by Gregor
The global gaming industry is enormous, and mobile gaming has emerged as a dominant force, accounting for a significant portion of the overall market. In 2023, gaming generated $183.9 billion in revenue, with mobile gamers making up 2.8 billion of the 3.31 billion global gamers. These figures clearly highlight the critical role mobile gaming plays in the wider industry. However, rather than focusing solely on these well-known statistics, it's more interesting to delve deeper into regional differences, particularly in Africa, and explore how they contrast with the Western world. We’ll also examine the immense untapped revenue potential, why now is the perfect time to focus on this market, and how blockchain technology could pave the way for a cultural shift in the African gaming sector.
A Look at Global Gaming Dynamics
Let’s begin by analyzing global player distribution and the financial dynamics behind it.
As of 2023, the Asia-Pacific region leads the world in terms of player population, with over half of all global gamers. Countries such as India and China, with their massive populations, play a significant role in this, while Japan and South Korea are known for their highly engaged and tech-savvy gaming communities. This has made Asia-Pacific home to the largest number of gamers worldwide. Meanwhile, the Middle East and Africa account for 17% of the global player base, with the highest year-on-year growth rate among all regions.
This disparity in revenue can be explained by the maturity of gaming markets in Western regions, where players generally have higher disposable incomes and are more inclined to spend on gaming hardware, software, and in-game purchases.
In comparison, Africa and the Middle East, while experiencing rapid growth in the number of players (with an 11.3% year-on-year increase), face challenges when it comes to monetizing this growing player base. The reasons behind this growth are multifaceted: improved mobile internet infrastructure, more affordable smartphones, and the increasing popularity of free-to-play (F2P) models. Still, despite the expanding audience, monetizing games in these regions remains a significant challenge.
Let’s take a closer look at the enormous potential that lies within the African continent.
Africa’s Gaming Potential
One major driver of Africa's gaming potential is the rapidly growing number of internet users. According to Statista, the total number of internet users in Africa reached around 540 million in 2022 (from a total population of approximately 1.4 billion). This number is expected to grow at a CAGR of 5.94% until 2028. Encouragingly for the mobile gaming sector, the majority of Africa’s internet traffic comes from smartphone users. For instance, in Nigeria, around 82% of web traffic is generated via smartphones.
Now, let’s take a look at some gaming statistics. According to Newzoo, out of the 1.14 billion people living in Sub-Saharan Africa, 186 million were playing games in 2021 (about 16%). This equates to roughly 30-50% of the region's internet users, leaving significant room for further growth—and with that, opportunities for monetization. Of these 186 million gamers, 177 million (95%) play on mobile devices rather than consoles or PCs. Sub-Saharan Africa’s mobile gaming audience is projected to be the fastest-growing globally, with a CAGR of 9.4% from 2020 to 2024.
Additionally, when we mix in crypto statistics, the potential for mobile gaming, especially crypto mobile games becomes even clearer. According to Chainalysis, Nigeria ranked second globally in cryptocurrency use in 2023, right behind India. Furthermore, Nigeria showed the third-highest year-on-year growth in cryptocurrency transaction volume, with a 9% increase. With digital wallets and virtual currencies becoming more commonplace across Africa, gamers are increasingly embracing digital payment solutions.
Looking ahead, Africa’s gaming market is projected to reach one billion users within the next five years. This potential is immense, but challenges remain on the horizon. Let’s explore these challenges and possible solutions for overcoming them.
Challenges in African Markets
To fully understand the obstacles African gaming markets face, it’s important to look at the kinds of games people play and how they pay for them. For example, data from South Africa shows that the top 10 downloaded games consist of a mix of globally popular casual, mid-core, hyper-casual, and football titles. The top 10 revenue-generating games are also similar to what one would expect in the top-grossing charts of most countries.
Based on this data, it might be easy to conclude that “what works in the world will also work in Africa.” However, there’s still a large untapped potential in the market, and several key challenges need to be addressed.
The first challenge is affordability. The global pricing models often used for free-to-play (F2P) games are based on Western standards, creating significant affordability gaps in other regions. For example, an in-game item priced at $5 might be seen as reasonable in the U.S. or Europe, but for a player in Uganda, such a price could represent a substantial portion of their disposable income. This leads to much lower conversion rates from free players to paying customers in Africa.
Another hurdle is the low penetration of credit cards and digital payment options in these regions. On average, only 5-7% of all payment transactions in Africa are made via electronic or digital channels. Credit cards are the primary method for in-app purchases (IAPs), and their scarcity limits the potential for monetization in these markets. Without easy access to traditional payment methods, developers face difficulties converting large player bases into paying customers.
The third challenge relates to cultural relevance. Currently, Africa lacks games that are specifically tailored to its diverse audience. While it’s true that fun games can transcend cultures, there’s tremendous potential in games designed with local cultures and preferences in mind. For example, in India, local companies like Mobile Premier League and Dream11 have thrived by focusing on games that resonate with the local market, with each company valued in the billions. Similarly, African markets could benefit from more games that reflect local tastes and cultures.
Lastly, there’s the issue of social norms around spending on games. Due to the affordability gap and the lack of culturally relevant content, many African gamers see spending on games in a negative light, which further hinders developers’ efforts to monetize their audiences.
Nano Transactions: A Game Changer for African Markets
Blockchain technology offers a promising solution to many of the challenges faced by the African gaming market, particularly through the introduction of Nano Transactions. While blockchain is often associated with high-priced NFTs and complex digital assets, Nano Transactions are different—they are microtransactions with even smaller price points, sometimes even lower as a few cents.
The key to making these small transactions feasible is blockchain’s ability to enable payments with minimal gas fees. Historically, these costs have been too high for small payments to be viable. However, advances over the last 1- 2 years in blockchain technology have driven gas fees down, while improving throughput capabilities making Nano Transactions a practical option.
As it stands, only 2.32% of players worldwide make in-game purchases, yet these purchases account for 76% of global gaming revenue. This creates a "whale-driven" market, where the majority of revenue comes from a small percentage of high-spending players. To increase profits, many games employ "choke points"—moments in gameplay where players must purchase an extra life or power-up to progress. In Western markets, these purchases may cost between $1.99 and $3.99, which is generally affordable for players in those regions. However, for gamers in Africa, where disposable income is significantly lower, even these small amounts can be a major barrier to engagement.
Nano Transactions offer a solution by introducing price points as low as a few cents, closing the affordability gap and unlocking the vast, underserved potential of the African gaming market.
Additionally, the lack of digital payments infrastructure in Africa, particularly credit cards, can be addressed through blockchain technology. With seven of the top ten countries in P2P exchange trade volume coming from Africa, cryptocurrencies and stablecoins could have a significant impact on the future of e-payments in Africa.
As Africa continues to embrace innovation, its young, urban population provides fertile ground for the growth of e-payments. Africa has the fastest-growing population in the world, with an average annual growth rate of 2.7%, compared to the global average of 1%. Moreover, Africa’s median age is just 20 years, and most of this young population is expected to live in cities by 2045. This creates a ready market for e-payments and presents an opportunity for game developers to integrate digital wallet solutions into their games, bypassing the need for traditional credit card systems.
How could this lead to a shift in African gaming culture?
A Change in Culture
The introduction of Nano Transactions and lowering the price of in-game purchases to just a few cents could dramatically reduce financial barriers and allow a much larger percentage of players to engage in the monetization ecosystem. By incorporating digital wallets or crypto payment solutions, this shift in affordability and accessibility could drive significant cultural changes within African gaming communities.
Nano Transactions could help create a more balanced gaming ecosystem, where more players contribute smaller amounts of revenue, reducing the dependence on "whales" and opening up new monetization opportunities in the fastest-growing gaming market in the world.
To understand how this cultural shift could occur, we can apply the Theory of Planned Behavior, which identifies three key factors that influence behavior: attitude, subjective norms, and perceived control.
Attitude Toward Spending: In regions where free-to-play games are dominant, many players may initially be resistant to spending money on in-game purchases. However, by lowering the cost of transactions to mere cents, developers can change this attitude by making purchases seem more reasonable and attainable. Over time, players may begin to see the value in spending small amounts for in-game advantages or content.
Subjective Norms: Social pressure also plays a role in behavior. When players see their friends making Nano Purchases, they are more likely to follow suit. In regions like Africa, where group behavior and community engagement are highly valued, the spread of these micro-purchases could create a ripple effect, encouraging more players to participate in in-game spending.
Perceived Control: Players are more likely to make in-game purchases when they feel they have control over their spending. By offering Nano Transactions, developers can lower the perceived risk of overspending, as the financial commitment is minimal. This sense of control empowers players to engage with the game’s monetization system without feeling like they’re being taken advantage of
Conclusion
The future of gaming in African markets is bright, but unlocking its full potential requires a nuanced understanding of the unique cultural and economic dynamics at play.
As mobile phone ownership and internet access continue to expand, game developers need to rethink traditional monetization models to accommodate these new audiences. Nano Transactions, powered by blockchain technology, provide a way to engage the next generation of gamers in Africa by lowering the financial barriers to participation and, ultimately, driving a cultural shift toward more inclusive gaming experiences.
By offering affordable price points, developers can create new opportunities for engagement and foster a more community-driven approach to gaming. With a billion new players on the horizon, Africa could soon become a key player in the future of the global gaming industry.
With our investment in Paradise Tycoon, we've already embraced the potential of nano transactions. The team integrates these micro-transactions into the game as rewards tied to in-game progress or social interactions. Players can unlock special abilities for NFT items, gain temporary production boosts, or access giftable consumables.
We're also actively seeking African developers with a deep understanding of local culture, who can create games that resonate with the African market. Our vision is to back developers and teams which have the potential to shape the future of gaming culture in Africa, while leveraging the unique opportunities that nano transactions offer. If you're building something along these lines, we'd love to hear from you.
Who We Are
Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.
Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.
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