That is US$40 billion more than previous estimates, the report said
Southeast Asia’s internet economy is set to skyrocket to US$240 billion by 2025 — about triple the size (US$72 billion) this year — according to the e-Conomy SEA 2018 report jointly commissioned by Google and Temasek.
The report, which takes into account four key internet sectors, online travel, online media, ride-hailing, and e-commerce, states that the figure is US$40 billion more than their previous forecast in their 2017 report.
This massive growth can be attributed to the region’s mobile-first economy. More users are coming online than before, thanks to the proliferation of smartphones.
The report’s findings say that 90 per cent of Southeast Asian users connect to the internet via their smartphones — and that accounts for 350 million users across Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
Southeast Asian users are also generally more engaged with their smartphones than their Western counterparts.
According to recent research by Hootsuite, internet users in Thailand spend nearly 5 hours per day using mobile internet, while those in Indonesia, the Philippines and Malaysia spend an average of 4 hours. These figures are at least double the amount spent by users residing in the UK and the US.
So what are they spending on?
E-commerce remains one of the fastest and largest growing internet sector in Southeast Asia. E-commerce platforms have contributed to over US$23 billion to the internet economy this year, and is set to collect US$100 billion in GMV by 2025.
A huge part of it can be attributed to three major e-commerce players, namely Lazada, Shopee and Indonesia’s Tokopedia. Collectively, these three platforms have grown over seven times in the past three years.
According to the report, Indonesians are the most voracious e-commerce users, contributing to over US$12 billion in e-commerce spending — which is US$1 for every US$2 spent on e-commerce in the region. Indonesians are projected to spend US$53 billion on e-commerce goods by 2025.
Thai and Vietnamese users are also increasingly buying goods online. The two countries have each spent US$3 billion on e-commerce products this year alone, and are projected to hit US$13 billion and US$15 billion by 2025, respectively.
Southeast Asian consumers are also increasingly becoming drawn to online media subscription services such as Spotify and Netflix, although a majority of them still prefer free or ad-supported variations. The report forecasts that “subscription music & video on demand, worth approximately $400 million in 2018, may rise to US$1.5 billion by 2025.”
In general, the biggest driver of online media revenue will still come from online advertising, which accounted for over US$7 billion in media sales this year, and is projected to hit US$25 billion by 2025.
Coming in second place is online gaming, hitting about US$3 billion in sales this year, and is expected to reach US$10 billion by 2025.
“With 164 million of Southeast Asians playing games online in 2018, up from 130 million in 2015, we estimate that the online gaming segment has continued to grow … the most popular games, released by global gaming studios or developed by leading Southeast Asian companies like Garena and VNG, command increasing monetization through app stores, in-app purchases, and in-app advertising,” said the report.
More Southeast Asians are also turning to online platforms to book their holidays. Online travel is expected to hit $30 billion in gross bookings value (GBV) in 2018, and is expected to hit US$78 billion by 2025, with online hotel and flight bookings contributing to the bulk of the revenue.
“Significant improvements in user experiences on mobile websites and apps, coupled with widespread smartphone adoption, have made online travel bookings accessible to more and more Southeast Asians. As these trends continue to unfold, we project that up to 57 per cent of all travel bookings will be completed online by 2025,” said the report.
As ride-hailing apps such as Grab and Go-Jek continue to gain traction and expand their offerings to include ancillary services such as food delivery, they can expect to exponentially onboard more consumers in the coming years.
Currently, ride-hailing apps have brought in US$7.7 billion in GMV this year, and is set to hit US$28 billion by 2025 (with food delivery accounting for US$8 billion). Still, the report states that the ride-hailing sector has a lot more room for growth.
“An estimated 35 million Southeast Asians [are] actively using ride-hailing services and booking 8 million rides on an average day — up more than 4X from 2015. Despite this impressive growth, ride-hailing services continue to have huge headroom for further growth, by considering that more than 80 per cent of Southeast Asian internet users are not yet actively using them,” said the report.
The post Google Temasek Report: Southeast Asia’s internet economy to hit US$240B by 2025 appeared first on e27.
Source: E27Follow us on Social Media
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