How the Changing Geopolitical Scenario Affects Investment Opportunities
RIYADH: Back in April, strategy and consulting firm Accenture estimated the global gaming industry to be over $300 billion, far more than the music and movies market combined. The industry added 500 million new players between 2019 and 2021. And that was just the beginning.
Driven by the rise of mobile games and the urge for social interaction during the pandemic, the industry has swallowed dozens of startups and multinational corporations into its fold. Besides demand-side traction, the powerful technological mix of blockchain and non-fungible tokens, or NFTs, has also enabled game developers to take advantage of these tools and create virtual worlds.
In fact, some developers smile all the way to the bank by effortlessly tapping into unexplored cultural niches. One of them is the Jordan-based mobile game publisher, Tamatem, which smartly publishes games aimed at Arab users and builds brilliant narratives around Arab culture.
“Arabic is the fourth most spoken language in the world, yet only 1% of global content is in Arabic. This is a huge void to fill, especially in the gaming industry in the Middle East and Africa North,” Hussam Hammo, founder and CEO of Tamatem, told Arab News.
Flavored with local flavors
Among his early games was Awad the Delivery King, a mobile game featuring a food delivery man racing through the pothole-riddled streets of Amman. Despite being a Jordan-based cartoon character, the game was the No. 1 app in Saudi Arabian and Jordanian app stores, the US online publishing platform reported. Medium.
His current chartbusters include VIP Baloot and Clash of Empires.
Launched in 2013, the game developer collaborates with international gamers and converts their content into Arabic. For example, another sought-after game, Escape the Past, was a partnership with French studio 3DDuo, where Tamatem customized content to suit local tastes and culture, the Medium reported.
Such has been the buzz around Tamatem that, according to a company press release last December, it raised $11 million in Series B funding led by PUBG developer Krafton. But reaching this crucial milestone has not been easy. Established in 2009, Hammo’s first gaming business, Wizard, closed because the area’s industry was in its infancy.
“This has resulted in a negative perception within the investment community. It also put a huge question mark on my leadership and in the industry,” Hammo recalled. He barely had a bank balance of $200 when he planned to launch Tamatem. In no time, he found 500 Startups, a Silicon Valley-based investor who injected $50,000 in exchange for a 5% share, valuing the gaming company at $1 million in 2013. The rest , as they say, is history.
Last February, Tamatem tapped Saudi poet and social media influencer Ziyad bin Nahit to launch the Baloot League, an extension of its popular VIP app-based card game Baloot that led to over 700 people participating in the party.
Exploit the game plan
The thirst to compete and excel is palpable throughout the region. According to the Saudi Social Development Bank, the Kingdom’s video game market is worth $1 billion and is expected to reach $2.5 billion by 2030. Boston Consulting Group’s outlook is more optimistic. It predicts that Saudi Arabia’s revenue from games will reach $6.7 billion by 2030.
Interestingly, much of this growth is being driven side-by-side by a public-private partnership. In January this year, Amazon Saudi Arabia and the United Arab Emirates announced a collaboration with MENATech, a GGTech Entertainment group company, to launch Amazon University Esports, the first educational esports league for each country. In the same month, Riyadh-based Savvy Gaming Group, backed by the Saudi Public Investment Fund, or PIF, bought ESL, formerly known as Electronic Sports League, for $1 billion.
In November 2020, the Mohammed bin Salman Foundation, or Misk, announced a strategic investment of approximately SR813 million ($217 million) to acquire a 33.3% stake in Japanese gaming company SNK Corporation. Two months ago, the foundation increased its share to 96%, Verge, a tech news platform, reported.
The industry is already buzzing with activity. Last February, the PIF revealed stakes of over 5% in two Japanese-listed gaming companies, namely Capcom Co. and Nexon Co., with combined holdings worth around $1.2 billion. dollars, Bloomberg reported.
The public fund also bought a 5.02% stake for $883 million in Nexon, the company behind role-playing games like MapleStory and Dungeon & Fighter, Bloomberg added.
According to the US-Saudi Business Council, the Ministry of Communications and Information Technology, or MCIT, is also giving a boost to public-private partnerships and infrastructure investment. The ministry has been deeply involved in the development of the Kingdom’s IT and telecommunications infrastructure, including broadband, fiber optics and 5G.
“With the help of MCIT, US-based Activision Blizzard has announced a partnership with Saudi Telecom Company to host the regional servers for one of their most popular titles, Call of Duty, in Saudi Arabia,” the report said. industry body in its recent article on Gaming and E-sport in Saudi Arabia.
Getting crafty with NFTs
What else? Many game publishers in Saudi Arabia are boarding the NFT train. What does that mean? NFT is a certificate of ownership of a digital asset which is rare. You have a certified token for it on a digital ledger or blockchain. Simply put, you get a link that proves your connection to that asset.
For example, a game developer like Activision’s Call of Duty could showcase their popular emblems as NFTs, which could be used as a profile picture for your social media accounts. The company could sell weapon camos, Operator outfits, and other gaming accessories, a huge draw in Call of Duty fandom.
Game developers in Saudi Arabia want to capitalize on this fandom. Tamatem’s Hammo will soon announce his NFT project, along with others including Riyadh-based UMX Studio.
“In the future, gamers will be able to generate revenue by reselling these items using blockchain,” said Ali Al-Harbi, founder and CEO of UMX Studio, a game developer that has previously launched auctions. in its games where players can trade items. It is a precursor to the appearance of new opportunities on the blockchain.
Publishers of popular drag racing game Climbing Sand Dune and police chase game King of The Steering, the studio has 200,000 daily active users and 50 million downloads. Starting in 2014 with around $4,000 in the prize pool, Al-Harbi made progress pretty much on his terms. His first game earned him $200,000 in the first few years of its creation.
Al-Harbi never felt the need for outside investors or funding. He earns his money through integrated services, online subscriptions and advertisements. His mantra for success: He listens to his players. “We keep taking it to the next level only because we listen to our audience. We will soon release a light version of the game at their request.
The opportunity for game developers to grow is endless, thanks to the toys at their disposal and the support of the state. But what will make the Saudi gaming industry dominate the rest of the room is when it listens to the customer and builds a unified narrative that celebrates Arab culture. After all, success in the gaming industry isn’t about making money; it’s about enhancing visibility and soft power.