In this analysis article of the MENA Gaming Industry, RedPad Games’ CEO and founder, Vildan Fazylov, closely examines the key factors shaping the industry’s future in the region.
Let’s say right away: the MENA region is unique in several ways. If the audience of players here is still relatively small and overwhelmingly not very solvent, then the segment of potential investors in game development and their evolution, as well as the conditions for the creation, relocation or existence of game studios are exactly the two “chips” that distinguish this region from a number of others. And thanks to them, there is every chance for the growth and development of the local gaming community. However, everything is in order.
The countries included in MENA are very different, sometimes radically different in many ways, including the standard of living. But one of the common indicators here is the unwillingness or inability of the majority of players to purchase paid game content. Of course, there are very wealthy game lovers who are willing to invest significant amounts in them, but the gaming market is usually focused on the mass consumer. Nevertheless, the gaming audience here is gradually growing and a gaming culture appears and gradually develops.
However, much more interesting is the fact that Middle Eastern investors have recently become increasingly interested in investing in the field of high technology. What is the reason for this? As we know, a surge in living standards in a number of Middle Eastern countries has occurred since the 60s of the XX century due to the growth of oil production. Since then, the traditional direction of investment here is investments in the development of oil and gas fields, the purchase of other tangible assets. Then the first generations of Middle Eastern wealthy people began to send their children to study in the West, where they realized the prospects of high-tech segments, including the gaming industry. Any competent investor seeks to diversify their investments, and MENA investors are very financially literate people, so they quickly appreciated the possibilities of investing in IT in general and games in particular.
Therefore, now investors in the Middle East are willing to invest in game dev. Another distinctive feature of this market is “quick deals” and significant amounts that can be obtained. If a funding transaction on the European market can last for 6-8 months, and for an amount of $ 10 million, the investor will simply “shake the soul” out of the recipient of the investment, then in MENA even amounts of $ 50 million are not considered something out of the ordinary, and the deadline for the transaction can reach up to a couple of weeks, although it usually lasts for several months, but still much faster than in the West.
That is why, for example, many Asian studios began to look for investments in the MENA region.
Vildan notes that despite the fact that the gaming market in MENA is still in the process of formation and there are still not enough well-known, large-scale players in game development, the trend is already visible that the market has great prospects and is growing. It is upwardly becoming both a place of investment and development, and a place for the relocation of specialists, the development of game studios, and therefore the interpenetration of cultures. It is also worth noting that community studios, services, infrastructure products have already gathered in the region. There is a more successful adaptation of global products to the local market. This affects the growth of the gaming audience, and the scale of the use of the product by players, and as a result, investments in gaming in the region are growing rapidly.
Supporting government initiatives aimed at stimulating the growth of technology and startups also welcome gaming innovations in the region. With the expansion of infrastructure and geo-economic influence, the MENA gaming industry seems ready for significant growth – entertainment and media spending alone is projected to almost double by 2026. Thus, favorable conditions for receiving investments and redomiciling the gaming business make the Middle East a region with high potential for game studios that can benefit from developing gaming segments.
“Communicating with local partners and investors in the region, receiving support and investments, we became interested in the market in a broader sense. We plan to work in this direction not only in the way of fundraising, but also as one of the priority regions of operation,” says the CEO of the international game development studio RedPad Games.
Features of the local target audience
From the point of view of the gaming audience, the MENA market is still relatively young and in its current form it is of little interest to the main participants – large developers. Nevertheless, as we said above, there is a growth potential in it, which is increasingly being traced. In addition, the growth in the number of studios and investments in the gaming industry will almost inevitably lead to an increase in the audience of local players and to their level of maturity.
Today, smartphones and tablets account for 51% of all industry revenues in the region. And the cloud gaming market is projected to grow by an average of 13.5% between 2022 and 2027. Major players from this field, such as Microsoft Xbox Cloud Gaming and Amazon Luna, are eyeing expansion into the region. Esports is still moderately developed, but there is growth potential. In 2021, the esports audience in the region reached 19.6 million people and continues to grow by 10% annually. We think that hosting tournaments like Gamers Galaxy with large prize funds attracts millions of viewers.
It is also impossible not to acknowledge the interest of Arab gamers in technologies such as VR and AR. We can even say that interest in VR and AR is a feature of the local gaming audience, because in the West this trend has already begun to decline. According to global statistics, by 2025 the region will occupy 4% of the global VR market, and as for metaverses, a number of companies from the UAE and Saudi Arabia has already announced their metaverses. For example, Cityneon Holdings, together with Saudi Telecom Company, is developing a Habibi platform aimed at young people in the region.
All these trends will be decisive for the MENA game development market in the medium term, so those companies that want to work here should take them into account.