Earlier this week, Singapore-based games publisher Sea Limited released its earnings report for Q1 2020, and the numbers show an enormous 58% rise in revenue when compared to Q1 2019. In total, Sea brought in $913.9 million in revenue, resulting in $206.8 million in total gross profit, a number that is 424% higher than the $39.5 million from the same period last year.
“Sea is the largest games publisher based in Southeast Asia as per our research, and Garena, its digital entertainment segment, continues to record strong growth,” Daniel Ahmad, senior analyst at Niko Partners, told GameDaily. “Garena has previously relied on publishing licensed titles such as League of Legends from Riot Games and Arena of Valor from Tencent to grow in the past, but the success of its self-developed title, Free Fire, has been the main driver recently.”
According to the report, Free Fire surpassed 80 million peak daily active users over the course of the quarter. The mobile battle royale game contributed a great deal to Sea’s overall digital entertainment sector, which generated $512.4 million in adjusted revenue during the quarter. This number represents a 30% increase over the same quarter last year.
“Free Fire is now one of the top mobile battle royale games globally, and the highest grossing mobile battle royale game in Latin America and Southeast Asia,” Ahmad said. “The game has performed well in developing markets due to its low spec requirements and unique skill-based gameplay. Esports has also been a way to drive further engagement among the expanding user base. The game is quickly catching up to PUBG Mobile in terms of monthly downloads and revenue.”
In an earnings call with investors, Forrest Li, CEO of Sea, touted Free Fire’s performance throughout the period.
“The game recently hit a new record for peak daily active users of over 80 million,” Li said. “In April, Free Fire achieved another record high in monthly paying users, which more than doubled year-on-year. In India our monthly paying users as a percentage of monthly active users already exceeded 10% in April.”
As is the case with the rest of the games industry, the ongoing coronavirus pandemic appears to be a primary driver of Sea’s strong growth. Li explained to investors that the company’s users are turning to Garena’s suite of games to socialize and consume entertainment amid quarantine efforts.
This has largely been the case for video games as a whole. Last month, NPD Group reported that the industry saw 35% growth from January through March, putting an end to several months of steady decline.
Ahmad notes that while this trend is likely to continue in the short term, the second half of 2020 may look rather different in terms of games industry revenue.
“COVID-19 has had a notable impact on the games industry as a whole,” Ahmad said. “Gaming has become a key form of entertainment for people under lockdown as it is safe, social, and low cost. We caution that whilst multiple game publishers, such as Garena, are reporting strong earnings in Q1 and 2, we expect growth to normalise in the second half of the year.”
Right now, though, the games industry is experiencing a boom, and heavy hitters like Sea and Free Fire are reaping the rewards. It will be interesting to track this trend as 2020 continues and the market is forced to face down a recession brought about by the pandemic.
Sam, the Editor-in-Chief of GameDaily.biz, is a former freelance game reporter. He's been seen at IGN, PCGamesN, PCGamer, Unwinnable, and many more. When not writing about games, he is most likely taking care of his two dogs or pretending to know a lot about artisan coffee. Get in touch with Sam by emailing him at sdesatoff@rektglobal.com or follow him on Twitter.
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