Mobile Gaming in Africa
The World’s Fastest Growing Market Is Set For Another Mobile Transformation
“A growing body of evidence backs our view that as Africa’s population doubles to two billion over the next several decades, its GDP will increase from $2 trillion today to $29 trillion in today’s money by 2050” — Charles Robinson, global chief economist for Renaissance Capital and lead author of ‘The Fastest Billion: The Story Behind Africa’s Economic Revolution.’
Mobile technology and its associated uses have already unleashed a technological revolution across Africa. Development of communication technologies have leapfrogged the traditional model seen in other countries over the 19th and 20th centuries — telegraph lines, to fixed-line telephones, and then to mobile cell phone coverage. Africa skipped this stage, and jumped right into mobile phone adoption. Given the delay in this linear development progression, Africa is able to skip the cumbersome and time-consuming process that this development path would entail. Rather, cell tower installations and satellite placement can occur at a much quicker pace, while also giving more access to people in a much quicker way.
Mobile Adoption Hits Historic Proportion
While there has been a staggering adoption rate of mobile subscriptions across Africa over the last 10 years — the current number hovers around 960 million subscriptions — internet penetration has not kept the same pace. In 2018, 216 million internet users were recorded, which is only 18% of the continent’s population. This gap makes sense, as it has only been recently that the mobile subscriptions reached such a high penetration rate. This gap though marks an historic opportunity for African internet companies to increase their market share, as there are still hundreds of millions of Africans who could be using mobile internet for their daily needs, rather than traveling to a location with a desktop computer.
It makes logical sense that mobile phone adoption would come first, for communication, and then on to internet adoption, which is used for secondary needs: social media, research, online shopping, and gaming. Once the phone adoption occurs, the next stage of this evolution is to gain access to the internet, and then begin using its for whatever needs a person has. It is no surprise then that the mobile money markets have exploded in Africa over the last couple of years, as access to traditional financing and credit markets are not as widely available as in some other parts of the world. With over half of the world’s mobile payments occurring in Africa alone, the untapped potential of this market is evident.
“The power of financial technology to expand access to and use of accounts is demonstrated most persuasively in Sub-Saharan Africa,” the World Bank’s Global Findex Database wrote in its financial inclusion survey which found 21% of adults in the region now have a mobile money account. This is “nearly twice the share in 2014 and easily the highest of any region in the world”.
The Opportunity for Mobile Gaming
Since mobile phone ownership remains high, and the mobile payments sector is exploding, the next mobile sector to see an increase in growth is likely to be mobile gaming. Mobile gaming is when users play strategy or chance games on remote devices for prizes or money. While the majority of mobile gaming in the global economy takes place on smart-phones, mobile gaming on traditional cell phones still makes up a large percentage of global gaming use. This year, there is estimated to be over 300 million Africans using smart-phones, with the mobile money market estimated to be worth nearly $15 billion.
Since mobile gaming is still a developing market globally, it’s best to look at other regions that already have already seen high growth in mobile gaming, in order to forecast different scenarios for mobile gaming in Africa. In the North American markets, there are 292 million mobile phone users, with an estimated money market at $90 billion. With a market of this size and value, mobile gaming revenues have reached $5 billion in 2018, nearly double what it had been 5 years prior. Given these numbers, it’s realistic that similar numbers could be seen in Africa.
Challenges Facing Gaming In Africa
While there may be plenty of opportunity for gaming, there are three main reasons why it hasn’t taken off yet. The biggest obstacle to adoption is the difference in payment methods seen in Africa for mobile gaming. In Africa, the most widely used method for paying either for a mobile game, or for in-game purchases, happens through the mobile phone providers. In Asian, European, and American markets, the majority of payments for mobile games happen in the phone’s app store. This structure forces gambling companies to deal with may different telecom companies, in just as many different countries.
Another challenge facing mobile gaming in Africa is the lack of data on what types of digital gambling African consumers want to engage with. Globally, the highest revenue comes from online slot machines, making up 70% of global profits for mobile gambling. Sports Betting is another type of online gambling that is seeing more interest globally, but gaming companies have yet to fully capitalize on this sector. The third type of online gambling that is available to consumers are lotteries. While some mobile gambling may involve strategy — like black jack — games that are randomized and luck-based are more popular globally. Since gaming options are heavily diversified, the lack of data for African mobile gambling tastes will present a unique challenge. However, it also presents an opportunity for an explosion of creativity from gambling companies and app de development companies to occur in Africa.
Finally, the lack of resources for marketing to Africans hinders the growth opportunity of mobile gamblng in Africa. Most of the world’s largest game developers skip African markets because they incorrectly assume that there is a small market, and therefore just blast the continent with marketing strategies that work in other zones. This limitation leads to a bias not only in marketing, but also creates a self-fulfilling prophecy — if you don’t market to this group, then there will be no demand.
The expansion of mobile gaming in Africa has all the right conditions to take place — rapid economic growth, an increase in population growth, and a high rate of smart-phone adoption. All of these factors will lead to the quick ascension of mobile gaming as a stable sector in the global mobile market. With a continent that has two-thirds of their population under the age of 24, the possibilities for mobile gaming are endless. This generation that is coming online will seek new opportunities that are open to them. This is why it is imperative to commit investment to mobile gaming, but also to make it homegrown, in order to develop a sector that works for the local population.