Southeast Asia’s gaming industry is on the rise. Between 2020 and 2025, it is expected to grow at a CAGR of 8.5 per cent, running counter to how the ongoing COVID-19 pandemic has disrupted many traditional sports sectors.

The gaming industry, particularly e-sports, has instead thrived, as illustrated by The Asian Electronic Sports Federation (AESF) bringing back e-sports as a medal sporting event at the 2021 SEA Games in Vietnam (which has since been postponed), following its debut in 2019 – hence illustrating the commitment by major stakeholders to back e-sports’ inclusion in a major sporting event.

This mainstreaming of e-sports in Southeast Asia had been gaining strong momentum in the years prior. For one, it has been underpinned by the region’s growing middle-class population, which had been seeing increased spending power, raising more disposable income that can be spent on leisurely activities, including playing video games.

Concurrently, Southeast Asia also continues to witness a growing internet penetration, which has enabled more users to engage in online gaming and spectatorship. 

While Southeast Asia’s e-sports sector is still nascent, there are several factors to support its continued rise – especially when it gains a stronger foothold in the region’s emerging markets. 

E-sports’ economic importance in Southeast Asia

While e-sports was very much the domain of gaming enthusiasts and hobbyists, it has since expanded to become a very promising sector in terms of earnings and industry development.

Especially during the pandemic, more people (namely those from younger generations) are working from home and crave more forms of indoor entertainment.

E-sports can meet that demand by offering content via live stream events or online video games, which contributes to economic earnings such as sales of gaming devices.

It also represents an opportunity for companies and investors to heavily back the industry – especially as more are exploring the implementation of disruptive experiences, given the eventual availability of 5G and the proliferation of more advanced technologies like AI and digital twins.

Also Read: The changing face of gamers and what it means for e-sports startups in SEA

This can encourage the growth of new forms of business opportunities for technology entrepreneurs to see how they can proliferate industry advancements to grow the market further.

Skilled technology professionals will also be key to the industry’s rise, namely in terms of gaming technology development, where Singapore particularly seeks to lean on to meet its aspirations of being Southeast Asia’s leading hub for e-sports.

Outside of its ecosystem, the e-sports sector will also help stimulate the growth of service sectors such as events management – creating opportunities for more live stream events to be conducted over the next decade, at least.

Singapore’s annual Formula 1 race is one instance; its organisers have developed the F1 e-sports Pro Series, which has created an ecosystem of opportunities for Singapore’s various hospitality and tourism industry players.  

Regional growth challenges

Despite its inherently strong potential, Southeast Asia’s e-sports industry still faces challenges for it to grow more actively in the region. More advanced markets such as Singapore have been better positioned to support startups and companies related to the e-sports ecosystem and have organised online gaming tournaments more regularly as compared to more emerging markets such as Vietnam and Cambodia.

This is largely due to greater industry maturity and available resources (both from the public and private sectors) in the former compared to the latter two. 

The lack of recognition for professional gaming as an occupation by government bodies also poses a challenge, particularly concerning international tournaments, as gamers may face issues procuring visas required to stay the course of a tournament or attend training camps.

This could then lead to low governance–  creating a grey area means that raises risks to the wider ecosystem, such as cheating, match-fixing, and illegal betting. 

Another challenge is the region itself. Being highly heterogeneous, key discrepancies such as the availability of payment models differ between the region’s various markets.

Not all countries have more sophisticated electronic payment methods; for instance, Singapore has options such as ApplePay and Samsung Pay, whereas Indonesia is slowly integrating a more secure and easily accessible ‘UniPin’ cashless online payment system.

Contributing to e-sports’ growth

While e-sports face many obstacles in Southeast Asia, many industry actors play an important part in influencing its growth. These include game developers, competition organizers, and even the players themselves.

For example, “Hawaii” Yee Xiao Hao began playing the online game Dota with just friends in Brunei, but later transformed his hobby into a career.

Since then, he has been driving the development of e-sports as a whole in his country for a new generation of gamers, such as his co-founding of the e-sports Association of Brunei.

Meanwhile, game developers, bring specific industry expertise that can add value to a game’s ecosystem, as well as directly organising competitions.

For instance, Singapore’s Riot Games organised the League of Legends World Championships, while Garena developed games such as Free Fire as they realized that mobile games are easier to access, leading to many games optimized for mobile play too, such as FIFA and Call of Duty. 

Sponsorships and investments are also key to e-sports’ future. This is evident in teams participating in competitions that need various resources, of which training is among the most important.

Relatedly, organisers also play a crucial part, as seen in the partnership by ONE Esports and Toyota Motors Asia Pacific for an online Gran Turismo tournament series. 

Still, the growth e-sports has been experiencing would not have been possible without an established governing body to oversee the sport, including responsibilities over regulations and promotion. To date, only some organizations can be classified as governing bodies for e-sports, such as the International Esports Federation (IeSF).

Also Read: The changing face of gamers and what it means for e-sports startups in SEA

Nevertheless, some Southeast Asian governments are taking more direct approaches to nurture the industry, namely by organising and collaborating talent management in e-sports, as seen via bodies like the  Singapore Games Association (SGGA) and the e-sports National Association of the Philippines (eSNAP).

With greater government support and accreditation, there can be seen a shift in attitudes towards e-sports which will be important for its future growth and mainstreaming.

Levelling up e-sports in Southeast Asia

Despite regional challenges, Southeast Asia’s e-sports industry has the prerequisites needed to even grow further, with participation in multi-sports tournaments being one of the major steps in gaining global recognition.

Recently, the Global eSports Federation (GEF) has even announced the first three editions of the global e-sports games, with the first to take place in Singapore in 2021.

While countries and their governments are taking measures to ensure the sport provides more mass appeal, its importance to the region is becoming more prominent, given that will present new sources of national revenue and growth, while stimulating auxiliary benefits such as helping youth development and employment.

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Singapore-based startup Merkle Science, which provides a predictive blockchain monitoring and investigative platform, has closed its US$5.75 million Series A funding round led by Darrow Holdings.

Other participating investors include Kraken Ventures, Bain-backed Uncorrelated Ventures, Fenbushi Capital, Token Bay Capital, Kenetic, and Lunex Ventures.

Merkle Science will use the capital for product development to serve enterprise segments, such as law enforcement agencies and financial institutions. It will also continue evolving its behaviour-based Rule Engine, expanding its token coverage to over 500,000 tokens, and customising solutions for decentralised finance (DeFi) and NFT platforms.

The funding announcement comes in the wake of Merkle Science’s launch in the US market.

Merkle Science co-founder and CEO Mriganka Pattnaik, said: “Our vision is to build the infrastructure necessary to ensure the safe and healthy growth of the crypto industry, starting with understanding the risks associated with cryptocurrency transactions.”

Also Read: (Exclusive) Merkle Science raises US$804K in seed funding round led by LuneX, SGInnovate

“Globally, we have seen strong demand, especially from financial institutions and law enforcement agencies, as crypto-related illicit activity and regulations have taken centre stage. Merkle Science’s intelligence platform is highly customisable and built to evolve with crypto criminal activity, simplifying crypto compliance for our users and ultimately allowing them to focus on their core competencies,” he explained.

Founded in 2018, Merkle Science helps crypto companies, financial institutions, and government entities detect, investigate, and prevent illegal activities involving cryptocurrencies.

Unlike other blockchain monitoring and investigative tools in the market, Merkle’s platform takes a behaviour-based approach to transaction risk management, resulting in more proactive and effective crime monitoring and investigations. This approach enables its intelligence platform to evolve with crypto-related criminal activity, simplifying crypto compliance and ultimately allowing businesses to focus on their core competencies.

Its Blockchain Monitoring tool goes beyond the blacklists, so compliance teams may detect illicit activity from their incoming and outgoing cryptocurrency transactions and meet their local KYC/AML compliance obligations.

The tool also helps regulators understand the risks across all types of crypto businesses, stay on top of emerging technologies, and keep pace with the industry’s increasingly complex illicit activities.

Dean Carlson, head of digital asset investments at Susquehanna and newly-appointed board member at Merkle Science, noted: “As the crypto industry continues to evolve, regulatory challenges are the biggest hurdles to mainstream adoption by financial institutions. The Merkle team has the right mix of regulatory and technology domain expertise to become the gold standard for cryptocurrency compliance and forensics.”

As a board member, Carlson will guide the executive team at a critical growth stage as crypto goes mainstream amid fast-evolving crypto regulations.

With clients across APAC, Europe, and North America, Merkle Science claims it has grown its revenue by over 900 per cent.

In May 2019, Merkle Science bagged seed funding led by Lunex and SGInnovate.

In the past six months, institutional interest for cryptocurrencies and compliance in the US has surged, which has prompted both the co-founders to move their base to New York as part of Merkle Science’s expansion plans.

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Image Credit: Merkle Science.

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Industrial Internet of Things (IIoT) refers to the use of smart sensors in machines that enhance industrial manufacturing processes. Also known as Industry 4.0 or the industrial internet, IIoT solutions utilize a connected network of intelligent devices that can monitor, collect, exchange and analyze data on a real-time basis to create value and transform business outcomes.

Using industrial IoT platforms, companies can analyse and act on data produced by connected devices to automate and improve how they design, manufacture, and service products. An industrial IoT platform enables us to leverage machine learning and advance artificial intelligence in real-time to bring in smarter manufacturing methods and enhance products.

Operational efficiency and cost optimization are the key drivers of industrial IoT, as it enables use cases such as asset performance management, predictive maintenance, remote service, connected logistics, and smart factories. IIoT can be applied to a range of industries with applications to save time and resources but increasingly also to innovate new service and revenue models.

Also read: Protégé Ventures as a gateway for VCs to invest in the future

IIoT’s primary focus on intelligent manufacturing is suited to heavy and high-tech industries like semiconductor, mining, aviation, oil and gas, defence, energy, but it also has a wide range of applications in sectors such as agriculture, logistics, finance. IIoT has great promise in the government sector to build smart cities and environmental solutions, as well as in healthcare and cross-industry applications such as smart buildings

The global industrial internet of things market size is expected to grow at 22.8 % to reach USD 1.11 trillion by 2028, according to a report by Grand View Research, Inc.

Sophic Automation: a regional powerhouse in Industrial IoT

For the past 14 years, Malaysia’s Sophic Automation has delivered software development, software and hardware integration solutions in the IIoT and Smart Manufacturing space. Employing a team of 100% local talent, their core competencies are in software, mechanical & electrical design. The company delivers industrial IoT solutions based around 4 main solution offerings to clients:

•       SMARTer worker: digitising traditional workflows
•       SMARTer machine automation: making machines smarter
•       SMARTer operations: digitised and remote operations
•       SMARTer asset: intelligent asset management

Koh, Dim Kuan (DK) and Lee Chee Hoo, founders of Sophic Automation Sdn Bhd (Sophic), started the business in 2007, bringing together decades of experience in leading digital transformation and Industry 4.0 solutions in smart factory and smart city projects.

CEO Dim Kuan says the team culture differentiates Sophic Automation from other software design houses because they continuously develop leaders and promote technopreneurship opportunities internally. “Sophic Automation provides turnkey in customized & hybrid solutions enabling seamless handshake between operational technology (OT) and information technology (IT) which differentiate us from competitors,” says DK. “With our focus on delivering software automation and system integration, we’ve managed to secure business to sustain our team and development,” says DK.

Koh Dim Kuan joined in 2011 as Director, taking charge of the company’s business development activities and operations management. The same year, Sophic secured its first SMARTer worker solution when we were engaged by a multinational semiconductor company to develop a machine monitoring system with mobile application for technicians and engineers to manage production equipment technical issues, and in the same year, Sophic also secured it’s first outsourced product design engineering contract from a multinational electronics company.

Powering Industrial Automation and Building Smart Cities in Malaysia

Sophic is among the top 5 IIoT solutions providers in Malaysia based on revenue and has ambitious expansion plans for the country. They have secured major deals that will play an important part in putting Malaysia on the path to Industry 4.0 transformation. Sophic MSC Sdn Bhd obtained Pioneer status from MSC in May 2012 with Liew Chee Kin joining in 2014 to lead the central region business.

Projects executed by Sophic in Malaysia have ranged from an automated visual inspection packaging equipment solution for a multinational food and beverage manufacturer, to a fully automated chemical compounding system for a glove manufacturer. In 2016, Sophic Automation obtained ISO 9001:2015 certification for smart manufacturing & automated digital solutions.

Also read: Learn the ropes around scaling your startup across borders

They were awarded a business growth fund from Malaysia Technology Development Corporation (MTDC) and secured funding from Multimedia Development Corporation Sdn Bhd (MDEC) under the Digital Malaysia Grow Embedded Systems Industry Project, to develop a Universal Data Bridge and Connectivity Solution. Sophic Automation, has also been awarded “Best Investee Company” by the Malaysia Venture Capital and Private Equity Association in both 2016 and 2018.

Continuing its growth in 2017, Sophic won a smart cities project to enable intelligent video analytics and intelligent operations centre for Penang Island City Council (MBPP). This project entailed the provision of a Command, Control, Collaborate and Cognitive centre for the government sector client. Sophic also set up an intelligent command centre for a semiconductor manufacturer to achieve its lights-off operation objective. Sophic continued to ramp up its smart cities business in 2020 with the design and development of a mobile application, as part of a smart city project, for local state authorities in Malaysia.

Sophic and MaGIC: Partnerships key to accelerating Industry 4.0 in Asia

“As part of our business expansion plan to capture potential demand in the semiconductor and electronics industry in Vietnam, Sophic Vietnam was set up in February 2014 to penetrate into the Vietnam market and provide better services to our customers in the country,” says DK.

“The major gaps we’ve observed from various industries are around getting real-time data from their manufacturing plant,” says DK regarding the challenges Sophic is solving for enterprises adopting IoT. “Data connectivity and IoT has been a key solution we’re providing to address these challenges/problems. As Industry 4.0 is driven by data, data will be key raw digital information to embark on a digital transformation journey,” he points out.

Speaking on the market prospects for IIoT, the Sophic CEO says that thanks to a “strong and active engagement from government policy and agencies who conduct the ground events, as well as funding support to industry, the market awareness in IIoT has been established quite well, but somehow, the adoption rate from industry is not moving fast as expected. Possibly due to an unclear vision of IIoT among small-medium enterprises (SMEs), as well as concern around high investment and operating costs.”

DK is very positive about the growth trajectory of the company: “We’ve been expanding at a compound annual growth rate (CAGR) of 30%+ since 5 years, and staff strength is now over 100 people. With our focus on software technology, the talent pipeline will be our core focus so we can expand our R&D activities. We want to bring to market a cost-effective solution that can serve SMEs. Growth through mergers and acquisitions is another option we’re considering down the road.”

Leveraging local and regional partnerships has been a key strategy, says DK: “We strongly believe in ecosystem partnership to leverage our partners’ strength to ensure win-win business for customer, partner and our team. We’ve been able to fully leverage each other’s strengths to conduct successful marketing collaboration, from leads to winning project bids.”

Also read: Leveraging digital-first CX for customer delight and business growth

“MaGIC has provided very good coaching to facilitate our business growth plan. The market promotion initiatives are very important as part of the product commercialization process,” says DK about the benefits of working with MaGIC. “It’s quite natural to expand regionally as part of the business growth process, which is mainly driven by market demand, and we aim to provide better customer services in the region and continuous product improvement. We’ll continue to focus on Vietnam in the near term and China & USA in the mid-term (3-5 years from now) because of strong semiconductor market growth,” says the CEO regarding their plans for regional expansion.

DK hopes their partnership with MaGIC will help create job opportunities at the local level and contribute to Malaysia’s GDP while developing Malaysia’s brand as a technology hub across the region. Sophic’s rapid acceptance in the market was the result of the MaGIC programme he explains: “It has helped us to expedite new product development and market validation by minimizing the customer’s concerns around risks. This paves the way for developing great customer relationships and we can secure a long-term relationship in the client’s overall digital transformation journey.”

“MaGIC’s programme has helped us fast track our new product’s acceptance in the market. MaGIC has worked with us to improve our new customer adoption rate and better predict prospects in the long term. Programmes such as Global Accelerator (GAP) and Global Market-Fit (GMP) are pivotal to our continued regional expansion,” concluded the Sophic CEO.

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This article is produced by the e27 team, sponsored by MaGIC

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Verihubs, an Indonesia-based ID and data verification startup, has raised US$2.8 million in seed funding led by Insignia Venture Partners, says a TechCrunch report. 

Central Capital Ventura (CCV), an investment arm of Bank Central Asia (BCA), and Singapore-based Amand Ventures also joined the round.

Angels who participated in this round include Shipper co-founder Budi Handoko, Payfazz co-founders Jefriyanto and Ricky Winata, BukuWarung founder Chinmay Chauhan, Modalku ex-CPO Pramodh Rai, and Singapore’s Gotrade co-founder Rohit Mulani.

Under the terms of the agreement, the funds from CCV will be used to expand Verihubs’s offerings for end-users who have an account with BCA.

The startup is also teaming up with Indonesia’s financial services platform Payfazz to help unbanked users deposit money with local agents for their online payments. BukuWarung, a bookkeeping app for SMEs, is also will help Verihubs access transaction data.

Verihubs will also use a portion of the capital to develop its product pipeline, including creating its own credit ratings based on transaction and account balance data. 

Also read: Empowering fintech and e-commerce through digital identity verification 

Launched in 2019 by Rick Firnando and Williem Williem, Verihubs assists Indonesian digital enterprises in authenticating their clients’ identities, verifying their histories, and gaining access to their financial data. 

While Verihubs primarily serves clients in the banking and fintech sectors, its solution can also be applied to e-commerce, rental marketplaces and hospitality.

The firm uses AI-based identity authentication technologies and APIs to reduce verification time from a few weeks to as little as five seconds, allowing businesses to continue authenticating returning consumers via SMS, WhatsApp, or flash calls, and do KYC checks.

End users are required to take a selfie and then submit a photo of a government-issued photo ID when they first log into a Verihubs-enabled app. The AI technology will compare the two pictures and cross-reference the ID with telecom credit ratings and Indonesian government databases, including criminal histories.

The company intends to expand into other Southeast Asia markets after achieving the product-market fit in Indonesia. 

According to a 2020 report released by Fenergo, financial institutions globally suffered from more than US$10.6 billion in penalties for non-compliance with Anti-Money Laundering (AML), Know your Customer (KYC), data privacy and MiFID regulations. In the Asia Pacific alone, fines for financial services firms totalled more than US$5.1 billion due to regulatory crackdowns on their illegitimate behaviours.

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Image Credit: Verihubs

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