5G Will Drive MENA Gaming and eSports Expansion

Filippo Giachi, VP Asia, Middle East & Africa and Greg Sigel, VP Partnerships

The growing video gaming market may prove the perfect antidote for telcos seeing downward pressure on turnover caused by tighter regulation and competition from over the top (OTT) telephony services. The COVID-19 pandemic too, is causing disruption to existing revenue streams. However, it is also precipitating a surge in online gaming amongst remote workers and their families entertaining themselves during extended lockdown restrictions.

That is particularly true for operators in the Middle East and North Africa (MENA) region, where up to half of the population is under 25 years of age in some of the Gulf Cooperation Council (GCC) states. With ownership of mobile phones vastly exceeding bank accounts, especially in the less economically developed territories of the region and younger demographics in richer nations, telcos and game publishers alike need to offer consumers more flexible ways to pay for gaming content.

MENA one of fastest-growing mobile gaming markets

Statista estimates that the MENA region is the world’s most active gaming community, with revenue growing 25% year on year and set to triple its current value to be worth US$4.4bn in 2022. Newzoo too estimates that the MENA region currently contributes 2.5% (US$3.bn) of the estimated US$135bn revenue generated by the global gaming market. Over US$1bn alone is expected to be generated by gamers in the GCC countries, where 30% of the population play digital games and where even before Coronavirus took hold those in the 18-24 age category could spend an average of anything between eight and seventeen hours per week playing video games.

Mobile games represent the largest single segment of the market, partly due to high smartphone penetration rates in the GCC states in particular - over 80% in the UAE for example and 95% in Saudi Arabia according to the GSMA. According to its Mobile Economy: MENA 2019 report, nearly half of the 25 countries it groups into the MENA region have mobile subscriber penetration rates of 70% or more compared to a global average of 65%. But there are still significant growth opportunities in what the GSMA terms the “frontier” markets in the region where mobile subscriber penetration rates remain below 50%.

With Saudi Arabia representing a total value of US$348m in 2020 according to Statista, the portion of that revenue coming from mobile games is US$165m (47%). For the MENA region, Statista forecasts that mobile games will bring in US$2.3bn this year. At last year’s AdColony Intelligence Summit held in Istanbul, published survey findings suggested that 90% of MENA smartphone users play mobile games, with Egypt having the most smartphone mobile gamers anywhere on the planet. Newzoo also forecasts that emerging markets in MENA, India and South East Asia will drive mobile gaming growth this year.

eSports raising its profile and participation

The most played titles in the MENA region tend to vary according to the devices being used - Player Unknown’s Battlegrounds (PUBG), Dota2, League of Legends and other mobile games tend to dominate the Levant and North Africa for example, while Fortnite, Overwatch and FIFA lead in GCC states where ownership of games consoles is higher.

Whatever the device, while MENA gamers have often complained about the lag that comes from having to access game servers located in other regions of the world (typically Europe or Asia). To demonstrate how important, they see the MENA gaming market, companies like Amazon (which runs the Twitch gaming platform) have recently set up closer hosting infrastructure in Bahrain. Last December also saw Bahrain hosting the BLAST Pro Series CS: Go global final – a two-day electronic sSports (eSports) tournament offering US$500k of prize money to professional gamers from all over the world.

Global eSports entity ESL – the company that organised the first-ever tournament to be played on 5G networks in partnership with Vodafone – organised its first MENA tournaments last year. The company started with CS: GO, the CS: GO MENA Challenger Series in partnership with gaming video sharing site Wizzo, before going on to co-ordinate the ESL MENA League in conjunction with regional broadcaster MBC.

Arabic is the fourth most spoken language in the world, with MENA’s population estimated at around 400m (though not all use Arabic as the default tongue). Yet games customised for Arabic-speaking countries and cultures are few and far between according to mobile games publisher Tamatem. Having started as a mobile games developer in its own right, the Jordan-headquartered start-up has since evolved its business model to focus on adding Arabic content to other companies titles to increase their reach and consumption in the MENA market.

As a measure of its potential, Tamatem received US$3.5m of Series A funding from existing investor Wamda Capital, with participation from Modern Electronics Company (a subsidiary of AlFaisaliah Group) and North Base Media in February this year [2020]. Another mobile game start-up from Amman and Dubai, Babil Games, was acquired by Swedish games company Stillfront Group for US$7.4m in 2016.

Various eSports organisations are also adding impetus to market expansion by arranging tournaments and co-ordinating sponsorship initiatives, including GB Arena, eSports Middle East and YaLLa. CABSAT, the region’s largest broadcast trade show featured an eSports showcase for the first time last year. One of the leading proponents was Rawa.TV, an eSports platform created specifically for Arabic-speaking eSports athletes and audiences as an alternative to live-streaming sites like Amazon’s Twitch that cater predominantly for an English-speaking audience.

5G expected to drive MENA mobile game expansion

The further stimulus of the MENA gaming market is expected to go hand in hand with the launch and expansion of the fifth generation (5G) mobile networks over the next five years. As of October 2019, ten operators had already launched commercial mobile services in five GCC states. Prior to the onset of the COVID-19 crisis - which is likely to temporarily delay some operator plans - another 12 other countries were expected to follow by 2025. By that point, the GSMA estimates that total 5G connections in the region will exceed 50m while another 450m smartphones will connect via 4G.

Zain’s 5G network already covers 95% of Kuwait’s urban areas, for example and started a rollout of 2,000 towers across Saudi Arabia in October last year. Oreedoo has launched commercial services in Qatar, as have Etisalat and du in the UAE. The greater reach and reliability of 5G networks, combined with higher download speeds and much lower latencies to reduce gaming lag, is expected to expand participation and viewing of online games and eSports tournaments even further. The initial 5G mobile consumer use cases already being proposed by operators including du, Etisalat, Ooredoo, STC, Turkcell and Zain to revolve around gaming, eSports, applications and content for immersive reality, and enhanced digital entertainment within stadia and music venues.

Direct carrier billing delivers convenient payment option

In a white paper – Skin in the game: How telecom operators can win with gaming – published earlier this year Strategy& (the strategy consulting arm of PwC) noted four ways that telcos and MNOs can establish a deeper role within the growing MENA gaming market. Those include the provision of network infrastructure at eSports venues as well as partnerships and sponsorships with games developers themselves. But it also involves them becoming more tightly embedded in the distribution of gaming titles and content.

It is likely that smartphone users will download not only new titles but also in-game add-ons such as mods, skins and characters onto their mobile devices. They may also access subscriptions to cloud streaming gaming platforms like Amazon Twitch and view eSports tournaments remotely. As such, MNOs are in a good position to set up distribution and revenue sharing agreements with games publishers, live streaming providers, app stores and tournament organisers/broadcasters, additionally providing simple, easy methods of payment through direct carrier billing (DCB). Countries in the MENA region have a combined population of almost 450m according to World Bank Data, which includes both large numbers of younger gamers without credit/debit cards as well as the estimated 70% of adults that do not have bank accounts.

By allowing consumers to pay for gaming content quickly and easily through their mobile phone bills, DCB gives content providers an established sales channel to a larger potential customer base. It can help them target millions of paying subscribers across multiple countries simultaneously through partnerships with telcos and MNOs that provide services in different territories of the MENA region. Establishing and managing lots of different partnerships with different telcos, games publishers, app stores, live-streaming platform providers and eSports coordinators simultaneously can be complex and time-consuming for every company within the gaming ecosystem, however. A faster route to the burgeoning MENA gaming market can be navigated using DOCOMO Digital’s third-party payment platform, which negotiates and administers the necessary relationships on each entity’s behalf while also making the billing, refund and renewal processes effortless for consumers.