January 29, 2016

Forget Oil, The new Middle East Gushers Are Mobile Games

We know the stock markets have started 2016 badly. The South Asian bubble, led by China desperately spending money to bring people into cities from the countryside, is over. Russia is suffering huge economic pain because of Western sanctions and Europe is undergoing a fundamental migration shift that is destroying budgets.

Moreover, Saudi Arabia’s cynical plan to destroy the US fracking industry has worked, but decimated oil prices to the extent that they have fallen 70% in the past 15 months. Nobody seems to have any money left apart from the Norwegians, Indians and Iranians.

So, show us the money. Where are the new and more reliable reserve currencies and safe markets? In a world where printer ink is now more expensive than Chanel No 5, what are the products and where are the territories that are going to define the rest of the decade?

Bizarrely, in a time of slumping oil prices, that territory may be the Middle East, and it may also be the games that people play on their mobile phones that will prove to be deeper than any lucrative oil gusher.

There are more than 100 million Arabic speakers and it is the fastest-growing market in the world. The demographics of the people in the Middle East and North Africa (MENA) region are among the youngest in the world because of the high local birth rate.​

Mobile games are huge business in the territory of and the market shows no sign of slowing down. According to Strategy&, the global consultancy arm of PwC, the MENA market was $680 million last year and will climb to $2.3 billion in 2022.

The major reason for this market is the desire for localised content. Arabic is the world’s fourth-largest language, but the world’s games publishers have been slow to realise the opportunities it presents because only 1% of content available in the local app stores of Google and Apple is in Arabic.

One company founded in 2013 in Amman, Jordan is achieving phenomenal growth by localising globally published mobile games, as well as developing their own games for Arabic speakers. Tamatem is the name of the company and is achieving 40% month-on-month growth across the region.

After recently opening up a new office in Cairo, Tamatem says it has had more than 16 million total downloads of 35 games, of which 25 have reached No 1, and they now have more than 2.1 million monthly active users and 350,000 daily active users.

In some MENA countries, smartphone penetration is even higher than countries in Europe and the US, and mobile games in MENA offer everybody, such as Saudi Arabian women, an opportunity to express themselves culturally and ​creatively in a way that is not always possible.

​”We let Arabic gamers play successful games that weren’t previously visible in their territories. Arabic players want to play other Arabic players in their own language, not being greeted by other players in English and other languages. We allow them to play the games they love within a community that understands the culture of that gameplay,” says Hussam Hammo, Founder and CEO, Tamatem.

Impressive numbers, but another company that is also successful in MENA is London-based chat games company Palringo, which originally set up as messaging platform in 2008.

The company has more than 45 million users and says chat games now represent 50% of the company’s revenues and it says that MENA users represent high ARPU (average revenue per user) because of the status that their gamers are willing to pay for.

This comes in the form of in-app purchases where gamers pay for influence and special rewards. The company has used its success in MENA to expand into Russia, Brazil and India, and is focusing on being a social platform for finding games and people to play with.

Last year Palringo had revenues of almost $14 million in 2014, up 100% from $7 million in 2013 and was as placed 7th out of 100 companies by The Sunday Times Tech Track 100 2015, a list of the UK’s fastest-growing tech companies. The company says 2015 figures will show a further explosion in growth.

“We connect people around the world based on the common interest of games, rather than people who already know each other. This allows users to interact differently compared to how they might interact with their close friends on other specific messaging apps,” says Tim Rea, CEO Palringo.

In 2016, Tamatem and Palringo are likely to be joined in MENA by other companies that have finally realised they can strike mobile games oil in the region… Chinese companies, especially, are targeting the region and the mobile games business.

But for now, the old cliche first-mover advantage applies they are pumping out money faster than any pipeline, or any other business. Middle East crisis? What Middle East crisis?

Article By Monty Munford

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