Asian Gaming Industry On Track To More Than Double Over The Next 5 Years

Online, March 28, 2013 (Newswire.com) - Overtaking the United States as the world's largest gaming market, Asia represents massive growth potential for the gaming industry. Sebastian Gray, Trading Floor Manager at ChanPark International believes that the sector presents massive opportunity over the next 5-10 years. "In 2010 the Asian region represented about 29% of the global gaming industry, and by 2015 the region will account for nearly 50% of the world's gaming revenues. We expect the region to experience 18-20% compound annual growth between 2013 and 2018 creating Asian dominance in the international gaming market place."

Throughout Asia gaming has long been a popular pastime. Over the last 15 years the median income has risen significantly across the region and the number of Asian millionaires and billionaires has grown exponentially. This prevalence of extreme new wealth has helped turn Asia into the fastest growing gaming region in the world.

Macao has long been the gaming capital of the east, and after surpassing Las Vegas and becoming the largest gaming center in the world, the Asian region as a whole is following suit and will overtake the United States in 2013 as the largest gaming market in the world.

Gaming revenues in Asia Pacific surged by an astounding 49.7% in 2010 boosted by a 57.8% increase in Macau as well as the emergence of a massive new industry in Singapore. Moving forward through 2018, Macau ad Singapore will continue to lead the way accounting for the majority of Asian market growth. Current projects underway in Macau will increase the number of hotel rooms by 82% by 2016, and efforts to increase tourism and market reach will likely yield increased profitability.

Currently gaming revenue in Macau is dominated by the VIP segment. This segment developed rapidly due to the large number of new millionaires in the region, but with expansion and a growing middle class it is highly likely that a shift will occur towards the mass market segment.

There are a few factors that could help drive this shift. First, the Chinese government is expanding its high speed rail network which will make Macao more accessible. Currently Chinese market penetration is very low due to inability to travel efficiently. On average more than 60% of the visitors to Macao come from mainland China, however more than 50% of those visitors are from Guangdong Provence which is the closest province to Macau. As infrastructural enhancements make Macau closer to the other 21 provinces Macau will experience an influx of mass market clientele. Second, a bridge is under construction connecting Hong Kong to Macau that is scheduled for completion by 2016. This will make the destination easily accessible to the more than 7 million residents of Hong Kong many of who can afford casual gaming. Finally the entire Asian region is experiencing rapid middle and upper income growth, and as more people can afford entertainment the gaming centers will begin to cater more towards this mass market than the VIP segment that has largely fueled growth to this point.

Currently 70% of gaming revenue in Macau is from the VIP sector with only 25% from the mass market segment. According to Gray, this breakdown is about to change: "Our analysis has shown signs of a shift towards mass market growth, and we project that total Macau revenues from the mass market segment will reach 50% by 2018." According to Gray this is good news for profitability. "While the VIP segment operates with margins near 15%, the mass market averages 40% margins. Further, the mass market statement is a much less volatile segment."

Thought Macau is the largest gaming center in the Asian Pacific region, growth in Singapore, Australia, South Korea, Malaysia, the Philippines and Vietnam are also expected to bolster gaming companies over the next decade. Beyond these existing centers, Gray also believes that new markets will emerge in countries including Japan as governments accept the benefits of gaming to boost tourism and tax revenue.

Despite its fully grown appearance as the world's largest gaming market, it seems as though the industry is still in its adolescence with a lot of growing left to do.