Genetically engineered chickens have become killing machines, invading Dubai, Egypt, Lebanon and the rest of the Arab world. You can only stop them by shooting them and destroying their eggs. Luckily this dystopian nightmare is not coming to a street near you, but is the storyline behind Birdy Nam Nam, an Arabic mobile game which was downloaded more than 250,000 times within a week of its release in September, and ranked number one in the Arab world on the iTunes store.
This is just one example of Lebanese talent tapping into the profitable computer gaming market, which, with a projected annual global growth rate of 12 percent, makes it the largest growth sector of the media industry. Digital games can be played online (on PCs or game consoles) or on mobile devices such as smartphones and tablets. In revenue terms, such games earn $56 billion annually; at least three times as much as the global music industry, which saw revenue decline by 8.4 percent to $15.9 billion last year. In the United States gaming makes $22 billion, which is more than the music ($10.4 billion) and film industry ($9.5 billion) combined.
Despite many obstacles, in terms of knowledge as well as infrastructure, gaming in the Arab world shows huge potential. Demand for local products far outstrips supply; less than 1 percent of content is in Arabic, while over 60 percent of Arab users prefer content in their first language on the Internet, according to the Dubai Press Club’s Arab Media Outlook 2010. “If you do anything in Arabic now, it will work,” says Lebnan Nader, one of Birdy Nam Nam’s creators.
Gaming in the Arab world started in the 1990s, when international fighting games such as Counterstrike and Starcraft drew large crowds at cafes, where people would play on a Local Area Network (LAN) connection.
With the advent of the Internet, games moved online, but the social function of the café remained and the popularity of massive multiplayer online (MMO) games such as World of Warcraft grew. In 2005 Travian Games, a German company, entered the market with an Arabized version of its MMO game Travian. United Arab Emirates-based GamePower7 was the first regional company to try and tap into the market in 2007 by Arabizing the game Rappelz, while Jordanian Quirkat developed the region’s first original MMO game in 2008, with ‘Arabian Lords’ allowing players to be merchants in the time of the rise of Islam.
With mobile and Internet penetration exploding across the Middle East, local entrepreneurs are searching for ways to tap into the opportunity, with the videogame market in the Middle East and Africa set to grow to $3.2 billion by 2016, according to the research company Ovum.
The largest markets are Saudi Arabia, Egypt and the UAE, while companies have been springing up across the region, especially in Jordan where the government has stimulated the sector’s growth through the Jordanian Gaming Task Force.
According to its chairman, Nour Khrais, online and mobile gaming revenues in the Arab world reached about $450 million in 2010, while the overall value of the gaming market in the Arab world, including investments and advertising, exceeds $1 billion. Jordanian companies develop 70 percent of the Arab world’s mobile and online games. In Lebanon, where there are just a handful of companies known to be producing games, with less than 20 released so far, the market is still immature.
Birdie makes a bang
Birdy Nam Nam (BNN), the Lebanon-based company that published the namesake game, credits its success to the use of the Arabic language, emulating international games that have entered the market through ‘Arabizing’ their blockbusters. Wixel Studios, Lebanon’s first gaming company that opened in 2007, scored its greatest success with its first game Douma, a fighting game based on Lebanese politics.
The game has been played online over 2 million times. The three-man company has released 13 titles, including games about a manouche bakery and the Egyptian elections. Falafel Games, a company started in 2010 by three Arab gaming veterans, uses Islam as the theme for their multiplayer online game ‘Knights of Glory’, which is set during the Islamic conquests of 632 to 636. All claim competition is virtually non-existent, with only a handful of regional competitors operating in their field.
Recognizing the opportunities, venture capital funds are starting to show an interest. “Gaming is a segment within technology which requires customization and local product development… The demand is there,” says Walid Mansour of Middle East Venture Partners (MEVP). The fund decided to invest in Falafel Games a few months ago, and is eager to enter the multiplayer online market, projected to be worth $400 million regionally by 2015 — a tenfold increase in five years.
Regional consumers tend to be big spenders; the average revenue per paid user in Saudi Arabia is $50, twice the global average. Most games developed in emerging markets rely on a free-to-play model that sells advertising and, in particular, virtual goods or one-time premium upgrades through micro-transactions. Within Knights of Glory, for example, extra defenses or more sophisticated weaponry can be purchased with virtual gold, which costs real money.
Although the lack of credit card owners in the region poses an obstacle, platforms such as OneCard, Cashu and Gate2Play are overcoming this issue by offering alternative ways of payment. In the West, a subscription model is popular, however this model is struggling in the Middle East as pirated versions of a game are readily available, though often lacking features.
Birdy Nam Nam, for example, was initially released for free, but sales on iTunes alone have garnered $20,000 in revenue, while its creators see the potential as much higher as they continue to monetize their product.
Mobile is the future
Console games still tend to come from big international manufacturers such as Sony and Nintendo, but browser and mobile gaming have opened up the market. The mobile platform shows the most potential regionally, especially with the advent of third generation (3G) Internet.
Of Arabic-speaking mobile Internet users, 85 percent have downloaded apps, with 27 percent downloading more than one per week, according to research published by Spot On Public Relations in January 2011. Of those apps, almost 20 percent are games, with women playing more than men, illustrating how gaming’s target audience has shifted over the past decade with the diversification of games on offer. Social Girl, which allows you to “go on the hottest dates and shop for the trendiest clothes”, is currently one of the most popular apps in Saudi Arabia. With women largely confined to their homes and veiled when in public, it is not hard to imagine why. Furthermore, many mobile games such as ‘Arabic Crossword’ appeal to both sexes.
BNN is looking to keep growing within mobile gaming. In addition to the benefits of a pre-existing end-user market and relatively easy payment methods through SMS, Nader sees two other factors playing a role. First, as the margin on voice calls drops, mobile operators are fighting for customers by offering extra services and unique content such as games. Second, corporate use of games for advertising — for example BMW offering potential customers a virtual test drive in their newest model car — will pick up. “With mobile marketing you can measure your impact; you know how many people are playing,” Nader says. Wixel Studios has already tapped into the advertising market through so-called ‘advergames’ for Kit Kat and Almaza. The latter was a football game that formed the centerpiece of the beer maker’s marketing strategy during the World Cup. Wixel aims to switch from browser-based games to the mobile platform next year.
Representatives for both Wixel and BNN said they aim to expand beyond the Middle East market over the next year, as less than 5 percent of all Internet users are Arabs. They wish to do this by offering unique content to a global audience. But, so far, the key to regional success is producing content that is recognizable to an Arab audience, in terms of landmarks, language or culture. Furthermore, people are immensely proud of locally developed games. “We got many emails saying how proud people were that BNN was created by Lebanese. Some were kind of disappointed to see that there was a French guy on the team,” smiles Jean-Christophe Hoelt, the French developer who wrote the code for BNN.
A lack of human resources?
The need for a French developer highlights one of the main obstacles to creating games in Lebanon; a lack of human resources. “I know that it is hard for people to find somebody, because they want me,” says Hoelt. There are plenty of graphic designers, but not many with sufficient experience to create a complex game. “High tech 3D animation or virtualisation, virtual realities, we cannot do this,” says Elie Boujaoude of Berytech Fund, the other Lebanese venture capital fund with a game company in its portfolio. “But if you stay below that [technological barrier] you can do very well.”
The lack of skilled employees to create a gaming industry is not just a Lebanese concern; the sentiment was echoed in a regional setting at the fourth Dubai World Game Expo conference last month. Falafel Games is based out of Hong Kong due to the availability of coders and artists with an extremely varied set of skills. “I tried Egypt, Jordan, Syria, I just couldn’t find the talent,” explains Vince Ghossoub, Falafel’s Lebanese founder.
Some companies, such as BNN and Wixel, do believe in setting up shop in Lebanon. “Part of our message is to be here. We want to create a success story for Lebanon to convince youngsters that they have the potential to do it here,” says Ziad Feghali of Wixel Studios. Both companies and investors highlight the diversity and creativity of Lebanon’s workforce, which allows it to create games that will resonate with both Western and Middle Eastern audiences.
Feghali hopes to transcend the lack of technical knowledge through in-house training; all three of Wixel’s founders have teaching experience. Birdy Nam Nam also feels that guidance can overcome lack of technical knowledge and is in the process of hiring several Lebanese developers. Ubisoft, one of the world’s largest game developers, just opened offices in the UAE, citing an abundance of raw talent. Notre Dame University in Beirut now runs a game design course, though it is a far cry from a full-fledged degree.
It is the only course in Lebanon since Digipen closed its institute and offices at Holy Spirit University of Kaslik following the 2006 war. All three of Wixel’s founders are graduates. Since then, most of Lebanon’s few game developers learn their skills independently through online tutorials and experimentation.
Stimulating local talent is especially important as developing a game is a continuous process, lasting well beyond the launch date. “Outsourcing everything is not a solution… because you need to respond to customer feedback,” explains MEVP’s Mansour.
“A good game can be played for years,” says Tarek Chehab, formerly on the Lebanese team for the game Counter-Strike. But building such a game, and a corresponding industry, takes time and requires mature investors. “We have the talent, have what it takes, all we need is investment,” says Nader. Such investment would be used to fund the development of new games as well as their marketing. Companies are wary of sharing specifics, but Nader estimates that a team of six people could work for a year and half with a $300,000 to $400,000 investment, with return on investment in a maximum of two years.
Normally, for MEVP to enter a deal, the fund expects a 30 percent yearly return on any investment (which vary between $200,000 to $1.5 million), while Berytech aspires to obtain a four to five times value multiplication over five to six years on its investments of up to $1 million.
“Venture capital firms are looking at the MENA region,” says Nader. “In the near future, this region will be a really good place.”