Before witnessing the bustling streets of Indonesia and the countless motorcycles weaving through traffic with your own eyes, it's hard to imagine that there could be a country in the world even more crowded than China.

Indonesia, which was previously understood only through strings of data, seems to take on a more tangible form in this moment. Beyond the awe-inspiring aspects of its vast population and youthfulness, it's impossible to ignore the multitude of consumer opportunities and the promising economic future that Indonesia holds.

PART. 01 Indonesia: On the Eve of Explosive Growth

According to statistics, Indonesia has an internet penetration rate of 73.7%. Among its population of 280 million, there are 200 million mobile internet users and 190 million social media users. As of 2022, Indonesian users spend more than 5 hours per day on mobile apps, enjoying activities such as binge-watching, gaming, and expressing their views on social media, and they are willing to pay for these services.

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However, compared to the increasing entertainment demands of Indonesian users, local companies in Indonesia lack the corresponding technical talent despite their ability to identify trends. This creates opportunities for external companies. Chinese gaming companies were among the first "hunters" to target the Indonesian market. For example, more than two national-level products in Indonesia are developed by Chinese companies, such as the Indonesian national MOBA mobile game "Mobile Legends: Bang Bang" and the popular battle royale game "PUBG Mobile."

"Indonesia's population is equivalent to 20% of China's population. Currently, the entire gaming market in China is nearly 300 billion RMB. Even though Indonesia's gaming market is currently at the level of China five years ago, based on this, we can estimate that Indonesia's gaming market is at least worth 30 billion RMB." Based on the long-term observations of Indofun CEO Mark, the overall gaming market revenue in Indonesia in 2022 was 2 billion USD. Compared to the potential size of 30 billion USD, there is still a significant gap to fill, indicating considerable market opportunities.

In summary, Indonesia still has a population dividend, enormous market space, and significant room for growth in the gaming market. It can be said that the Indonesian gaming market is on the verge of a true explosion. However, complex cultural factors, language differences, religious customs, and more act as localized barriers for Chinese developers entering Indonesia.

To assist Chinese companies in breaking down these barriers and successfully tapping into the Indonesian market, Sail the World's "Beyond the Great Wall, Towards the Sea" has invited Mark, CEO of Indofun, who has deep experience in the Indonesian gaming market, to discuss the opportunities in the Indonesian gaming market, localization strategies, and distribution tactics in detail.

PART 02: Changing Indonesia - An Evolving Market

As the largest market in Southeast Asia with its massive population, it seems that the consensus among global companies is "If you win Indonesia, you win Southeast Asia." This consensus continues to inspire global companies to flock to Indonesia, and their influx has had a multifaceted and profound impact on the country.

As an entrepreneur who has lived and worked in Indonesia for nearly 20 years, Mark has a more direct and clear perception of Indonesia's changes: "Compared to when I first entered the industry in 2015, the number of gamers in Indonesia has grown from around 20 million to the current 125 million, and game revenues have also seen a substantial increase. Looking at Indonesia's Google Play bestseller list, we can see that the current top-ranking mobile game generates monthly revenue of at least tens of millions of dollars, whereas in 2017, the top-selling mobile game's monthly revenue was less than half a million dollars."

Behind the expansion of the player base and the surge in game revenue is the improvement of local infrastructure and the widespread adoption of mobile devices in Indonesia. In Indonesia, the market share of Apple iPhones is quite low, with Android phones accounting for about 95% of the market. Brands like OPPO, VIVO, and Xiaomi have become prominent players in the Indonesian smartphone market. As of now, the smartphone penetration rate in Indonesia has exceeded 60%.

The rapid growth in smartphone penetration has sparked increased demand among Indonesians for online shopping, gaming, and social media, which in turn has driven the widespread adoption of electronic payments and e-wallets in Indonesia. In most parts of Indonesia today, everything can be easily solved through online payments and QR code scanning.

"Over the past three years of the pandemic, e-commerce has become the primary consumption channel for Indonesian users, and the online shopping habits it has brought about have significantly increased the penetration rate of electronic wallets. Currently, there are 56 mainstream electronic wallets available in Indonesia, indirectly affecting the payment methods for games," Mark explained. "During the period of 2015-2016, the credit card penetration rate was only 2%, and while the bank card penetration rate reached 50%, it was still very inconvenient for gamers to make payments."

During that time, game payments mainly relied on carrier billing, and gamers had to go through a cumbersome process to make payments, often requiring 17 screen taps from opening the payment page to completing the payment. This resulted in low conversion rates. However, now users can make payments with electronic wallets or QR codes, significantly improving the conversion of game payments. According to Mark, for Chinese game companies looking to enter Indonesia, "payment is no longer a significant barrier. Instead, localization is the real obstacle to Chinese games going global in Indonesia."

As mentioned earlier, Indonesia is made up of over 17,000 islands and more than 400 ethnic groups, making it a country with complex cultures, customs, and user preferences. To succeed in localization, one must have an in-depth understanding of the local history, culture, and religious taboos. Game content and game operation methods must also cater to the tastes of local gamers. In addition, thorough research and preparation are needed regarding users' smartphone usage habits, game package sizes, and the state of the local mobile network.

It can be said that only those who understand the locals better than the locals themselves can truly establish a strong presence in Indonesia.

PART 03: Localizing with an Indonesian Team 

As a game publishing company with Indonesian roots since its inception, Indofun naturally fits the Indonesian market. Established in Jakarta, Indonesia, in 2015, Indofun has nearly all of its team members originating from Indonesia. With 8 years of deep experience in Indonesia, Indofun now boasts nearly 110 local employees who form multiple teams responsible for various aspects of game publishing, including product development, operations, marketing, and more.

To date, Indofun, firmly rooted in the Indonesian domestic market, has published over 30 popular titles, including "枪火战神" (Firearm God), "劲舞团" (Audition), "Raja Matahari," as well as IP-based products like "Idle Dynasty (神魔三国志)," "Rich and Famous (大清摄政王)," and "Condor Heroes (新射雕：铁血丹心)." Among them, "枪火战神" (Firearm God), launched in 2018, garnered 3 million downloads in its first month.

With the advantage of being deeply rooted in the local culture and understanding the unique needs of both game developers and Indonesian gamers, Indofun not only comprehends the development requirements of game developers but also has a profound understanding of the local user base, market dynamics, and services. Indofun operates in various game genres, including card games, MMOs, strategy games, FPS games, and rhythm games, and they have unique insights into each.

For strategy games, Indofun adopts a long-term operational strategy. For instance, in the case of "大清摄政王" (Rich and Famous), Indofun adds Indonesian local hero characters within the game to deepen the connection between players and the game. Additionally, they design online and offline events tailored to the game's content updates. These events include online live broadcasts and offline meetups. During anniversaries, they also create relevant peripheral products to boost in-game purchases. In a creative twist, they even name some game servers after player IDs, enhancing the sense of community within the game.

For FPS games like "枪火战神" (Firearm God) or rhythm games like "劲舞团" (Dance Audition), which have strong offline elements, Indofun adopts unique strategies. When these games are launched, they organize press conferences, inviting media and top players to participate. During the operational phase, they establish closer connections with players through spokespersons and esports events.

According to Mark, the success of their press conferences with hundreds of attendees can be attributed to two key factors in their brand marketing strategy. Firstly, they create multiple blockbuster products, as the product itself is always the most convincing aspect of the brand. Secondly, their company's brand, "Indofun," takes "Indo" from the abbreviation of "Indonesia." In Indonesia, many products with the "Indo" prefix are considered national-level products, such as "Indomi," a national-level instant noodle brand. This naming strategy gives Indofun a distinct local character and makes it memorable.

Two examples illustrate the impact of Indofun and its games in Indonesia. Mark recalls a case where a prominent Indonesian-Chinese player who owned a brand processing factory in Indonesia specifically produced branded T-shirts for the game's GM (Game Master) and operations manager. Whenever Mark attends gatherings of Indonesian-Chinese or local friends, every mention of the company and its products, regardless of whether the players have experienced the game, spreads through various social media platforms like Instagram, Facebook, and others, thanks to advertisements and other means.

According to Mark, while it may seem relatively simple for Indofun to do brand marketing in Indonesia, there is a prerequisite - their games, team, and operations must be sufficiently localized, with a strong emphasis on game localization.

The complexity of localization in Indonesia is, to a large extent, due to the diverse cultural makeup of the country. Indonesia is influenced by various cultures, including Chinese culture from the over 20 million ethnic Chinese in the country, religious and cultural influences from Islam, Indian culture from descendants of the Middle East, as well as Western, Japanese, and Korean cultures. Indonesia is also a secular nation with six officially recognized religions, including Islam, Catholicism, Hinduism, and Confucianism. This diversity in culture and religion makes it necessary to consider religious taboos when localizing content, especially for products with strong religious themes. However, for games that don't heavily feature religious themes, this aspect can be less of a concern.

Moreover, external game developers often underestimate the importance of proper localization when entering the Indonesian market. Mark observes that many top games currently entering the Indonesian market, such as Genshin Impact, Clash of Clans (COC), and Call of Duty (COD), lack sufficient localization. Other games like MMOs, ROX, and ROO, which are suitable for the Indonesian market, have yet to produce a national-level game that covers all Indonesian players. This has led to many Indonesian gamers not having the option to play games in their local language (Indonesian) and some resorting to playing private servers.

Mark emphasizes that many game companies releasing major titles in Indonesia treat it as a supplementary market rather than an incremental one. Indonesian gamers have distinct tastes and their own payment logic, and many are capable of making in-game purchases. Therefore, overlooking the potential of these players due to assumptions about their payment abilities is a mistake.

In light of these challenges, Indofun conducted different depth-of-localization tests for similar genre products. For card games, they compared three forms of localization: not localizing into Indonesian, basic translation, and deep localization based on the characteristics of the Indonesian gaming market. The results showed a revenue difference of over 100 times between the three approaches, reaffirming the necessity of deep game localization.

Mark has identified several effective strategies for successful game localization:

Create an Indonesian language version of the game.

Consider Indonesian users' sensitivity to aspects like network quality, app size, and in-game pricing.

Localize voiceovers and translate text into a conversational style.

Localize core game resources, such as adding local heroes or scenes.

Once game localization is done right, it provides a solid foundation. Marketing, on the other hand, is a test of a game publisher's "soft power." Drawing on their long-term experience in the Indonesian market, Indofun believes that a dual online and offline strategy is the most effective approach for marketing.

Online, Indofun starts by creating product packaging that suits the Indonesian market's characteristics, adding local elements to the materials, optimizing them with real-life footage and incorporating popular memes. All materials, including videos, graphics, and art, are collected and produced by local Indonesian members. For voiceovers, they choose background music that is currently popular among locals.

After creating the materials, Indofun spreads advertisements through various channels while organizing competitive events on platforms like Instagram and Facebook. They also plan events based on popular local holidays. Additionally, they utilize private traffic sources such as communities, gaming guilds, TikTok, and live broadcasts to reduce customer acquisition costs and increase Average Revenue Per User (ARPU) by 10%-30%.

Offline, Indofun leverages trade shows, collaborations with Key Opinion Leaders (KOLs), product promotions, player meet-ups, and esports events to increase brand exposure. These strategies have been effective in attracting or re-engaging a large number of players, regardless of whether the games are new or existing titles.

In addition, Indofun offers a variety of services for high-spending users, also known as "Big R" users. These services include 24-hour VIP customer support for high-value transactions, customer support for playing together, and online streamer companionship. For users who make significant deposits, special perks are provided, such as exclusive merchandise like custom water bottles. This approach allows Indofun to meet the multi-faceted gaming needs of high-value users and foster their payment habits. It's worth noting that Indofun employs local Indonesian team members to provide these services.

Regarding their distribution model, Mark humorously likens it to "Haidilao-style all-encompassing service." In his view, "the gaming industry is a service industry; when users choose your service, you have to provide that service at its best." Indofun's approach to achieving the highest level of service is through deep localization, essentially becoming locals themselves.

"We have been bringing in local talents from the Indonesian gaming industry. When we have meetings with them, we speak Indonesian. We can effortlessly understand each other's needs and solutions. Therefore, in the eyes of Indonesians, we are considered locals," Mark explains.

This deep localization approach not only applies to the games themselves but extends to all aspects of Indofun's operations and services, creating a seamless experience for Indonesian gamers and reinforcing their connection with the brand.

PART. 04 From Indonesia to the World

Indofun's unique combination of a mature publishing model, an experienced localization and publishing team, and extensive market expertise has made it challenging for most Chinese companies to replicate their success. With both Indonesian and Chinese DNA in its gaming portfolio, Indofun has grown rapidly over the past eight years since its founding in 2015. In 2020, Indofun established an office in Guangzhou, China, and now has approximately 20 Chinese employees.

"The main function of the Guangzhou team is to handle product introductions and lead the buying and distribution of games in the Indonesian market. This includes confirming intentions with domestic developers, preparing for launch, testing, creating distribution plans, and coordinating design requirements with the Indonesian team," explained Mark. Meanwhile, the Indonesian team primarily focuses on game localization, operations, marketing, building private traffic, managing guilds, live streaming, and more. It's worth noting that Indofun is one of the few companies with TikTok Mini Game privileges.

According to Mark, after establishing the Guangzhou office, Indofun's publishing capabilities were more reasonably and efficiently allocated, marking their entry into the second phase of international publishing.

In their eight years of rapid growth and with this new phase, Indofun is driven by a grand vision: to launch a national-level card game in Indonesia, a country with a population of 280 million.

"Indonesia already has national-level MOBAs, national-level chess games, and national-level battle royales, but national-level products in categories like card games, MMOs, SLGs, simulation games, and party games have yet to appear. Leveraging our extensive experience in the card game category, we want to work with Indonesian local development companies or independent development teams, partner with a mature Chinese game development company, and jointly develop a national-level card game tailored for the Indonesian market."

Why consider joint development? Mark explains, "Because the local game planning and programming capabilities are relatively weak, we often refer to the Indonesian market as the supply side, meaning the products we provide to this market are determined by the demand. However, Indonesian local teams have a much better grasp of local trends, music, art, culture, and other aspects. The true meaning of joint development is relying on Indonesians to create games that Indonesians like, in other words, reforming the supply side."

Although this vision seems promising, the reality is that the Indonesian market has limited room for trial and error due to the high level of localization required, the lack of a significant number of blockbuster references, and the lingering effects of the global economic downturn. Consequently, many Chinese companies remain cautious about entering the Indonesian market.

In Mark's view, this caution is primarily due to insufficient supply-side capacity. "We look at the market opportunity and user demand first. Through the performance and revenue of some top Chinese mobile games in Indonesia, we can see the commercial value of the Indonesian market. This value fully demonstrates that the market is worth the investment of professional teams. However, due to information barriers, many people in China may still not fully understand Indonesia."

To encourage more Chinese game companies to enter the Indonesian market and collectively expand the pie, Mark believes that joint development is the best choice. On one hand, Chinese companies can find intersections with the Indonesian market through local teams, which benefits their own market expansion and helps other Chinese companies find direction in the market.

Moreover, the continuous entry of external companies can provide more employment opportunities locally, nurture more talent in the gaming industry, and eventually transform Indonesia's consumer market, valued at over 1 billion USD, into an operational or even development market.

"If game companies are willing to unconditionally share their experience, technology, and even abilities and ideas with local teams, and if local teams realize that your actions have a positive impact on Indonesians or the local economy, then, with accumulation, you can truly turn a business into an industry, opening the door to opportunities for everyone."

As one of the closest observers of the outbound wave, Yangfan Chuhai (Sailing Abroad) also hopes that the Indonesian market can truly become a treasure trove welcoming all outbound enterprises. Hopefully, that day won't be too far off.

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