Domestic firms are put under tight control

According to Director of VTC Intecom Nguyen Thanh Hung, the number of Vietnamese users downloading games provided by domestic firms from Google App Store accounts for 26 percent of total games, while foreign games account for 74 percent.

While domestic firms are put under tight control of state management agencies, foreign firms are not. 

Foreign games are provided through Google or Apple app stores. Hung urged management agencies to apply measures to force foreign firms to pay tax. As they earn money from the Vietnamese market, they have to contribute tax.

CEO of CMN Online Pham Quoc Thang said  management agencies’ need to carefully consider the problems in the gap between local and foreign firms. Games distributors also pointed out problems existing in the payment method for games.

Consumers pay via mobile network operators’ cards, SMS, international payment cards, and intermediary payment portals such as e-wallets, or pay directly to games distributors via their own issued cards.

However, the revenue from payments via mobile network operators’ cards and SMS is the biggest, accounting for 65 percent of total revenue. Vietnam is contrary to global trends where revenue via this mode is very low.

Thang said it is necessary to discourage payment through mobile network operators’ scratch cards because of technical problems as this can allow phishing. 

He also complained about profit sharing between games distributors and telcos.

According to Thang, telcos pocket 18-20 percent of revenue, while games distributors, after paying games royalty, marketing expenses, salaries and operation costs, can collect only 3-5 percent. 

Games development and distribution is an industry with high potential. However, games firms said they struggle to survive, while many others have died. 

To compete and obtain the right for games distribution, domestic firms have to raise purchase prices, thus eating into profits.

Thang said in 2011, firms had to pay $20,000-30,000 for one foreign game, mostly from China. In many cases, firms have to pay one million dollars to buy one game for domestic distribution.

“This is because domestic firms compete with each other and don’t support each other,” he commented.

Vietnam has been the biggest game market in South East Asia since 2015. The total revenue of the game industry in the year reached $237 million, ranking sixth in Asia, after China, Japan, South Korea and Taiwan. The Vietnamese game industry is expected to earn annual revenue of US$1 billion within 10 years, according to experts.

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