR).
Investments in Malaysia’ Digital Content Sees Increased Growth
The global market size for the digital games industry was US$455 billion in June 2024, with a compound annual growth rate (CAGR) of 114 per cent for the 2019-2024 period.
Malaysia’s video gaming industry is projected to hit US$649 million (US$ 1=RM4.78) in revenue in 2024 after registering significant growth in recent times. The market is anticipated to show a steady compound annual growth rate of 7.55 per cent from 2024-2027, with a projected market volume of US$807 million by 2027.
- Electronic Arts/Codemasters (2011)
- Streamline Studios (2015)
- Bandai Namco (2017)
- PlayStation Studios (2019)
- Larian Studios (2019)
- Virtuous (2022)
Local Companies Penetrate International Markets
- Kurechii Sdn Bha, which developed the digital game “Tiny Guardians” had penetrated the international market and won the Indie Prize Awards – The Best in Show by Audience Votes and Casual Connect 2015.
- Local video game developer 7th Beat Game Sdn Bhd, which created the computer game “Rhythm Doctor,” ad successfully entered the global market and secured a publishing deal with Indienova, a Chinese company, to be marketed in China
Government Support for Local Game Development
Malaysia’s role in Southeast Asia’s games industry growth
Southeast Asia is a fast-growing region for the games industry. Niko Partners estimates that there are more than 300 million gamers in the six countries we track in SEA: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Across these markets, total PC and mobile game revenue is anticipated to reach USD6.5 billion by 2025, with an estimated CAGR of 7.1% for 2021-25 (Niko Partners, 2023). The game industry’s size encompasses revenue from various sectors including in-game purchases, game development and esports.
Niko Partners conducts an annual survey of 2,400 gamers in Southeast Asia, primarily targeting Gen Z and Millennials aged 18 to 29. Whether for casual fun or competitive action, gaming has become an integral part of Southeast Asian culture. Esports, in particular, have emerged as a significant component of mainstream entertainment in the region.
Esports was included as a medal title for the first time at the Olympic Council of Asia (OCA), sanctioned Southeast Asian Games (SEA Games) in the Philippines in 2019, followed by the 2021 SEA Games in Vietnam and the 2023 SEA Games in Cambodia. Singapore also hosted the first Olympic Esports Week in 2023.
The region boasts prominent esports organizations, such as EVOS Esports, Team Flash, Fnatic and ONIC Esports. Southeast Asian countries have also served as the host location for major global tournaments such as the Free Fire World Series and the Mobile Legends: Bang Bang World Championships, which have taken place in SEA for 5 years consecutively.
Malaysia’s policies for games and esports industry development
The growth of esports and gaming in Southeast Asia is inspiring increased attention and investment, and Malaysia is one of the leading markets in the region, taking an active role incentivizing this growth. Game industry stakeholders, including the government, telco companies, and other tech organizations, are taking initiatives in providing programs to nurture games and esports talent. Malaysian government agencies, particularly the Malaysia Digital Economy Corporation (MDEC), have also provided incentives and support to game creators, encouraging more to start and grow game development companies. Programs such as the Digital Content Grant, Digital Content Creators Challenge, and the Pemangkin IP360 Metaverse initiative are key examples of initiatives encouraging development.
As for esports, the Malaysian government has shown its support, with the Sports Development Act 1997 amended to include recognition for esports last year. Youth and Sports Minister Hannah Yeoh and the government-led Esports Integrated (ESI) also launched the National Esports Development Guidelines (NESDEG). NESDEG is one of the first government guidelines in the region to provide detailed protections for esports players and guidance for esports tournament organizers.
In October 2023, Malaysia’s Ministry of Finance announced a MYR 30 million (USD6.3 million) budget to encourage foreign games and esports companies to invest in Malaysia. While detailed information about the budget allocation is not yet available, this initiative is expected to enhance Malaysia’s appeal to foreign companies considering to enter the market.
Why the games and esports industry are important to support
In analyzing the support for gaming and esports in Southeast Asia, including Malaysia, it is important to consider the market context. The younger generations, particularly Gen Z and Gen Alpha, are growing up in a digital-first world.
This environment requires a different set of skills compared to previous generations. Essential skills for thriving in this digital-first world include digital communication, collaboration, creativity, critical thinking, and problem solving. Notably, these skills can be nurtured through video games (Bailey, et al., 2006). (Hewett, 2022).
Video games and esports encourage competence in these skills in an engaging format. For example, multiplayer video games and esports can enhance communication and collaboration skills through their team-based aspects (Musick, et al., 2021). Furthermore, creativity, critical thinking, and problem-solving can be fostered through game development activities (Thomas & Greene, 2011) and by playing certain game genres, such as strategy and role-playing games (Franco, et al., 2019).
Second, the development of video games and esports industries unlocks new job opportunities locally and beyond. Opportunities in the games and esports industry include being a game developer, professional esports player, esports coach, and content creator. The demand for esports in the region also leads to an increase in prize pools across esports tournaments. Jianwei Yap, a Malaysian Dota 2 player, has earned USD2,081,585 from prize pools alone (Esports Earnings, 2024), which is the highest earning among all players in Southeast Asia.
In Malaysia’s case, the country has seen an increased number of game studios that can develop AAA games. Studios such as Lemon Sky Studios, Passion Republic, Streamline Studios, Common Extract and Kaigan Games are taking part in bringing Malaysian game developers precious experience in developing successful games. Notable games that are developed with the involvement of Malaysian studios include Street Fighter 6, Final Fantasy XV, Cyberpunk 2077, Death Stranding, Spider-Man Remastered, The Last of Us: Part 2, Elden Ring, Street Fighter 6, and Overwatch 2. The quality of Malaysian studios is also attracting foreign investments, with Lemon Sky Studios acquired by Australia-listed game developer iCandy Interactive for USD30 million, while Common Extract was acquired by Swedish studio The Gang for an undisclosed amount.
Malaysia has made significant breakthroughs in the esports industry. AirAsia, a Malaysian-based low-cost airline, became the first airline in the world to own an esports team, actively developing the esports scene in the country and the region before the COVID-19 pandemic. In addition, Malaysia’s Esports Business Network (EBN) operates EBN Esports City in Kuala Lumpur, the largest esports facility in Southeast Asia, spanning over 6,000 square meters and accommodating more than 1,000 people. Another noteworthy development is the creation of a Mobile Legends-focused Esports Hub at Hatten Land’s Element X mall in Melaka, the first of its kind globally.
These initiatives demonstrate Malaysia’s potential to enhance its international reputation, nurture local talent, and boost the domestic popularity of esports. Supporting the video games and esports industry can lead to positive outcomes, including developing essential skills and creating job opportunities.
Future outlook
Southeast Asia’s games and esports industry, including Malaysia, has continued to grow in recent years. Malaysia’s games industry has grown on average by 8.9% YoY since 2020 (Niko Partners, 2023) and since 2020, Niko Partners has also estimated that more than 50% of Malaysia’s population are active gamers.
There are many reasons to be optimistic about these trends. Malaysia has the potential to lead the games industry growth in the region as the country boasts a favorable business environment for game companies.
This includes talented and world-class game developers, a growing popularity among foreign game companies developing regional offices due to Malaysia’s supportive business environment, a significant increase in digital economy investments, and growing recognition and support for esports within private and government sectors.
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