How to build a gaming ecosytem

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This is the third post in a content series called Wamda Debates. Every other week, the Wamda team debates a topic, industry, or challenge in the Arab world to identify trends, solutions, and remaining gaps and brainstorm ways to address them. 

In today's world, building and distributing a game is simpler than it's ever been, thanks to the spread of mobile phones and social platforms.

Games themselves are evolving rapidly, as expansion packs, patches, and updated gameplay work to keep users engaged. In games like World of Warcraft or Diablo, users are literally playing a new game every time they log in, unlike the static games of the past.

While gaming is one of the hottest sectors in the Arab world, it's still a challenging one; we have yet to see a global hit come from the region. But that moment is coming.

As developers are branching out into MMORPGs and console games, and games are getting more detailed and challenging- a few of our recent favorites include Gamabox's Ali Hood and upcoming game Abou Ahmad the Arabian from Wixel Studios.

In our Wamda Debates, we took a look at the factors that go into building, monetizing, and distributing a game, and what it takes to build a gaming ecosystem in an emerging market.

Wixel Studios's upcoming game Abou Ahmad the Arabian.

Business models

In the industry today, there are three major types of gaming companies: developers, publishers, and distributors:

  • Developers are the designers and actual creators of games. 
  • Publishers manufacture and market games for public consumption. 
  • Distributors are usually platforms allowing developers to post their games for download, or for publishers to partner with to handle marketing and distribution in a specific region.

Of course there are hybrids; Maysalward in Jordan is both a developer and a distributor, while US social gaming powerhouse Zynga does all three.

Games can be monetized several ways:

  • Charging per app download
  • Monthly subscriptions
  • In-app or in-game purchases (freemium model)
  • Partnerships with telcos for pre-loaded games
  • Advertisements
  • Merchandizing (think Angry Birds)
  • Virtual currency

Each strategy has its uses, depending on the game. Some estimate that popular MMORPG World of Warcraft, the biggest subscription-based game in the world, makes nearly $1 billion in annual revenue for publisher Activision.

Gaming today

Each country in the region has very specific characteristics. Saudi Arabian gamers are huge consumers of international games, while Jordan, and to a lesser extent Lebanon and the UAE, are big on developing their own titles, especially mobile games.

These days, Jordan is focusing intensely on the sector. The King Abdullah II Fund has helped to create the Jordan Gaming Lab, a space for students and indie developers to freely create and design their own games using state-of-the-art facilities and free software, and Sony now plans to open two gaming academies in Jordan in the coming months. 

Though there were a couple closures in Jordan's gaming sector over the winter, the remaining players have some high goals, creating the region’s first Arabic MMORPG at Beladcom,  and developing for consoles; Quirkat recently became Sony’s first developer for the PlatSytation 3 from the Arab world.

Internationally, the industry continues to evolve as social gaming begins to take a backseat and mobile takes the forefront. We see this especially in Zynga’s recent closure of over 11 social gaming titles with a renewed focus on mobile gaming, particularly in making cross-platform multiplayer games (check out Richard Rabbat's 6 Tips for Developing Games for Mobile for more on Zynga's evolution).

Measuring success

How can gaming startups, internationally and in the region, measure their success? Revenue is one way, but for most game developers, especially in mobile gaming, their first few games don’t hit it big. To iterate and see what works with consumers, they have to measure engagement in other ways.

We brainstormed a few things for these companies to measure:

  • Downloads
  • Active users
  • Conversion rates
  • Number of minutes played
  • Engagement (After which level to people stop playing?)
  • Average revenue per user (ARPU)
  • Average revenue per paying user (ARPPU)
  • How many references people make in a game
  • Average number of connected friends in a game

One strategy for assessing these metrics is cohort analysis: grouping users based on a particular variable, usually time. For example, comparing all of the users who downloaded a game in January as opposed to those who downloaded it in February, looking at time of play, level reached, and friends they referred.

A/B testing is also important. Showing different users different content (whether a color or actual gameplay) can reveal which is more successful. 

The K-factor can be used to measure social overlap and reveal a game's ability to go viral. Click here for more on the K-Factor.

What will it take to make the Arab region a gaming powerhouse?

Ultimately, we are optimistic that the region has what it takes to make some pretty epic international titles. All it takes is a few tweaks to push forward:

  • Education systems that support game development (Jordan is already beginning this).
  • Investors taking a chance on gaming startups in the region to give them the resources to experiment with new games and train local employees.
  • Passionate game developers who want to create a game from the region instead of emigrating to larger publishing houses.
  • Regional publishers who can effectively distribute games.
  • Game diversity: while mobile is on the rise, a strong console or PC game in Arabic could really boost the region as well.
  • A success story: there are some great titles expected for this year, and with at least one solid example of an international success, international publishers and investors will become more interested in the sector (Sony has already expressed interest).

After speaking with gaming startups across the region, from Tunisia to the UAE, a lot of these issues are shared by all. It may take some time, but with hungry Arabic consumers, a little perseverance, and some collaboration, gaming could be the market to watch in the Arab world.

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