Unlocking the Potential of Indonesia’s Digital Economy Through the Video Game Industry

Indonesia is currently experiencing rapid development in the video game industry.

In this era, we all know that the video game industry has become an unexpected new economic force. In the last few years, we have both witnessed how this extraordinary growth in the video game industry has developed, with this growth bringing new opportunities that did not exist in the past. 20 years ago. The video game industry indirectly opens up great opportunities for countries in the world to be actively involved in it. This also includes Indonesia, the country with the fourth largest population in the world with a population reaching 279 million people and this figure is believed to continue to grow (World Population Review, 2024). With active internet users of 221 million people (APJII, 2024), this makes Indonesia a country that needs to be considered and has great potential to gain economic benefits from the video game industry.

Indonesia is currently experiencing rapid development in the video game industry, which is not only a medium of entertainment for millions of players but can also become an economic force that drives the growth of digital aspects in this country. However, the potential of Indonesia’s digital economy is still not fully explored, such as the video game industry which can be a digital economic opportunity that can be researched further. In this opinion article, the author will explore how the video game industry can be a connecting variable in unlocking the potential of the digital economy in Indonesia. With innovation and creativity in the video game industry, there is an opportunity for Indonesia to show its potential to build a more inclusive and dynamic digital economy.

Growth Trends in the Video Game Industry in Indonesia

First of all, you need to know that the video game industry is not only entertainment but can also be a creative economic opportunity, not only in Indonesia but throughout the world. This industry has demonstrated its ability to open up opportunities for strong economic growth, and by 2024 video games are projected to generate global revenues of 282.30 billion USD and be able to compete with other media such as film and music (Statista, n.d.). Even some developed countries such as South Korea, Japan, and the United States have recognized the economic potential of this industry and have taken strategic steps to support the economic growth of this industry.

Indonesia’s local video game industry has developed significantly in the last few years, starting from just being an enthusiast and then being able to develop it themselves, history has recorded the development of local video games starting in the early 2000s funded by foreign investors (VOI, 2022). Then as time went by, many local developers began to take part in the video game industry. With the rapid growth of the video game industry in Indonesia, there was an increasingly large community of gamers and developers, for example, the creation of the Indonesian Game Association (AGI) which aims to support and accelerate the growth of the video industry in Indonesia.

Indonesia as the country with the fourth largest population in the world can naturally take advantage of the video game industry, with the large population in Indonesia being increasingly digitally connected it can create a large market share for the video game industry and this can also be in line with the idea of ​​a golden Indonesia 2045. This is possible can be implemented considering that Indonesia has a generation with great creative talent, many local video game developers have demonstrated their abilities by creating video games that are innovative, interesting, and acceptable to the international market, for example, many original Indonesian video games that are world famous such as DreadOut, Coffee Talk, Ghost Parade, and Coral Island. By utilizing the local talents of local video game developers, Indonesia can develop video games that can penetrate the global market.

Contribution to the Digital Economy

The rapid growth of the Indonesian video game industry accompanies the contribution of this industry to the digital economy, which currently still requires strategic efforts and steps to optimize the potential of the Indonesian digital economy through video games. It is known that the income of the video game industry in Indonesia has reached more than 52.7 billion USD, which beats the film and music industries, and Indonesia has the 17th largest video game industry market in the world (Wibowo, 2023). Currently, Indonesia has great potential in video game investment, for example, games that are currently on the rise in Indonesia, namely Mobile Legends: Bang-Bang (MLBB) which is growing very rapidly, from players, streamers, and tournaments from this video game can be an economic opportunity for the country. This can also be supported by Presidential Regulation 19/2024 which includes the obligation to have Indonesian legal entity status, market equality for the video game industry, as well as cooperation and investment (Adipratama, 2024). With the entry of the video game industry in Indonesia, there are new job opportunities in this sector, such as animators, media, community managers, YouTubers, game designers, programmers, game testers, consultants, audio engineers, and professional gamers who influence people’s income in Indonesia.

There are several important things to highlight in the development of the digital economy through this industry, such as strengthening the local ecosystem of the video game industry which is deemed necessary to do from the formation of a more diverse active community, organizing interesting video game events and festivals, and collaboration between stakeholders ( developers, publishers, and supporting institutions). If this can be achieved, Indonesia can create an environment that supports the long-term growth of the video game industry. Don’t forget, to create a supportive environment for video game developers, such as providing accessibility to adequate information and communication technology infrastructure, financial and educational support for local video game developers, as well as policies that are conducive to investment in this industry. These factors are important because they can understand in depth their role and contribution to the growth of this industry.

However, it is important to remember that developing the video game industry in Indonesia is not only about creating economic profits, but also about building strong creative cultural values, introducing Indonesia to the world, and inspiring future generations. By promoting the cultural values ​​contained in Indonesia, it is hoped that it will make a positive contribution to global society and also to Indonesian society itself. Overall, the video game industry has extraordinary potential in developing Indonesia’s digital economy. The existence of a local video game industry and supporting strategic efforts will create a bright future for the video game industry and significant economic benefits for Indonesia.

Challenges Faced

Several challenges concern the author, namely uneven digital infrastructure, lack of access to capital for video game developers, and delays in the emergence of regulations that support the growth of the video game industry. Based on data from (UNDP, 2017), it is found that the existing technological infrastructure in Indonesia is still not completely perfect because it is still in the development process and the challenge is that technology developers are limited, as can be seen from the network coverage and internet speed which is still low which can affect the development process. video game industry in Indonesia. Moreover, the digital welfare figures in Indonesia are still quite low because the level of addiction to devices is still quite high, this also has a fairly close correlation with digital literacy skills in Indonesia which are still limited. However, it is known that the Indonesian government is also working to improve education and prepare human resources for the next era.

Then the lack of access to capital for local developers causes many detrimental impacts for Indonesia, one of which is the most striking and most felt by the public is foreign games which still dominate the video game industry in Indonesia. It is known that there are more than 99% of foreign games in Indonesia with only local contributions. 1%. This is a threat to Indonesia because it could damage the local video game market. With the number of foreign video games being very different from local video games, President Joko Widodo has formed a team consisting of many ministers to accelerate the development of the national video game industry which aims to optimize the use of the domestic industrial economy, so the government must encourage synergy between parties in development. industry (Bestari, 2024). 

And finally, there is a delay in the emergence of regulations that support the video game industry. Since the emergence of the video game industry in Indonesia in the early 2000s, it has taken quite a long time until only this year have some regulations support this industry. The newly published Presidential Regulation 19/2024 is considered too late because it only appeared this year, and it is also necessary to consider that the programs contained in Presidential Regulation 19/2024 need more time until they can be implemented properly in Indonesia, disappointed but better late than never at all.

Conclusions and recommendations

Development of the video game industry in Indonesia requires increasing human resource capacity through formal education and practical training in the fields of technology and game design, as well as support for non-formal programs related to this industry. In addition, the government needs to provide incentives and active support to game companies through fiscal incentives, industry promotion at national and international levels, and investment in game research and development. Inclusion is also important to ensure fair representation and participation of all elements of society in the industry. Continuing to encourage innovation with new technologies such as virtual reality and artificial intelligence will maintain Indonesia’s competitiveness in the global market. With a holistic strategy and ongoing support, Indonesia has great potential to lead the video game industry globally, bringing significant economic benefits to the country and its people.

Fathanaditya Rianto
Fathanaditya Rianto
Fathanaditya Rianto, master's student in International Relations at Gadjah Mada University, specializing in Digital Transformation and Competitiveness. My research delves into the influence of digital advancements on global relations, aiming to contribute innovative solutions to the evolving international scenario.