In what seems like the blink of an eye, online gaming has grown from a niche hobby to an enormously profitable, mainstream industry. Gaming revenues are greater than movies, music, and books combined.
Around the world, there are over three billion gamers — almost half the global population — who regularly use their consoles, computers, or mobile devices to enjoy sophisticated digital experiences that are a quantum leap from the pixelated screens of the past.
Asia Pacific is home to more than half of the world’s gamers and 70% of the total population is younger generation, digital natives, and millennials. This makes the region unusually dense with game enthusiasts in the highly coveted — but notoriously hard to reach — Gen Z demographic.
Vijai Karthigesu, CEO of Swarmio Media Holdings Inc. (SWRM:CSE), explains, “Gen Z doesn’t watch TV. They don’t read newspapers. They don't watch online websites. Gaming is where they're hanging around, where they get their information and media.”
Despite the size of the Asia-Pacific gaming market, players in the region suffer a huge disadvantage. The shift to 5G is well underway in the United States, Europe, and Canada, but regions in Asia, the Middle East, and Africa are just reaching 50% coverage with 4G — a service that’s estimated to be 10 times slower than 5G.
“Say you’re in San Francisco and I'm in New York and we are playing a game,” says Karthigesu. “Assuming the game server is in San Francisco, you will have an advantage over me because you will have faster access. If you're closer to the server, you have a better chance of winning. All these kids from Asia are having a harder time winning because most of the servers are hosted in Europe and North America.”
“We build systems around our technology to enable other people to target and monetize this younger generation through gaming.”
This was only one of Asia Pacific’s gaming problems. Even as Gen Z gamers contended with latency and lag — how long it takes data to travel from one point to another — the region’s telecom operators struggled to connect with younger consumers after having lost ground in music delivery to Spotify and movies to Netflix.
Meanwhile, developers needed to see more engagement on the high-production games their audiences demanded. Although telcos had distribution networks used for gaming, they weren’t capturing any profits. No one’s resources were being fully utilized, no one was making as much money as they could have and no one was enjoying a gaming experience that was seamless, reliable, and fast.
2020 US$159.3 billion
2021 US$175.8 billion
2024 US$218.8 billion (predicted)
To meet the needs of all involved, Swarmio rolled out an online gaming and e-sports platform that telecom operators can use to capture and monetize Gen Z gamers. The platform incorporates real-time, artificial intelligence latency-optimized edge computing technology to give Gen Z the best connectivity experience for gaming as well as channels to build communities.
The company just announced that it has claimed a U.S. patent for its breakthrough Latency-Optimized Edge Computing (LEC) technology; "Swarmio Matrix" is the keystone of the company's Ember gaming platform.
Median Ages of Geographic Regions
In describing the platform, Karthigesu says, “It’s like a Facebook for gamers." “We bring all the gamers to one party, let them engage in content, play a game, participate in a challenge, communicate with friends. It provides content, rewards, play, and community, allowing telcos to build trust and loyalty with Gen Z subscribers that will make them sticky customers.”
So what do telcos gain besides access to Gen Z consumers? Plenty, says Karthigesu, “Most games are free to play and download. Seventy percent of gaming’s revenue is actually made by selling items in the game but most telcos don't earn a penny on it. That’s where Swarmio Store and Swarmio Pay come in.”
Within the Swarmio platform is a storefront where players can redeem coins and points earned in-game using a digital wallet solution created specifically for gamers in Swarmio’s target markets. “This is a very important thing,” says Karthigesu. “In North America and Europe, everybody has a credit card but in countries in Africa, the Middle East, and Asia, credit card penetration can be less than 1%.
People pay with mobile wallets that are usually owned by the telecom operators, so the telecom operators become payment processors and are able to take a share of annual revenue.” The use of mobile wallets is surging, with market revenue expected to be worth approximately USD$700 million by 2027, according to GMIInsights.
Swarmio currently has currently has five key deals in Asia-Pacific regions, representing an addressable market of nearly 60 million users. Included in these deals is Bahrain’s Batelco, which had sales of over $US1.1 billion in 2020, and was the 8th largest telco in the Middle East. Swarmio could sign four more telcos in 2022, representing potentially over 200 million additional Swarmio users.
The deals that Swarmio has signed along with the extensive pipeline they have created could mean that this is just the beginning of large contract signings. In the Middle East, where gaming expected to continue growing at a 12.1% compound annual growth rate (CAGR) until 2026, the top 10 telcos were valued at over US$106.9 billion in 2020. In Africa, the top five telcos generated over US$25 billion in revenue. Swarmio is well positioned to add meaningful revenue as these telcos launch its platform.
While Swarmio is currently focused on the gaming industry, Karthigesu makes it clear that its technology has much broader applications. “We can optimize delivery of any real-time application that needs low latency,” he says. “In the future, it could be IoT, self-driving cars or smart cities. They all need one thing: a low latency edge computing platform.”
While there are other edge computing companies and there are payment processors, like PayPal, says Karthigesu, “No one else has put these things together in a vertically integrated platform that goes from game hosting to user acquisition to processing payment and delivering. It's a win-win-win story.”
1) Wendy Hubbert compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. They or members of their household own securities of the following companies mentioned in the article: None. They or members of their household are paid by the following companies mentioned in this article: None. Their company has a financial relationship with the following companies referred to in this article: None.
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