In recent years, the gametech industry has witnessed remarkable growth and innovation, becoming a significant force in both the gaming world and its applications in other sectors. Statistics show an upward trajectory in the adoption of gaming technologies, with advancements in areas like artificial intelligence, virtual reality, and cloud computing redefining user experiences. As the industry continues to expand, it not only enhances gaming platforms but also offers transformative solutions across various industries, from aviation to cultural heritage preservation.

In this TNGlobal Q&A with Lisa Cosmas Hanson, President and CEO of Niko Partners she delves into these dynamic developments within the gametech landscape. Hanson’s career includes leadership roles at Niko Partners since 2002 and previous positions at Viant and IDC Research, which has established her as a key figure in understanding the Asian gaming market, particularly in China and Southeast Asia. Her insights are regularly sought by major media outlets, reflecting her status as a thought leader in the field.

This interview explores the multifaceted nature of gametech, examining both its current state and future potential. Hanson discusses the symbiotic relationship between gaming technologies and their broader industrial applications, shedding light on how innovations born in the gaming world are revolutionizing other sectors. Additionally, the conversation covers recent trends and future projections for the gaming industry, particularly in Southeast Asia, offering valuable perspectives for enthusiasts, professionals, and observers alike. Hanson’s extensive experience and authoritative voice make this session an invaluable resource for anyone looking to understand the evolving world of gametech.

Can you explain to our audiences–what is “gametech”? How are dedicated gametech firms in development, operations, game engines, hardware, middleware, and monetization all supporting growth and innovation across the video games industry and beyond?

Game technology, or “gametech,” refers to both existing technology that is benefiting the video games industry and technology developed by the video game industry that benefits other industries.

The first category in the gametech space refers to pre-existing technologies that are incorporated into video game software and hardware or are integral to playing online video games. This would include computer processors applied to gaming, or network technologies leveraged to support live-service titles such as 5G.

The second category of gametech includes technologies initially designed for use in the video game ecosystem but which have become widely used for other commercial applications and in a multitude of businesses. This second category includes augmented reality (AR), virtual reality (VR), game engines, haptic input devices, and adaptive controllers, just to name a few.

What are some new and upcoming gametech innovations that you believe will make their way into other, non-gaming industries in the near future, and why? Can you please also share some examples of real-world industrial applications?

A compelling case is the intersection of artificial intelligence (AI) and gaming. AI is already utilized in games across a number of areas, including generating new content, creating realistic non-playable characters (NPCs), analyzing user behavior, adapting difficulty levels in games, and even combating toxicity online, all through machine learning.

Driven by the growing and evolving needs of users, games have always embraced and applied the most cutting-edge scientific and technological advancements in a timely manner. The flip side is also true: Games represent a powerful driving force for AI and technological development.

While AI-generated content is starting to be popular among the non-gaming populace, with ChatGPT being a major example, the usage is still rather limited. We expect more adoption of AI in an industry that mirrors how it’s used in games.

Tencent’s game AI, called Wukong AI, was created to learn rules, strategies, and decision-making for Honor of Kings, Tencent’s 5v5 MOBA game. In 2019, Wukong AI defeated a human team comprised of 5 top players from China’s King Pro League in a 3-1 victory. The AI reportedly played the human equivalent of 400 years’ worth of simulated games each day against itself to develop its strategy, a feat impossible for its human counterparts.

While it is impressive that an AI can beat human players, the implications are much wider. Video game AI may be used in training top human players, and not just for esports. Coaches may use this technology to uncover or optimize strategies that would take players years to discover.

Other real-world industrial applications include:

Aviation Industry

• In collaboration with China Southern Airlines (CSAIR), Tencent launched an advanced full flight simulator visual system. It utilizes its game engine, regenerative procedural content generation (PCG), AI-generated content (AIGC), and other gaming technologies to recreate natural environments, resulting in a 10-times increase in asset production efficiency and a 100-times increase in texture fineness compared to existing systems. These advancements lead to significant time savings, in addition to reducing over 50 percent of the production cost.
• With CSAIR wide-angle infinity display technology, the system can reach the strict industrial standard of 4K 60FPS, zero frame loss, and zero lag when running in real-time, making more realistic imaging, efficient modeling, and stable operations.
• The visual system also enhances the efficiency and quality of civil aviation pilot training. The simulator offers an immersive and lifelike experience with hundreds of training disciplines, allowing trainee pilots to develop and refine their skills within a safe and controlled environment. The impact of this innovation extends beyond individual pilots and benefits the entire aviation industry.

Cultural heritage:

• Digital Great Wall cloud game, a culture heritage conservation project, uses Tencent CROS Game Engine to create a cloud-based video game of the Great Wall in China. The development team employed advanced photo scanning and 3D reconstruction technology, capturing nearly 50,000 high-definition pictures and utilizing 1 billion patches to meticulously recreate every detail of the Great Wall in Xi Feng Kou, including the carved names on the walls. Over a span of six months, the in-house engine was used to develop rendering and streaming technologies such as Nanite Lite, Udim, and Virtual Texture, enabling real-time rendering of highly detailed models with massive textures.
• The project also incorporated local county annals to recreate a realistic vegetation landscape, utilizing plant illustrations and pictures. Notably, a self-developed procedural content generation (PCG) toolset facilitated the simultaneous planting of 250,000 trees. The Digital Great Wall project leverages an in-house game engine and cloud game technology to provide users with a hyper-realistic interactive experience on their mobile devices, showcasing the Digital Great Wall in real-time, providing users with a hyper-realistic interactive experience on their mobile devices.
• Digital Dunhuang Library Cave is a project co-created by Dunhuang Academy and Tencent as part of a five-year strategic partnership. Through high-definition digital photo scanning, physical rendering in a game engine, and global dynamic lighting, it faithfully restores the Mogao Grottoes, showcasing the original appearance of the towering 1,600-meter cliff face. The precision of the recreation is remarkable, capturing the intricate details of the “three-storey building,” the 16th and 17th caves, and incorporating over 30,000 images, resulting in a digital model with an astounding 900 million faces. Users can engage in character role-playing, exploring four distinct historical periods and interacting with seven NPC characters to gain a deeper understanding of the Library Cave’s history.
• Moreover, utilizing state-of-the-art 4K digital restoration and 3D modeling techniques, the project offers a virtual 3D exhibition hall where visitors can closely examine and experience 21 valuable relics unearthed from the caves, currently housed in the British Library, Bibliothèque nationale de France (BnF), the British Museum and The Guimet Museum.

We’re near the end of 2023; talk us through some of your early 2023 observations and trends, and the extent to which those (and other gaming-related trends) played out over the year so far.

While this year saw slower growth compared to 2021 and 2022 in Southeast Asia, we are bullish that next year will see bigger growth for Southeast Asia’s gaming industry. SEA’s market is still primarily dominated by foreign games as the local development talent pool continues to evolve. In order to encourage local talent and local developers, government support in the way of grants or other concessions has helped local game companies grow more in the region. We also see that esports, particularly mobile esports, continue to be a major driver of gamers’ interests even amidst the global esports winter.

What is your 2024 outlook for the gaming industry in Southeast Asia, and what key trends/issues of interest do you see popping up next year?

In-app purchases (IAP), particularly for skins and cosmetics, are by far the most successful monetization model in Southeast Asia. The share of gamers who purchase skins and cosmetics in Southeast Asia is the highest among the markets that we cover. Southeast Asian gamers focus on community and social gaming and like to be able to show off interesting skins and cosmetics to their friends.

Southeast Asia as a region generally has one of the lowest shares of credit card ownership/banked population among the markets that Niko Partners covers, making third-party payments, including digital payments, a major part of driving in-game purchases.

What are the most impactful monetization models for the Southeast Asian market, and what are they contributing in revenue to the industry?

Hybrid monetization models work because they adopt the most popular aspects of different models, in order to capture spending from a wider array of people. Hybrid can mean the adoption of any type of model in combination, and we see that trend continuing in the near future.

What are these new “hybrid monetization models” gaining traction in the industry, and to what extent have developers/publishers adopted these models so far?

Developers and publishers are recognizing that women spend money on games at a lower rate than men at the moment, but as games evolve to attract more spending by women the total revenue base will climb. The ratio of women gamers is rising, and women are eager to play.

Female gamers make up 37 percent of the total gamers in the region (with an annual growth rate of 11%), how do you think game developers and publishers tap into this growing market?

One thing we’ve noticed is that there could be more women developers in studios, who could help inform the game design to attract even more women gamers to play and spend money. No matter if it is men or women developing games, studios are recognizing that women gamers are a growing cohort, and they are paying attention to how to attract and retain them as players. Niko Partners is engaged with the Women in Games Asia chapter, and we also actively ensure that voices from our analysts, both females and males are heard and published in our reports and articles.

How a team of BAFTA and Emmy Award-winning visionaries are spearheading the gaming evolution