Indonesian Govt aims to boost local game industry amid dominance of foreign developers

INDONESIA: The Ministry of Tourism and Creative Economy (Kemenparekraf) has revealed that Indonesia’s national gaming market reached a staggering Rp25 trillion (US$1.6 billion) in 2022, signalling a substantial potential to bolster the country’s economy through foreign exchange earnings.

However, a significant portion of this market is dominated by foreign game developers who have been aggressively flooding various platforms with their products.

Based on Kemenparekraf’s records, local games produced by domestic developers managed to generate only half a percent of the total gaming market revenue in Indonesia in 2022.

Iman Santosa, Director of Game Applications, Television, and Radio at Kemenparekraf, expressed his concern about this discrepancy at the Nemuin Komunitas event on Saturday (14 Oct), stating, “The national gaming market in Indonesia in 2022 reached Rp25 trillion, exclusive of applications, which only accounts for game revenues. Local games make up just half a percent, not even one percent.”

Santosa emphasized that the dominance of foreign developers in the Indonesian gaming market means that the majority of the income generated from Indonesian gamers flows out of the country, amounting to a staggering 99.5 percent of the Rp25 trillion market.

In contrast, domestic games earned a mere Rp12.5 billion throughout the year. With approximately 170 million mobile phone users in Indonesia, the country has a substantial potential gaming market. However, the current situation sends the bulk of revenues abroad, leaving only a small fraction at home.

In response to this opportunity to enhance the national economy, the government is designing a Presidential Regulation (Perpres) for the Acceleration of National Game Industry Development. Santosa hopes that this regulation will lead to an annual increase in local game revenue above 0.5 percent of the national market value.

He noted, “We expect improvement. Realistically, we believe this regulation will increase local game revenue, although not significantly, let alone meeting the set target.”

To achieve these revenue goals, various government ministries and agencies are collaborating under this presidential regulation. These include Kemenparekraf, the Ministry of Education, Culture, Research, and Technology (Kemdikbud Ristek), and the Coordinating Ministry for Maritime Affairs and Investment (Kemenkomarves).

Kemenparekraf, according to Santosa, is organizing local game competitions at regional and national levels called “Game Seed” to stimulate the growth of local game developers. These competitions are being held in four Indonesian cities this year: Batam, Bandung, Surabaya, and Solo.

Through these competitions, the hope is that developers will create games with themes rooted in local wisdom. There are numerous local games with these themes that are not only engaging but also high-quality.

Some of the best local games that highlight local wisdom include Lokapala, Manguni Squad, and others. These games will be introduced to various locations, including overseas, to garner attention from the Indonesian gaming market.

The plan is for these competitions to become an annual event to encourage the emergence of the best local games, ensuring a steady stream of engaging content for the national gaming market.

Meanwhile, the Ministry of Education, Culture, Research, and Technology is tasked with nurturing game developer talent through vocational schools, and the Coordinating Ministry for Maritime Affairs and Investment is focusing on attracting investors to support the development of local games, considering the substantial investment required.

Lokapala, a locally made Indonesian game. (Photo: MNC Media)

The potential of the national gaming market is linked to the extensive user base in Indonesia.

The global creative agency We Are Social reported in 2022 that Indonesia ranked third in the list of countries with the most gamers worldwide. An impressive 94.5 percent of internet users between the ages of 16 and 64 in Indonesia played video games. The Philippines topped the list at 96.4 percent, followed by Thailand at 94.7 percent.

Globally, revenue from mobile game applications has increased annually. A Business of Apps report compared mobile game application revenue from 2017 to 2021.

In 2017, global revenue from mobile game applications was recorded at USD 47 billion, while in 2021, it significantly surged to USD 89.6 billion. Over the last five years, mobile game application revenue has seen an average annual increase of 17.6 percent.

The government’s efforts to boost national revenue in the gaming industry have received positive feedback from the Indonesian House of Representatives (DPR). Ferdiansyah, a member of the DPR’s Commission X, urged that the development of the domestic gaming industry prioritize local wisdom themes.

He explained that there are numerous local theme ideas that can be incorporated into games, focusing on local cuisine from different regions as an example. According to Ferdiansyah, integrating cultural and regional elements into games created by Indonesian developers plays a vital role in preserving the nation’s cultural heritage.