Fragmented African gaming industry needs to get itself together, but is still “next big thing”

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The African gaming industry is still extremely fragmented in that it is made up of a handful of small studios, but is nonetheless “the next big thing” given, among other things, the relative youth of the continent’s population.

Data released last year from Newzoo, the leading provider of games market data and insights, and gaming startup Carry1st, revealed that Sub-Saharan Africa is one of the fastest-growing mobile gaming regions in the world. 

The report showed that the total gamer numbers in Sub-Saharan Africa grew from 77 to 186 million people between 2015 and 2021. This rapid growth has been accelerated by increasing digitisation, as well as the COVID-19 pandemic, and is largely driven by mobile gaming – 95 per cent of gamers across the region play on a smartphone or tablet, as opposed to consoles and computers. 

The number of Sub-Saharan gamers has more than doubled in the last five years and the region is projected to be the fastest-growing globally for both mobile gamers and people who pay for games. 

“Despite the significant growth, African gaming is still very much in its infancy,” says Varun Nagendra, VP of product, games at South African mobile gaming company Carry1st. 

“There’s a lot of conviction that Africa is the next major digital growth market. There’s a huge mobile-first population coming online and consuming gaming content at increasing rates. With the rise of mobile phone based gaming, plus cheaper and faster internet, it is now possible for many people in Africa to access gaming for the first time. In Africa, mobile game players have increased 2.5x and revenues have increased 4.2x since 2015 with lots of room to still grow.” 

But who is taking advantage of this? Africa has its gaming success stories – ChopUpSea MonsterGamsoleCarry1st, this isn’t a short list – but the industry is in a fragmented state, in the sense that there are a handful of small studios but no real dominant players.

Glen Gillis is CEO of South African game development startup Sea Monster, probably one of the largest of those studios. He says the question for the African gaming industry is how to bring together the capabilities that already exist. 

“There’s a lot of emphasis on entry level jobs and hackathons and game jams here, but that actually shouldn’t only be where our efforts are focused, because those things deal with supply side challenges,” he said. “Really what we have here are demand side issues – how do we scale demand, how do we scale businesses, studios and the gaming industry?” 

Linked to this are the lack of unified payment systems, and meaning game creators are not yet able to monetise properly, and the lack of sustainable business models beyond advertising. 

“There is increasing recognition that in the serious gaming space, what we need is to do less, better, and at scale, rather than continually doing proof of concepts because what are we proving? That games work? Well we know that’s true,” Gillis said. 

“The good news is that nowhere in the world has that particular issue been solved. Africa has huge needs and huge opportunities for games to serve a crucial role but we are no further behind relative to the rest of the world in terms of how we are going to actually reap the rewards of that potential.”

In spite of all of this, Gillis is clear that African gaming is “the next big thing”. 

“If you consider that Africa is the youngest continent, Africa is absolutely going to be the future of most of the growth in gaming over the next couple of decades. It’s going to be a rich store of stories and game concepts. There’s no question that Africa is going to be a big market and source of creativity,” he said.

In order to speak further about it, it is important to separate out the definitions of what we mean by African games. Gillis said he likes to think about it in terms of three buckets – African-concept, African-made and African-owned.

“In terms of African concepts, I think there is a lot of demand for authentic stories and creatives and the world is looking for more and more of that. Africa is largely untapped and I think audiences everywhere want to see things that are different and for the local audience, people want to see themselves in the work that they consume. Authenticity also resonates everywhere so one can only hope that we get to tell our own stories and have them be appreciated by the world,” he said.

“The next thing is African-made, and that’s got to do with capacity. It would, for example, be amazing if one of the big global players opened a studio here, but that’s one part of a strategy that could potentially collapse some of the smaller companies which would get merged into one big company. Let’s learn from that and take from it that, yes, we do need the big guys here, but we also do need the medium and the small companies as well.”

The single biggest challenge for African games, Gillis said, is African ownership. 

“Unless we are getting royalties and license fees and annuity income flowing back into the continent then we are essentially always going to be a work-for-hire destination in which case it will be an extractive situation wherein our stories and talent are simply used by others, which would be a great pity,” he said.

So what interesting avenues are African startups taking with gaming, and gamification?

“All of the avenues – we are hustlers,” Gillis said. “There is a lot going on in the space and we are looking at ways to cluster companies in order to find bigger opportunities which would allow everyone to get to scale. I think it’s also important to separate out the challenges that any startup has versus the challenges of the creative industries versus the challenges within the gaming sector because each of these overlap but they are all slightly different.” 

The conversation cannot just be about startups, he said, but also about scale-ups, finding success, and celebrating commercial as well as creative success. 

“We can’t keep participating in game jams and engaging on a low level – what we do is design games professionally so game jams are not what we need and they’re not what the industry needs if it doesn’t lead to an opportunity for people to actually build viable careers,” said Gillis. 

“I always think it’s better to start in the middle rather than at the bottom. Dont assume that there’s nothing in Africa – there is an amazing amount of stuff happening here so we need to amplify that which is already working.”

Investors are massively interested in that stuff. In January, for example, Carry1st raised a US$20 million Series A extension round from investors including Andreessen Horowitz, Avenir and Google to help it scale across Africa. Sea Monster has also raised, albeit to a lesser extent.

“Africa is the last frontier of real opportunity in the gaming space. This is where the growth is and investors are interested because there is a growing market here. They are interested because they have realised that we can make and compete with the very best in the world,” said Gillis. 

“Investors are also realising that you can leverage incredible returns here and if games have a social angle to what they are doing then you can make money whilst driving change which appeals to the whole category of investors that are interested in making a better world.”

Yet this may only be the case for the very elite African gaming startups. Abdulrahman Aboshamah runs Egyptian startup Gamesbandy, and says though Africa-based investors have interest in the space because of its global appeal, only very few have the knowledge and the understanding to “actually get the deal done”.

“Personally, I’ve wasted months with investors who showed interest – some of them approached us first, but the outcome is the same, no experience in gaming so they consider it a high risk,” he said. “In my opinion, and my experience, serious gaming investors are usually from outside Africa.”

Is anything holding the space back? Aboshamah says talent is key.

“It’s like chicken-and-egg, and what comes first. A very low number of companies in this sector, and almost no talent and nothing to encourage them to learn games development, or design,” he said.

Zubair Abubakar of Nigerian gaming startup ChopUp says publishing and monetisation are still the major challenges faced by game developers, but also cites talent as an issue. 

“Another challenge is the dearth of talented game developers and the skills and knowledge required to run a gaming company, albeit companies like Maliyo and Google are working to improve this with their game dev bootcamps,” he said.

Returning to the beginning of the conversation – fragmentation is what is holding the space back. 

“We need to get together ourselves and collaborate to scale what we are already doing and we also need to find partners. In brief, what we really need is partnerships, mergers and scaling,” said Gillis.

Abubakar says the sector is on the right track, however. 

“African gaming is on steady gradual growth with new gaming companies, investors, game publishers and dedicated incubation programmes coming into the space. The convergence is getting closer,” he said.

“The demand for African games is equally growing both locally and internationally, as we are still getting demands from both local and international game publishing partners.”

Source: Disrupt-Africa