Gaming in the Middle East

(CONSOLES – SOFTWARE – ACCESSORIES – ONLINE GAMING)

KAZI NAJIB ASHRAF IS A TELECOMS PROFESSIONAL AND A BLOGGER WHO IS PASSIONATE ABOUT TALKING TO ACHIEVERS AND THEN RELATING THEIR SUCCESS STORIES.
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I would relate a personal story for this article to build the tempo but rst, let me tell you a bit about the picture above, this particular alley in Dubai controls 60-70% of the gaming business across the Middle East. I am serious folks, this is the heart of the wholesale gaming market in the bustling metropolis of Dubai and the funny thing is that not too many people know this. This street is adjacent to one of the main hubs of mo- bile phone business called the Gargash Center and during my entire stay of 23 years in the city, it was last November that I had set foot in this locality, so much for being a native.

So here’s my short story and the introduction to the wonderful world of gaming. I lost my job heading an interesting regional venture and got employed in another group involved in the mobile phone trade. The owner of the company decided to send me off to another subsidiary as it was going through a crisis of sorts and asked me to get it fixed. Well, as luck would have it, this was among the leading gaming companies in the Middle East region going through a serious financial crisis. I would leave the brief stint and the crisis story for another time but what I learned here had been an eye opener and start- ed a love affair with a business that earlier I had no idea of.

An advanced gratitude to www.newzoo.com for the great information. Asia Paci c is among the top growth areas for the gaming business and the Middle East takes lead as the growth prospects in this region are the most promising across the world. A young generation with a high disposable income and an otherwise restrictive environment is a recipe for the success of this great vertical.

The Middle East especially the GCC is a US$ 2.6 Billion gaming market as of 2017 and is poised to grow to 4.4 Billion US$ by the year 2020 (PwC). This pace of growth is much faster than the global average. The irony is that this business is still controlled by the unorganized channel and the digital transformation is still in its infancy. People like to visit the physical stores and purchase the games (software) in CDs. Please see the attached chart for details.

The revenue from games and game content is on par with the movie Industry now and women tend to play more than men. As mentioned earlier consumers in the region are looking for a buying experience and the Independent Retail (IR) shops, the small side shops and the ones in the localities tend to do more business as compared to the Organized Retailers (OR) in the Malls etc. Console Manufacturers and Software (Gaming) publishers demonstrate the products in the OR channel and the IR channels only receive some BTL Material at best.

MARKET MECHANICS: The UAE market in particular controlled by 3 major distributors servicing OR and selling to 2 major whole sellers.

The whole sellers are the ones controlling the70%of the regional trade by selling products in the IR channels across the region. IR Channel is quite intricate and there are more than 2-3000 shops that can be considered credible spread across the region. The master whole seller selects key customers and these channels sell the products down the channel in their markets. Credit plays a significant role in this business and the control of your funds define the strength of your business management. Credit periods are from 60-90 days depending on the markets and limits are de ned by the financial health of individual customers. The IR’s range from selling thousands of units per month to selling in 10’s so the complexity. Another challenge for publishers is the clearance of games with ‘Violence / Nudity” from the authorities. This is where the major element of the gray market comes into play as the consumers demand these games and these are sold “Under the Table”. The downside as in any gray business is the confiscation of these goods and heavy penalties charged to the traders dealing with these products.

Sony PlayStation is a regional favorite and commands around 65% market share whereas the share of X Box is around 35%. Nintendo Switch had done well initially but has been in a shadow of the big players for now. Other popular products are the SteamBox and Controller (http:/store.steam-powered.com/) and (www.twitch.tv).

There’s a massive gray market for both consoles and games but very few traders have ventured into this business. There are a few consumer electronics and mobile phone traders importing the products sporadically but over all the trend has been slow. As a virgin market, the growth prospects for this vertical are amazing and a little hard work would go a long way. Popular names involved in this business are Red Distribution, Shooting Stars, Geekay Games, Pluto Games etc.