Gaming in South Africa:

Producers & Consumers

Submitted to:
Department of Arts and Culture
Submitted by:
Nelson Mandela University
In Partnership with:
Rhodes University, University of Fort Hare and University of KwaZulu-Natal

1
South African Cultural Observatory

Report

Gaming in South Africa:

Producers & Consumers

September 2022

2
Table of Contents
1. Summary of Main Findings ........................................................................................ 4
Are Conditions in South Africa Fertile for growth of the Gaming Industry? ..................... 4
An absence of ‘African Games’ ..................................................................................... 4
2. Introduction/Scope and Goals ................................................................................... 7
3. Methodology .............................................................................................................. 9
4. An Overview of the Gaming Industry in South Africa ............................................... 10
5. The Producers ......................................................................................................... 14
6. Does SA make for a sustainable Gaming Development Hub? ................................. 31
7. Gaming Economies & Value Chains ........................................................................ 33
8. Consumers .............................................................................................................. 38
Global Gaming Audiences ........................................................................................... 38
Who are Global Gaming Audiences, Where are They and What are Their Characteristics? 43
Income ................................................................................................................................ 45
African & South African Consumers ............................................................................ 59
Nigeria ................................................................................................................................ 60
Kenya ................................................................................................................................. 60
The South African Market ............................................................................................ 61
South African Consumers ................................................................................................... 65
Township Internet Connectivity ........................................................................................... 70
Internet ............................................................................................................................... 72
9. Conclusion & Recommendations ............................................................................. 84
10. Bibliography ......................................................................................................... 87

3
 1. Summary of Main Findings

The Producers/Studios

• The local gaming sector is in its infancy with most companies under ten years old.
• There are about 49 studios in number, but only a fraction of them are bona fide
businesses that are active and generating an income in producing games.
• There are currently no studios in South Africa producing their own AAA games. This
means no large-budget ‘blockbuster’ type games are being created.
• The focus is on smaller premium indie games for a niche audience beyond SA’s
borders.
• 7 ‘big’ studios have been identified that are growing and have successfully penetrated
the global gaming market.
• The largest companies in terms of staff are those involved in third-party service work
– co-producing games for other studios, publishers or corporate entities.
• A skills deficit at the mid-career level was cited by third-party service gaming
companies and those pursuing their own IP as one of the restraining factors to their
companies' growth and that of the industry at large.
• The industry’s growth and job creation is more closely tied to service work than IP
creation.
• Most third-party service studios indicated that they wanted to or are pursuing
generating their own IP. They wish to establish an income and reputation in the global
market and better understand it through doing service work before embarking on a
high-risk high-capital investment by producing their own IP games.
• Successful studios driving their own IP are mostly aligned to a publisher based in the
US or Europe.
• Only one service-based company contracts for local businesses. All service-based
studios are dependent on revenue and clients in the US or Europe.

Are Conditions in South Africa Fertile for growth of the Gaming Industry?

• Given that the growth of local gaming companies relies on premium PC games, there
is an insufficient local audience to drive any expansion.
• This has forced gaming companies to cater for audiences at a geographic remove from
them.
• A lower cost of living in South Africa, which is believed to translate into cheaper
(compared to first world countries) salaries for gaming professionals, has allowed local
studios to remain competitive in the global market. However, South African labour is
not as cheap in India or other countries in the Global South.
• A lack of government support and other unfriendly business trading practices were
cited by a number of stakeholders as a barrier to SA establishing itself as a gaming
development hub.
• An unstable electricity supply that loadshedding by Eskom has created has been
challenging for gaming companies.

An absence of ‘African Games’

• Demand for African content in the west has become more pronounced, particularly
since the release of Black Panther. This has manifested in one of South Africa’s
biggest gaming deals with one of the largest publishers based in the US.

4
 • The need for ‘African’ content can also be detected in various programmes run by
console makers who are running workshops on the continent to identify new games
and talented creators.
• However, local studios are not creating content targeting South African consumers as
consumers can only afford (and have access to) mobile devices and Free-to-Play (F2P)
games. The niche audience for ‘indie’ PC games in this country is too small to be viable.
• Several stakeholders raised the point that an African “themed” game, or the fact that it
was “made in Africa” are not unique selling points that have value – players simply do
not care. If one wants to find commercial success (internationally and in the local
market) you have to first ensure you are making a world-class game (Tshimologong,
2021: 28).

Global Consumers

• The Asia-Pacific region claims the biggest market share of the global gaming market
in terms of audience and turnover numbers.
• The Africa and Middle East Region boast a larger number of users than North America
or Europe, however, the two latter continents boast a larger income. The larger income
generated from games in the US and Europe is also most likely due to players
spending more money online than those in Africa and the Middle East.
• One of the most significant game consumption determinants (in Western countries)
appears to be age or generation. As the secondary data demonstrates, while Baby
Boomers and Gen Xs are gamers, it is Millennials and Gen Zs that account for the
most gamers.
• There appears to be little correlation between income and education as factors
encouraging gaming in the US and UK. This needs to be taken into consideration for
potential and current South African audiences, though with an awareness that there
are considerable income and education gaps between the US/UK and South Africa.
• Primary data collected on Steam shows that in the online PC gaming sphere, America
claims the majority market share in terms of audience. This fact also bears out when
considering that South Africa’s top-selling game on this platform, Broforce, is primarily
played by an audience in North America.
• American domination in terms of studios and publishers also aligns with the fact that
South African studios, whether advancing their own IP or servicing other studios and
publishers, mostly rely on companies in the US.
• Despite the large number of African American gamers, there is a lack of diversity and
diverse stories within the games themselves and within gaming developers in the
industry (Nielsen Company, 2018). South African studios are well-placed to cater for
this demand.

South African Consumers

• Given that South African audiences do not carry much influence on Steam at a global
level, it follows that local studios that are interested in developing IP are not designing
games that target them.
• South African gamers have a preference for playing games on mobile devices. This is
not only shaped by the fact that the penetration of smartphones has been high, but
because there is more and better connectivity to the internet through smartphones and
cellphones.
• Only 10% of the population have access to a fixed internet connection, which is
generally a prerequisite for PC and console online games.

5
 • Given the statistics around South Africa’s shrinking middle class and the income
brackets that define this group, the market for online gaming is small.
• Those that are playing games on mobile devices are playing games that are primarily
being produced by developers in the US and Europe.
• As such, the predicted growth and revenue expected on mobile devices with regard to
gaming is not feeding into the local gaming ecosystem in any way.

Gaming Economies

• Game publishers account for the bulk of revenues in the value chain.
• US publishers are benefitting from South African IP. If they invest in the development
of a game, the studio will not be able to claim full royalties on sales of the game until
the publisher has recouped this investment and other costs. The standard royalty split
between a publisher and a studio is 30/70 in favour of the studio.
• Steam has democratised the dissemination of online games in that anyone can load a
game for US$100 (R1 700). There were 11.7k games released on Steam in 2021
(Video Games Insights, 2022), which translates into 30 games being released on the
platform a day. As such, those South African studios that have managed to earn a
living selling their games on this platform have done so against great odds.
• All the studios in South Africa barring those involved in third-party service work sell
their games on Steam, which is how they generate an income. Only 20% of games are
F2P on the platform and that figure is said to be declining.
• There is also a cost to the studios to sell their games on Steam, with the platform taking
30% of sales revenue from the developer.
• PlayStation and Xbox have come to operate very much like Steam in that they operate
as digital storefronts. Revenue is also split along the 30/70 percentage in favour of
developers.
• Most of the stakeholders suggested that the F2P model for mobile games
automatically shapes the design of a game in such a way that it exploits the psychology
of the player. This results in a game structured around extracting money from players
and has been compared by many as being not too dissimilar to gambling.
• F2P games can also monetise via advertising that is played throughout the game. The
owner of the game generates income for each advert that is screened. However, your
game needs to be incredibly popular to attract advertising. South African gaming
companies would not be able to compete at this level, nor do they have the budgets to
do so. As such, the mobile gaming landscape is not one that local studios are primarily
interested in pursuing.
• At different junctures in game production, US-based companies are profiting from
South African studios – in terms of the tech tools (Unity and others) and platforms for
dissemination (Steam). Those studios using a third-party publisher are losing up to
60% of their game royalties – 30% to the publisher and an additional 30% to Steam
(or other platforms).

6
 2. Introduction/Scope and Goals

As this report will show, the gaming industry in South Africa is in its infancy. Of the main studios
operating in the landscape successfully, most have not been operating for more than a decade.

Yet despite and perhaps due to this being a relatively new digital art form there has been
interest in coming to grips with this sector. SACO undertook a study in 2018 titled Unlocking
the Growth Potential of the Online Gaming Industry in South Africa: Challenges and
Opportunities. Tshimologong, a digital hub associated with Wits University published a report
in 2021, For the win: developing a strategy to grow and transform the South African game
development ecosystem. As this title suggests, there was an interest in not only mapping the
sector and identifying some of its central challenges, but advancing a strategy to grow beyond
them.

The intention of this report is to build on the information contained in both previous reports
with a focus on understanding gaming economies, business models and the consumers of
games. This should shed light on what kind of interventions could be made to strengthen this
industry in South Africa at such an early stage in its development.

How much of the local market is captured by local gaming companies? What insights do we
have into patterns of consumption vis-à-vis gaming? Are international companies the primary
beneficiaries of games being consumed in South Africa? Is our gaming fraternity robust and
growing? These are some of the questions this report aims to uncover.

The UNESCO Framework for Cultural Statistics, published in 2009, which was intended to
offer an international guideline, would classify gaming as part of the Audio-Visual and
Interactive Media Domain. In SACO’s most recent mapping study measuring the
Macroeconomic Impact of Cultural and Creative Industries in South Africa, it was found that
this domain was the second largest contributor to the GDP – accounting for R48.4 billion in
2020 (30% of the CCI contribution to GDP) (2022: 16).

There are many promising statistics to be found on the rise of gaming in Africa and South
Africa. For example, it has been cited that the African gaming market is expected to double its
revenue in the next five years; it was valued at US$ 1178.40 million in 2020 and is expected
to reach US$ 2861.04 million by 2026, registering a CAGR of 15.2% during 2021-2026
(Mordor Intelligence, 2021).

A number of stakeholders interviewed for this report expressed scepticism of these kinds of
statistics which can be found in a number of reports relating to gaming in Africa. Indeed, there
is an abundance of such reports analysing gaming revenue since there is a hunger for
information on digital art sectors, especially those that appear to be outpacing other
entertainment forms in terms of growth and particularly among the younger generations. Few
of these reports outline their methodology or sources, making it difficult to be sure of their
validity. Nevertheless, they all seem to paint the same picture. Gaming is a growing industry
across the world.

However, when you drill down into the local gaming sector, a different picture emerges that
does not align with all these promising statistics. On the face of it, the number of studios is
decreasing, if you take the figures of previous reports (to be around 60) to be accurate – in
the 2018 SACO report animation studios were bundled into the study and the 2021
Tshimologong report claims to be based on a 2018 survey that has never been publicly
released.

Not that the growth of this sector can necessarily be measured in the number of studios – our
research bears out the assertion that it does not as only a small group of them are bona fide

7
businesses generating a living income from creating or producing games. As such a closer
study of the growth of their companies and revenue models offer a more accurate view of the
status quo.

In gauging their business models and the factors that might be restraining growth in this sector,
the heads (barring one) of each of South Africa’s big gaming studios (employing more than 10
people), were interviewed and shared information about their approach and income
generating strategies. This allows for a nuanced reading of this sector that has yet to be done.

Commonalities and differences emerge from this study on the titular producers, which point to
the fact that few of them are generating games for local audiences. As such, the statistics on
the growth of gaming in South Africa - and Africa for that matter - are not translating into any
local gains.

The gaming industry is a thoroughly globalised one, though as will become clear, those that
are reaping the largest financial rewards with respect to South African consumers are
companies based in the US and Europe. This is illustrated in a detailed study on consumer
patterns in South Africa in which a combination of primary and secondary data juxtaposing
gaming and lifestyle trends is presented.

As South African studios are catering for niche audiences with a hankering for ‘indie’ games
primarily located in the US and Europe, it was necessary to plot a similar study of global
audiences. This also allowed for the consumer characteristics relating to gaming to be refined
before tackling the local gaming consumer and gauging the potential of the South African
gaming audience.

The focus on consumers has not been covered by previous reports in any depth and while the
results will not surprise those working in the gaming sector, it does substantiate their models
and isolates in figures the disconnect between local producers and consumers.

In contrast to the 2018 report, the gaming studios under analysis have been uncoupled from
the animation ones. Our research found that animators are more likely to be absorbed into a
gaming studio than for an animation studio to service a gaming one.

“Gaming and Animation are different industries and have unique challenges, opportunities and
pipelines” (Tshimologong, 2022: 50).

The gaming value chain, which is visualised in this report, demonstrates some of those clear
differences, such as engaging consumers at an early testing phase of creating games. Unlike
animation studios, gaming ones face no challenges (other than financial) in publishing their
creations on a globalised platform and reaching consumers directly.

The objective of visualising the gaming process and the steps in disseminating and selling
games draws attention to the constituents deriving benefits at different phases. A closer look
at the gaming economy also brings into focus the main barriers to reaching local audiences
and the monopoly that the US has at all points of monetising content and on different kinds of
devices.

The main goals of the research are to provide:

I. A visualisation of the gaming industry value chain.
II. Insight into the primary producers - the gaming studios in South Africa.
III. An analysis of the different audience segments that consume games (at a global level)
and the patterns and trends relating to them.
IV. An analysis of the consumers of games in South Africa.

8
 V. Insight into the design of game economies.

3. Methodology

In service of a balanced, well-researched, and accurate report on the gaming producers and
consumers in South Africa and elsewhere, multiple approaches and sources were adopted
and are listed below.

1. As the intention was to build on the two previous reports on the gaming sector in South
Africa, SACO’s 2018 report, Unlocking the Growth Potential of the Online Gaming
Industry in South Africa: Challenges and Opportunities and Tshimologong’s For the
win: developing a strategy to grow and transform the South African game development
ecosystem (2021) formed a starting point for the research. In the case of the latter
report, however, several discrepancies between our findings and those it contained
surfaced.
2. A review of existing literature and research on the gaming industry was undertaken.
3. In coming to grips with the status quo in the local gaming sector, we adopted a focused
qualitative approach, producing case studies on each of the ‘Big 7’ Studios. This was
largely motivated by the fact that they were identified as the leaders in the sector. This
also compensated for the fact that it was difficult to gather solid data on all the studios
that we were able to identify due to either not being able to establish if they were still
active or operating as bona fide studios. The consensus suggested that the majority
of studios are assumed to be hobbyists even if they have websites or have published
games. The industry gaming body, Interactive Entertainment South Africa (IESA), was
not able to assist as their data is derived from anonymous surveys, which are no longer
published, possibly due to lack of engagement.
4. Other stakeholders in the gaming sector were interviewed including a small
independent studio and a new start-up enjoying the support of Tshimologong.
Stakeholders running incubators for the industry and those running an event dedicated
to gaming were also engaged.
5. In pursuit of tracking the characteristics of gaming consumers and patterns linked to
them, we embraced a quantitative approach, identifying existing data on global
audiences before relying on consumer statistics pertinent to the existing or potential
South African audience for games.
6. In identifying consumer tastes and which countries the dominant developers and
publishers originate from, we undertook different approaches to capture the ‘most
popular games’ including listing the number of followers, positive reviews and ‘top
trending’ games on mobile and online platforms. These platforms do not share data on
games that generate the most income or downloads. We can only speculate what
games these might be based on different filters that indicate popularity.
7. Lastly, the gaming economy and value chain pertaining to the production,
dissemination and marketing of online games is visually depicted. As has been
indicated, the focus of this model on the online gaming premium sector due to this
being the dominant one for the South African gaming community.

To ensure the anonymity of the stakeholders interviewed for this report we have assigned the
following identities to them. The table below, however, divulges their status in the industry.
We have named the studios in the producers chapter as it is important to do so given the
paucity of information on the sector. They all agreed to share information on their businesses
for this report.

Reference Position Time in industry Gender

9
 Stakeholder A Senior development manager >12 years Male
Stakeholder B Chief Operational Officer of >10 years Male
largest third-party service
company
Stakeholder C Director of oldest gaming >15 years Male
studio
Stakeholder D Young director of growing >6 years Male
gaming studio
Stakeholder E Co-owner of small two-man >10 years Male
studio
Stakeholder F Founder & Director of large >15 years Male
third-party service gaming
studio working in mobile
gaming
Stakeholder G Founder of Industry body, >12 years Male
working for third-party service
company
Stakeholder H Works at Industry body and is >5 Years Male
involved in incubator
programmes for young
gamers
Stakeholder F Director of gaming event >8 Years Male
Stakeholder I Director of large third-party >10 Years Male
service gaming company
Case Study 1 Small two man gaming studio
that has existed for 9 Years
Case Study 2 Details are outlined in the case
study.

4. An Overview of the Gaming Industry in South Africa

The gaming industry in South Africa is in its infancy. The most significant studios involved in
producing IP or service work with a staff complement above 10 people were all founded
around 2014. As such the gaming industry in this country has only existed in any significant
manner for around a decade. It seems likely that its belated growth – compared to gaming
industries elsewhere - is linked to local companies only gaining access to international online
platforms such as Steam (which is the biggest online market for PC-based games) in 2013. It
was in this year that the first SA-produced games, The Harvest and Desktop Dungeons, were
launched on Steam. Prior to that Valve had been an option, but as they would vet games it
was difficult to gain access to the global gaming consumer base. This put studios in the Global
South that were unable to get to gaming events or secure publisher representation at a distinct
disadvantage (Stakeholder C). Steam has democratised the global gaming market, as any
developer, no matter their location or their size, can load their game onto this platform for a
fee of US$100 (approximately R1 700).

Given how young this industry is, it is impressive what the prominent companies have
achieved. Nyamakop, which was founded in 2015 has only produced one game to date, but
has recently landed the biggest publishing deal for a South African game. Quarter Centre
Forward, South Africa’s oldest gaming studio established in 2008, garnered an award for
Desktop Dungeons at the 2011 Independent Games Festival – and by 2016 had reportedly
made in excess of R9 million (Vermeulen, 2016). The game was initially developed with funds
raised through crowdfunding. In terms of developing a successful library of IP, Free Lives

10
undoubtedly stands out as the country’s leading studio with five published games, among
them Broforce which has clocked sales amounting to US$1 million (R17 million) per annum.

The majority of these games and the focus of studios producing IP is on generating premium
games (a model where the consumer pays an upfront once-off fee) for PC or console. South
African studios are largely creating or servicing the ‘indie’ games niche – a term used to apply
to those games created by smaller teams with modest budgets, as opposed to AAA (or Triple-
A) games, a rating attached to those games which, like Hollywood blockbusters, are produced
by large studios with sizeable budgets (Bernevega; Gekker, 2021).

In this way, the South African gaming landscape is one defined by studios making indie games
that cater to niche audiences (Stakeholder C). However, on a global scale, ‘niche’ markets
can be lucrative ones (Stakeholder B). As such, despite being small there are opportunities
for local gaming studios to be successful and attract international publishing deals.

There are currently no studios in South Africa producing their own AAA games, only those
companies servicing those that are, such as Balisti Studios. The production of AAA games is
not only contained within a single large studio, but can span across multiple studios. This was
the case with the making of The Last of Us Part 2, created by Naughty Dogs studio, one of
the largest studios based in the US with the assistance of 14 other studios. Around 2 000
specialists were involved in producing that game (Maher, 2020).

In line with this it has been suggested that “the biggest indicator of a successful ecosystem
and the most effective means of growing an ecosystem is to have large studios operating in
the ecosystem” (Tshimologong, 2022: 14). As the Naughty Dogs production evinces, one high-
budget production provides work for many smaller studios other than the one driving the IP.
You could surmise that creating and producing a AAA game in South Africa would not only
require a large studio able to handle it, but a string of smaller ones. This would require a cluster
of medium-sized studios with the necessary skill set and likely, some local investment.
Presently, the gaming landscape in South Africa is not able to meet these criteria. The majority
of studios, 41 of the 49 tracked in this study (84%), are defined as microenterprises.

Crucially, there is a skills deficit in South Africa’s gaming industry, particularly at a mid-career
level. Every stakeholder interviewed for this report cited this as the primary condition
restraining the growth of their business and the industry at large. In this industry, the skill levels
of the staff are the main asset of a studio. Since the local industry is an ‘indie scene’, this has
determined the current level of skills. As such certain specialist game designs are not possible
to achieve with the current pool of developers (Stakeholder E). This may account for the
recurring observation made by a number of studio heads that the gaming industry in South
Africa “has plateaued” (Stakeholder D).

Testing this perception with existing data is challenging given that the number of studios
deemed to exist might not be able to reflect ‘growth’ since the majority are considered to be
micro-studios. So while previous reports (SACO, 2019; IESA, 2015, 2016; Tshimologong,
2022) have listed up to 60 studios existing, in reality a fraction of those are operating full time,
employ staff, or outsource work and generate their income from game development for their
own IP or in service of others.

This study identified only 7 studios that could meet the criteria listed above which makes for
an extremely small industry. This is the result of several factors, which will come clearly into
focus in this report, but also relate to the following characteristics of this industry;

1) It is a highly competitive globalised industry – a surplus of new games has led to

the notion of an ‘indie apocalypse’ (Stakeholder C).
2) Producing games is expensive and time-consuming.

11
 3) Returns on investment follow a long tail pattern – it can take up to ten years to
achieve a game’s full monetary rewards.
4) Creating IP is high risk due to the cost. A return on investment is not instant, but
rather depends on a sustained stream of consumers over a long period of time.
5) This is a field driven by and reliant upon different groups of specialists.
6) This is a data-driven industry – interest is measured in the numbers of downloads
and sales rather than in the quality of the artistry, narrative or technical nous of the
developers.
7) Gaming is therefore completely audience-centric. Their engagement is not only
measured in sales and downloads but also in their interaction with the product,
which feeds into its creation and updates. As such this is a highly participatory
medium.

Tellingly, the largest studio – in terms of turnover and employees - is focused on service work
for mostly international publishers and companies.

As the impact of the opening up of the Steam platform to the Global South demonstrates, the
growth of this industry is due to relationships with publishers, companies, and sales on
platforms that are based in the US and Europe. This is also due to the small size of the South
African consumer market for PC or console indie games (this will be addressed in more depth
further in the report) and an absence of local or African-based publishers investing in game
development. From this perspective, only the companies that are able to deliver a high quality
of work that appeals to a market – a niche one in this case – remain active and operational.
As such, only those studios detailed in the chapter on producers are currently producing work
of a world-class standard.

South Africa is proving to be a viable outsourcing hub for international gaming and publishing
companies. In part, this is due to the competitive rates that they are able to offer as salaries
in South Africa are lower than those of studios in the US or Europe. Additionally, exchange
rates favour international companies in the US and Europe as it is comparatively cheaper to
outsource work to South Africa rather than doing it all in-house. Local rates are also
competitive for the quality of the work in relation to other outsourcing tech hubs such as those
in India or elsewhere (Stakeholder I). As such the local gaming industry is dominated by those
focused on service work for studios and publishers beyond its national borders. This has
established the South African gaming industry as one that is very connected to the global
gaming market.

The global games industry is a growing one, at the rate of 5% year–on–year (Digital Vector,
2021). However, it is mobile and hand-held games that have been found to be the fastest
growing segment, followed by console games. The PC games segment, however, is
stagnating with almost no growth (Digital Vector, 2021).

At a local level, these statistics are similar though slightly different with regards to PC. In terms
of turnover in 2020, of the total South African gaming market value of US$289.5 million (R5
billion), mobile games command US$258.9 million (R4.4 billion), PC games attract US$17.6
million (R300 million) while console games account for only US$13 million (R226 million)
according to a Newzoo report (Bassey, 2022). This preference for mobile games echoes
across the continent with 95% of gamers opting to play games on smartphones or tablets as
opposed to consoles and computers (Bassey, 2021). South Africa is believed to have the
highest saturation of gamers, with 24 million people playing within a population of 59 million
(40%) (Bassey, 2021).

The dominance of mobile games not only globally but locally and the high turnover for games
in mobile and PC (in the billions and millions respectively) is clearly at odds with the picture of

12
a gaming industry that is so small – only 7 studios known to be generating profits – and is
focused on indie games for PC and console. Similarly, the figure of 24 million people said to
be playing games in South Africa suggests that the industry is out of sync with the audience.

As mentioned earlier, several stakeholders indicated that the overly inflated figures touted on
gaming websites and various studies did not ring true. However, at the heart of the
discrepancy between a large community of gamers said to be generating such huge incomes,
is the fact that South African consumers are not playing local games on their phones as the
current business model for mobile gaming is not viable economically and creatively for local
companies. As will be substantiated in further sections of this report in the analysis of top-
selling mobile and PC/console games, companies in the US are predominantly the
beneficiaries of the growth of gaming in South Africa. This partially explains why, despite all
these encouraging figures for gaming in South Africa, there is little local investment in the
development of games and gaming companies. Those focused on generating their own IP
either self-fund its development, raise funds through crowdfunding, or rely on foreign
publishers to do so.

Investors are not encouraged by the fact that many of the studios are “pursuing projects purely
to satisfy their artistic vision and not projects that are necessarily commercially viable,”
(Tshimologong, 2021: 33). This is linked to a disinterest in building games for mobiles,
preferring premium games which for PC or console are not hampered by creative limits that a
revenue generating motive can place on a narrative (in the form of in-App purchases) or a
game’s structure, which many studio heads suggested were more in line with gambling
strategies that exploit a player’s vulnerabilities. Some larger studios are said to have little
interest in scaling up or taking on larger, more ambitious games or projects (Tshimologong,
2021: 33). This could relate to the cost of outsourcing beyond South Africa and the shortage
of specialists in the country. Nevertheless, as it stands the local development community is
disillusioned by investment prospects while the local investment community is very
disengaged with the sector as a whole (Tshimologong, 2021: 33).

Demand for African content in the west has become more pronounced, particularly since the
release of Black Panther (Stakeholder B), but also due to other socio-political shifts. This has
manifested not only in the deal Nyamakop has struck with a large US publisher based on the
game’s ‘African’ content, but can also be detected in various programmes run by console
makers who are running workshops on the continent to identify new games and talented
creators (Stakeholder F, 2022).

“Africa is probably the last undeveloped market for games. In the long term, a lot of
these large companies are looking at Africa in terms of how to develop it. And in the
last 10 years that I've been here, we've had more and more and more people from
these large companies visiting the continent for the first time” (Stakeholder D).

As such the future outlook for the gaming sector in South Africa is positive. There is great
potential waiting to be unlocked. As this report will demonstrate, however, this relies on
connecting gaming studios to publishers in the US and Europe as African audiences cannot
currently sustain local studios or content, nor is there sufficient demand for content that is self-
consciously African at either a local or global level.

The disconnect between the interest in gaming in South Africa and the modest size of its
industry is palpable when you consider the number of gaming related events that take place
annually from Fak’ugesi, to the now defunct Amaze, Africa Games Week (previously called
Playtopia), Games for Change Africa, African Comicon and Rage Expo. That so many events
exist given the size of the industry implies that either they are servicing microenterprises or
addressing the consumer culture around gaming that does not seem to feed into the industry’s
growth. Other initiatives (hackathons and game jams) undertaken by foreign cultural

13
organisations often focus on attracting aspiring game designers to the industry, which is no
doubt bolstered by the promising statistics about the growth of games and their revenue.
However, it has been found that there are not enough jobs in the industry (Tshimologong,
2021: 6). The skills deficit experienced in this industry is at a mid-career level, as such the
industry is currently faced with the problem of “upskilling” a relatively large talent pool of juniors
(Tshimologong, 2021: 6).

The Tshimologong Precinct located in Braamfontein, Johannesburg which is associated with

Wits University is a digital innovation ecosystem that includes a coworking and maker space.
They also run structured programmes for creatives working in the digital sphere. The future
vision they have sketched out for the industry in their 2021 report, is one in which in a decade
there would be 25 studios employing at least 50 people, 50% would be black owned and a
significant number would be developing their own IP (Tshimologong, 2021: 17). Indeed, as
the industry is dominated by white men, transformation of it should be a future goal.

5. The Producers

In this study, we were able to identify 49 gaming studios. This number is less than in two
previous studies (SACO, 2019; Tshimologong, 2021) – where 60 were cited. This was partly
due to animation companies being included who do not develop games and a reliance on
surveys to collect information on gaming companies, undertaken by IESA (Interactive
Entertainment South Africa, an industry body driven by one person) which relied on call-outs
on gaming community websites, which may have been oversubscribed by hobbyists.

It is likely that other profitable and active studios exist, given that there is no industry
convention, fair, or industry body with information on them and since they do not need to
engage with local structures to generate an income, they can be tricky to track. Steam, the
largest and most accessible platform for PC games does not aggregate games based on the
geographic origin of the studio – the emphasis is on tracking consumers not producers - which
makes it difficult to track how many South African based studios are creating their own games
for this platform.

It is also very likely that many of the studios in this dataset are not active, in the sense that
they are currently involved in developing games, servicing other studios, or generating a
substantial income from games. Some companies, which say created a game 5 or 6 years
ago, may retain their company website for as long as their games are still available on Steam.
As indicated earlier, the sales of games can stretch out for up to a decade, however, in the
case of an unsuccessful game, this long tail may be too lean to justify creating new games or
to retain a formalised studio on a full-time basis.

The recurring view of the gaming landscape in South Africa is that it consists of largely
microenterprises and/or hobbyists (Tshimologong, 2021: 37):

“There are a bunch of micro studios, a few people trying to get something going and
do it professionally, but haven't been able to do it. They try for a year or two, it doesn't
work out, and then they disappear back into another industry. I wouldn't even call them
indie developers, I would just call them hobbyists. They have the appearance of a
company with a website and everything but I don’t actually think they're making a living
out of it yet” (Stakeholder D).

A census conducted among 168 people aligned to the South African gaming industry found
that of that number, 75% of gaming hobbyists indicated that they worked in software
development, with the next most common industry being animation (12.8%) (Tshimologong,

14
2021: 63). It was also found that 69% of the hobbyists were interested in working in the games
industry on a full-time basis. Three primary reasons were identified as barriers to this;
1) They could earn more in other industries.
2) There were insufficient job opportunities in the industry.
3) They lacked the skills they believed were necessary to participate in the industry.
It is interesting to observe that the difficulties involved in creating games that could be
successful and the high risk in doing so was not listed as a barrier.

A skills deficit, particularly at the mid-career level was cited by third-party service gaming
companies (those that produce games for other companies) and those pursuing their own IP
as one of the restraining factors to their companies' growth and that of the industry at large.
However, a spurt of growth experienced by one of the larger third-party service gaming
companies, has allowed them to offer competitive salaries to attract developers working in the
banking industry (Stakeholder B).

“The gaming industry is so fresh and new in South Africa that we haven't had nearly
enough time to mature it to the point where we even have those specialists. It will take
a big company like Ubisoft or EA or something opening up a branch here and training
people. That's the only real way I see it happening” (Stakeholder E).

The skills deficit is not only the result of specialists being attracted to other industries, some
stakeholders suggested that many skilled South Africans are either working remotely for
gaming companies based elsewhere in the world or had immigrated in pursuit of opportunities
elsewhere:

“We've exported an incredible amount of talent and skills over the last 10 years. And
of course, now with remote working, we've lost an enormous amount of creative
capacity to the world. They might still work here but tragically, many of them have
actually moved and are working for studios globally. So, now they’re pretty much lost
to the industry forever. The harsh truth is we are being left further and further behind,”
(Stakeholder F).

The sign of a healthy gaming ecosystem is one that boasts a large anchor studio, according
to Tshimologong (2021: 5):

“We need more large companies to be present in the system, and we need an
environment that facilitates and encourages this behaviour. It was suggested that a
key initiative that could help accelerate this process is to locate South African citizens
who are working at larger studios internationally and see if they could not be convinced
to come back to South Africa to establish studios here, bringing with them a wealth of
experience and an internationally linked network” (Tshimologong, 2021: 32).

Establishing or growing smaller studios into medium-sized ones could address the skills deficit
as it would be able to support a bigger pool of freelancers:

“Right now, the freelancers are better off working for international studios, because we can't
offer them the career-building opportunities within companies” (Stakeholder F).

A census of the games workforce (Tshimologong, 2021: 48) found that while the majority
(57%) are employed in development/programming work, those working in small studios would
often be involved in multiple roles. As such it was concluded that to find employment in the
gaming industry, one would need to have multiple competencies. Most stakeholders indicated
that the skillset of their staff was their greatest asset and accounted for the majority of their
overheads (Stakeholder B). While animators were easy to attract and could adapt to the

15
gaming industry, game designers were harder to find due to them requiring a high level of
games literacy, as were programmers, according to Stakeholder D.

It has been observed that the gaming industry “is starting to show signs of maturity in its
workforce, with over 21% of the workforce having more than 10 years experience”
(Tshimologong, 2021: 48). Most of the stakeholders interviewed for this report affirmed that
there are not enough people in South Africa who have this level of experience.

Some of the statistics gleaned from the 2021 census reveal that the overall demographics of
the industry’s workforce are also echoed in the ‘Big 7’ Studios identified in this study, which
are all owned by white men. They are as follows:

Two-thirds of the workforce are 35 years old or younger.

82% of the workforce is “white.”
83% of the workforce identifies as “male.”
94% of the workforce is South African.
24% of the workforce identify as being LGBTQ+, significantly higher than the national
average.
45% of the workforce suffer from at least one mental health condition.
(Tshimologong, 2022: 48)
.

As the case studies of the Big 7 Studios will show, at least two are actively shifting the status
quo in terms of racial and gender bias levels in this industry. Undoubtedly, when you analyse
the companies and when they were established, the local gaming sector is in its infancy.

Figure 1 Year in which South African gaming studios were founded

16
As the above figure 1 indicates, the growth of gaming studios has been steady, reaching a
peak in 2015.

The apparent abundance of microenterprises in the sector can hamper understanding where
the growth is taking place and gauging shifts, given it skews the overall picture. As indicated
earlier in the report an analysis of the producers therefore demands studying those companies
that are active, formal businesses that employ staff (of at least 10 people) or outsource.

In the context of this study, the term producers delineates those that are producing their own
IP and/or are involved in service work for other companies or publishers. In arriving at a
dataset that is limited to this group, we excluded those companies producing casino games,
and e-sports due to the fact that the business models and economic chains are tied to a
gambling one and in the latter case remains a ‘micro-cluster’ of economic activity
(Tshimologong, 2021: 36).

Tshimologong (2021) refer to the ‘Big 6’ Studios which they define as those that employ more
than ten people - yet they are not named in that study. These studios were credited as
accounting for “approximately half of all the permanent jobs in the ecosystem and more than
half of the revenue generated” (Tshimologong, 2021: 31). In identifying those studios that may
have attracted this appellation, we initially relied on existing data (SACO, 2019), and through
interviews with studio heads and desktop research, we refined the dataset to isolate this group
dubbed the ‘Big 6’ and discovered what recurring patterns could be detected.

Our research found there to be seven rather than six big studios – based on the fact that they
all had over 10 employees. The larger firms employed over forty while the smallest of the
group employed 10 people. On average, the ‘Big 7’ boasted a staff complement of 28.2 people.
In total, these companies employ 198 people. The discrepancy in the number of big studios
between this study and the one completed in 2021 is likely due to one of the studios having
mushroomed from under 10 staff members to over 25 due to a large and lucrative publishing
deal with a large US-based publisher. This demonstrates how quickly the landscape of this
industry can shift in the wake of deals with international publishers – which rely on convincing
and viable gaming prototypes and vertical slices (a visual and operational rendering of a partial
‘slice’) of a game. This will be delved into deeper further in the report.

As figure 2 below indicates, however, while successful IP can quickly grow a company, it is
the third-party service sector of the gaming industry that currently accounts for the most jobs
– 71% as opposed to 29%.

17
Figure 2 Percentage of jobs offered by the Big 7 Studios

From this perspective, you could surmise that at the present moment the industry’s growth
and job creation is more closely tied to service work than IP creation. This is not unexpected
given such companies can and should be developing multiple games simultaneously.

As the profiles of the top seven companies highlight, those undertaking service work are
looking at establishing their own IP in the future. Their position seems to be that it is far better
to create a stable company with a good reputation in the global gaming market first through
service work before embarking on the riskier pursuit of creating a game. It also makes
business sense with regards to royalties, as a gaming company with its own capital to invest
in a game does not require an advance from a publisher, which sees them lose out on royalties
at the launch of the game until all the costs have been recouped through sales.

From the perspective of companies that were set up to pursue their own IP, it appears that it
is only in the early stages that they would rely on publishers to fund the game’s creation and
once they have created a winning game that delivers on a long-term stream of income, they
are able to generate their own resources to fund the next game. However, they would still rely
on a publisher to market and ‘manage’ that IP. A section on publishers will follow, which will
look at the nature of that relationship.

18
Figure 3 Location of the Big 7 Studios

As the figure above details, the majority of the Big 7 are based in Cape Town. Given that most
of the studios on this list, barring one, derive their income and deal with clients and publishers
outside South Africa’s borders, there is perhaps little need for them to be established in South
Africa’s economic capital, Johannesburg. Remote work appears to have been a characteristic
of this sector prior to Covid-19. In many instances, key staff members work remotely and some
are South Africans based in other countries (Stakeholder C, Stakeholder B).

The Big 7 Studios – case studies

The Big 7 Studios are;

1) Ballisti
2) 24 Bit
3) Free Lives
4) Sea Monster
5) Quarter Centre Forward (QCF)
6) Renderheads/Yellow Lab
7) Nyamakop

As the profiles of each studio will show, only 3 of the 7 are involved in producing their own IP,
though two, which are currently involved in service work, have ambitions to do so.

19
Those that are involved in producing their own IP, are working with internationally based
publishers. The next chapter will explore that relationship in more detail. Having published 5
games and with one game (Broforce) continuing to bring in considerable revenue, Free Lives
can fund the prototype and development of their own games, whereas as the younger
newcomer, Nyamakop is relying on a large international publisher to fund the development of
their ambitious new project, said to be the biggest deal in the industry.

It is significant that each of the ‘Big 7’ Studios relies on a different business model, even if they
are service oriented. Renderheads, for example, have relied on creating experiential
exhibitions as their bread and butter, while 24 Bit initially built their business on porting, before
becoming involved in lucrative co-productions.

Please note that only games created under a company's own IP are listed. For this reason,
the games co-produced or made for other companies as per a service model are not listed.

1) Ballisti Studios

Established: 2014
Location: Cape Town
Employees: 12

About:

This company is an offshoot of Triggerfish Animation Studios, one of South Africa’s most
successful animation companies. They are a subsidiary of Triggerfish, that pursues work in
the gaming sector. What distinguishes them from Triggerfish is that they are not involved in
pursuing their own IP, rather they are solely focused on service work for internationally-based
companies from mobile through to AAA.

Business Model:

Service orientated. As they have strict non-disclosure agreements with their international
clients, they were not able to be interviewed. However, they have publicised some of their
high-profile clients which include Disney, Unity, Pixeltoys, Nordeus (a Serbian mobile games
company) and Bioware corp.

2) 24 Bit

Established: 2012
Location: Joburg/Cape Town
Employees: 43

About:

Canadian-born Luke Lamothe studied video game design in Canada before starting up a few
studios in South Africa. When he started 24 Bit, it was a one-man shop that relied on
freelancers and the focus was on porting games – adapting them for mobile or PC/console.
Indeed porting became the bread and butter of this company before it began to co-produce
games for other small studios at the behest of publishers.

20
24 Bit has built up a reputation for third-party service work and has secured favourable retainer
agreements with established indie games publishers in the US and UK, and is expected to
secure a relationship with a French publisher shortly.

They have done third-party work for some local gaming developers such as Free Lives and
Nyamakop, but primarily those studios’ games are generated for international publishers. As
such, 95% of 24 Bit’s revenue is derived from international clients.

In the last three years, they have tripled in size in terms of their staff and turnover. This spurt
in growth is partially due to Covid-19 and the increase in demand for games during this period
but also due to “stable relationships with clients who wanted to give us more work,” according
to Pieter Koornhof, its chief operating officer.

Business Model:

Currently, 24 Bit assists with the co-production and co-development of games created by other
studios. They derive a percentage of revenue from the games they co-create and they share
in the credit of the games and have thus been able to build up an international reputation.

“If you're a small studio with your first successful title and all of a sudden, investors and
publishers want to give you more money to build a more expensive title, but you don't
necessarily want to expand your studio, you don't want to pay for a single project and you
don't want to assume that risk, you would partner with someone like us to help you build that
game,” explains Koornhof.

The publishers that work with those small studios pay 24 Bit to produce and develop games
for these smaller studios. Two of the US publishers that they work with are Devolver Digital
and Anapurna.

Having relied on porting as their bread and butter at the beginning of their evolution, they have
expertise in mobile but have found that most of their current work is adapting mobile games
for console as Nintendo Switch is allowing for console games to become more ‘mobile.’

They do outsource from time to time when needed, but in such instances, they prefer to work
with local companies or freelancers as it is better for the bottom line.

24 Bit is interested in creating its own IP in the future, particularly now that the company is
stable, has the resources to do so under its own steam, and can weather the risk this would
entail.

3) Free Lives Games

Established: 2012
Location: Cape Town
Employees: 21

Games:
Broforce – 2014
Genital Jousting – 2018
GORN (VR game) - 2019
Cricket Through the Ages (mobile) - 2019
Terra Nil – TBA, 2022

21
Anger Foot – Full release due in 2023

Publisher:
Devolver Digital (US)

About:

Free Lives is South Africa’s leading games studio, having successfully developed six of its
own IP games. To date, Broforce (2014) remains the studio’s most successful game and more
than likely the most successful South African created PC game. It has enjoyed critical success
through various awards but also through sales, which continue to sustain the studio, allowing
them to fund some of its new games. GORN is their first VR game. They usually concentrate
on premium games for PC or console, but some games have been adapted for mobile. Cricket
Through the Ages is the only example of a mobile-only game and it is exclusive to Apple
Arcade.

The studio is led by creative director Evan Greenwood. Free Lives do not focus on one game
genre, rather their work is concept driven, often with a viral ‘joke’ at its core. In this way, their
success has relied on a strong creative team. Their games are not aimed at a South African
audience. They produce ‘indie’ games targeting a niche audience that is largely located in the
US. According to Steam statistics on sales of Broforce, 0.3% of their revenue is derived from
Africa while 46% of their revenue over all time has been generated from North America.

Business Model:

They focus on one strong concept and build the game around it. They test the concepts via
prototypes generated in a short time frame, from eight hours to a month. Those games are
typically tested on Itch.io and offered for free. If the game attracts significant consumer
attention as a free product (measured in the number of downloads where 100 000 is
considered to be significant) in the first couple of months, they will consider investing the three-
year timespan into creating a paid version of it. This full version of the game would be released
on a variety of platforms via their US publisher Devolver Digital, whom they have worked with
since creating Broforce. They have found that approximately 1 in 10 games attracts that kind
of audience response. Depending on what the studio is busy with, they might try to produce
and test up to 10 prototypes a year. “You have to be able to test a lot of ideas to find the one
that's really good,” says Ruan Rothmann, senior development manager.

They prefer to work on premium games as designing a game that depends on micro-
transactions to generate an income would place a limit on the narrative and enjoyment of their
games. Nevertheless, some of their games have been adapted to mobile such as Terra Nil.
They use 24 Bit to do their game porting so that they can concentrate on the creative work.
Cricket Through the Ages is a mobile game. Apple Arcade paid a lumpsum to acquire it and
they use a subscription service to generate income rather than via microtransactions - they
would not have entertained a free-to-play model.

Broforce and GORN have had long tail commercial benefits for Free Lives. Devolver Digital
continue to market their games on Steam with special promotions resulting in bursts of income.
Broforce has generated US$1 million in sales to date. This revenue has meant that they no
longer need an advance from their publisher to develop games, which allows them to generate
royalties on new games straight away.

“We have multiple projects in the running at the same time. So we're keeping a small team
with creative energy, but doing it with the support structure of a larger company (like Devolver
Digital and 24 Bit). It also means that when one game finishes, there are other projects that

22
are running that those people can join if they wish, or they can dive into the prototyping and
experimentation phase again for the next game,” explains Rothmann.

4) Sea Monster

Established: 2011
Location: Cape Town
Employees: 30-35 (with 20 additional engineers)

Games:

Sea Monster has created about 80 serious games - games that serve a function beyond
entertainment ie. education, branded engagement, and social goals:
• Live2Love (Cipla): a game that motivates audiences to adopt — and retain —
important habits around the use of HIV-related medication and testing.
• Business Boost SA (African Entrepreneurship Initiative (AEI)): a gamified platform for
young South African entrepreneurs to train and upskill.
• #POINTTAKEN - Sea Monster was 1 of 3 winners of the U.S. - Africa Tech
CStakeholder Genge where African tech companies leveraged their platforms to
combat vaccine hesitancy and misinformation.
• LIVIN’ IT UP (CAPITEC) - a mobile game to teach South Africans about balancing
daily money decisions against their long-term financial goals.
• WIP - FishFORCE - Sea Monster was tasked to develop a virtual law enforcement
game designed for law enforcement officers in the fisheries crime environment. The
prototype will be available before the end of the year.
• VR Examples:
o The last Maestro - created a VR healing experience for those struggling with
mental health.
o Working at Heights - a virtual reality experience for ArcelorMittal. The
experience is designed to test for a fear of heights as well as an employee’s
functionality at heights by having trainees complete a series of 3 tests.
• Lighthouse Platform:
o Lighthouse was built to allow Sea Monster’s existing clients to engage with their
users in the digital world by gathering a client company’s content and turning it
into a gamified user experience with real-life rewards
o Accessible on the web and across devices
o Clients: USAT, Ackermans, Makro, Disney, Savanna, and many more

About:

Founded by Glenn Gillis and Wynand “Munki” Groenewald who previously worked together at
Clockwork Zoo - Africa's largest animation studio from 2005-2010 which produced the 2D
long-form series URBO: The Adventures of Pax Afrika (2006-2009) for SABC 3, the fifth
season of Caillou (2010) for the Canadian Treehouse TV and Florrie's Dragons (2010) with
Wish Films (UK) for the Disney Channel UK. After the closure of Clockwork Zoo in 2010, Sea
Monster was established in Cape Town as an animation studio offering full, cross-platform
animation and game development services, in addition to augmented reality and virtual reality
solutions that drive business and social outcomes. Sea Monster was born out of the desire to
use games, VR, and AR technology as an instrument for change to develop new and
advanced methods of communication and education solutions for corporations. The company
was named among the top 20 in Fast Company South Africa’s Most Innovative Companies in
2021.

Business Model:

23
For games - clients approach Sea Monster with a problem to which they offer solutions through
gaming technologies. Some projects have been funded by other external sources, such as a
US company. Whilst animation work forms a considerable part of the Sea Monster portfolio,
their current focus and future intention is aimed at the serious gaming space and building their
brand engagement platform.

5) Quarter Circle Forward (QCF)

Established: 2007
Location: Cape Town
Employees: 10

Games:
Desktop Dungeons - Self-published 2011 and Steam released 2013
Drawkanoid - 2020
Desktop Dungeons: Rewind (remastered) - TBA

Publisher:
Prismatika (Germany)

About:

Of all the current active gaming companies, QCF is the oldest. It was established by Danny
Day. Rodain Joubert, who conceived of Desktop Dungeons joined the company and received
profit shares for the game. QCF has had a rollercoaster existence. The studio initially garnered
critical and commercial success with Desktop Dungeons. However, the gaming landscape
was different at that time as Steam was not accessible to game developers in the Global South.
This forced QCF to sell their games on their website using Paypal. Big publishers were
interested in Desktop Dungeons and offers were made that would fund its development further,
however, these were not realised. Once Steam became more accessible in 2013, Desktop
Dungeons was published on the platform.

Before developing their own IP, they undertook service work for corporates and educational
institutions. However, they found making games for corporates to be difficult given the small
budgets and short-turnaround times on games that often were not played by a large audience.
During that period they built 14 different prototypes, two of which became released games
later, Volantia (not a QCF product) and Drawkanoid. The stresses of having to come up with
a new IP to develop rather than returning to service work along with differences at a
management level would see the company more or less cease operating around 2016 to 2017.
The pressure to "build a good game right now wasn't conducive to creativity,” according to
Day.

Day undertook consulting work under the QCF banner before building up the company again.
The focus is currently on generating new IP. A remastered version of Desktop Dungeons is in
production and is due to be released with the support of the German-based publisher
Prismatika.

Day has repositioned QCF as a creative hub that promotes new talent, and diversity with the
foundation and grounding of an experienced core team. He is committed to growing skills and
developing the local gaming ecosystem through support from international publishers:

“I want to funnel international publisher cash into the local gaming industry economy,” says
Day.

24
Business Model:

QCF is almost conceiving of itself as an incubator for new games created by either internal or
external creators, who receive training as they build their prototypes. With Day’s experience,
the support of a core group of specialists, a network they have cultivated, and a German
publisher in the wings, these would be produced by QCF.

QCF use their own funds to build prototypes, but when it comes to production they do not put
their own money at risk; they only build games that the publisher has funded.

6) Renderheads
Established: 2015
Location: Cape Town
Employees: 35 (including contractors)

Games:
Metavoidal (in the testing phase)

About:

Shane Marks studied fine art before finding his way into the animation industry. He had been
freelancing in South Africa for Renderheads, a British-based company, for two years before
he proposed setting up a branch in his native country. He is a majority shareholder of the
South African office, which now runs independently of the UK studio. In terms of staff numbers,
Renderheads are one of the biggest studios in South Africa.

Renderheads cannot strictly be considered a gaming studio per se given that their main focus
is on specialising in experiential media for exhibitions and installations. However, they
undertake games for entertainment and education and offer game porting. Largely, in these
various capacities, they do not service the gaming industry but rather an array of corporate
clients. Nevertheless, at least half of their work pivots on gaming for entertainment and
education, and they are also involved in game porting. As such they have a substantial foot in
the industry, which they are expanding via Yellow Lab, an entity with a staff of five who are
dedicated to pursuing IP.

Renderheads will be expanding their operations to Mauritius with a view to establishing a more
Pan-African studio. This development is also motivated by difficulties with monetary exchange
controls in South Africa which have hampered the business, according to Marks.

Business Model:

Renderheads derive the following percentages of their income from;

• Games for Entertainment - 5%

• Game Porting - 5%
• Impact / Educational Games - 10%
• Experiential Media (e.g. museum exhibits / mini-games) - 50%
• Metaverse - 30%

Renderheads have worked with a few select South African studios like Sea Monster and
Formula-D. However, the majority of their clients and income are derived from companies
outside South Africa.

25
A team is working on producing IP under the Yellow Lab label. The intention is to self-fund
games. They are currently testing Metavoidal and are using it as a pilot project of sorts to feel
out this side of the business, as they have less experience with IP. As such they are not
working with any publishers at this stage. They have invested R6 million in the game of which
R1 million is dedicated to its promotion via a staff member tasked with building a community
around the game, according to Nick Hall.

7) Nyamakop

Established: 2015
Location: Johannesburg
Employees: 20-25

Games and Publisher:

Semblance - 2018 Published by Good Shepherd Entertainment (Netherlands)
To be Announced: Published by one of the largest US publishers (cannot be named due to
non-disclosure agreements)

About:

Co-founders Ben Myres, Judd Simantov and Cukia Kimani launched Nyamakop while
studying at the University of the Witwatersrand. They garnered a lot of attention with their
debut title, Semblance, which was started as a university project. This led to Nyamakop being
selected to join the Stugan accelerator – a non-profit accelerator co-founded and sponsored
by the creators of games including Angry Birds, Candy Crush Saga and Minecraft.

Semblance was the first game developed in Africa to be released on any Nintendo console.
The success of Semblance has since led to the studio landing what is rumoured to be the
biggest game development deal for an African gaming studio with a concept that is currently
in the making. It was through the representation of an acclaimed Hollywood talent agency that
the deal with a large US publisher came into being. Due to non-disclosure agreements
surrounding this deal, the type of game and concept are not publicised. Unlike the majority of
studios in South Africa, Nyamakop is generating a game or series of games that are
Afrocentric in terms of content.

Business Model:

Despite the African consumer base being such a small audience for PC and console games,
Myres was keen to figure out how to make games for Africans and to do so in a way that would
be viable. He came up with a concept and upon learning that 73% of African Americans play
video games, he realised Nyamakop could create a game with an African identity and
aesthetic that could be financially viable if it was aimed at this segment of the US audience as
well as a broader African audience in the diaspora settled in Europe. “The idea with this game
and future games is to make authentic African projects that allow the diaspora to reconnect to
their heritage,” says Myres.

African-based studios are best able to address this interest:

“It's very difficult for anyone outside of the continent to do that because you haven't lived an
African reality. If you haven't been surrounded by African culture, stories, and people, you can
do good research to be authentic, but it's hard to beat having grown up around it your entire
life” says Myres.

26
Their first game was partially funded in the beginning through loans from supporters in the
gaming industry and other entities as the concept was taken further. However, going forward
their model is one where their US-based publisher has funded the production of their game.
As is common with such an agreement, once the publisher has recouped their investment
costs, the royalties from the sale of the game will be split between Nyamakop and their
publisher.

The Afrocentric outlook of this studio’s content aligns with its commitment to retaining and
supporting a diverse staff complement. 80% of the studio’s employees are people of colour
and their narrative and operations directors are black women.

A Microenterprise

Given that the gaming landscape is dominated by microenterprises, there was some value in
taking a closer look at one of these businesses to discover how they came to be established,
how they sustain themselves and how they are able to undertake the production of their games.

The company selected here, Case Study 1, are by no means ‘hobbyists’ – the two co-owners
work full-time and undertake service work in the gaming industry and are able to support their
families by doing so. Indeed as has been observed they, like many other companies, have
little interest in scaling up their business (Tshimologong, 2021: 6). However, it is not due to
the South African environment not being fertile ground to do so but due to previous experience
in running a larger company, which proved to be creatively unsatisfying. Case Study 1 is also
at a point in their development where the partners are still learning the business itself and as
such are not in a position to upscale at this point.

Case Study 1

Established: 2013
Location: Cape Town
Employees: 2

Games:
Stasis - 2015 (self-published)
Cayne - 2016
Beautiful Desolation - 2020
Stasis: Bone Totem - Q1 2023

About:

The founders ran a large graphics and 3D marketing company mostly servicing the
architectural industry, in Joburg and employed up to 12 people. However, they were not
enjoying the work and the pressures that came with running the company that they established
in 2002. One of the founders had a strong artistic bent that he wanted to pursue in the games
sphere and started working on their first IP game, Stasis, in his spare time while they were
running their company. They raised funds through crowdfunding to develop Stasis which was
released in 2015. One of the founders worked on the game while the other ran their company.
This paid dividends and when Stasis was launched and started making an income the duo
became full-time game developers. Stasis is their most successful game and it continues to
sell well. To exploit the audience that it has attracted, they set their second game Cayne in
the Stasis universe while their new game, Stasis: Bone Totem, is a full sequel that is far more
ambitious. They expect the sequel to do well when it is released early next year.

Business Model:

27
The founders describe themselves as “control freaks” and this self-confessed characteristic
has shaped their business model in that they have opted to self-publish rather than pursue a
relationship with a publisher. This has meant that they have had to raise the funds for the
production of each of their games. They have relied on crowdfunding to do so, not only for
Stasis but also for Beautiful Desolation. In this way, the only royalties they need to split are
with either Steam or GOG - the platforms where they sell their games.

Going it alone has also meant that they are responsible for the marketing of the games. They
have built up an extensive database of players with whom they remain in contact via email
and use Twitter primarily to engage with players and the industry at large.

They concentrate on developing their own IP, but also provide concepts, illustrations and art
direction for larger international gaming companies. Their main motivation for doing so is to
learn best business practices from these interactions, while also building up a reputation in
the gaming industry.

They do outsource by contracting writers, musicians, actors, and translating companies, but
not for the programming and art production development of their games, which is impressive
given that they are a two-man team.

Beautiful Desolation, a futuristic dystopian tale was set in South Africa and one of the central
characters was a veteran of the Border War. However, they found that their American
audience struggled with the accent – there were many South African and African voice actors
involved in the production of that game.

Their target audience enjoys indie adventure games. They have found this resonates with
Americans, Britons, Australians, Germans and Russians. As such they have had their games
translated into foreign languages where their games find an audience. This does come at quite
a high price (R2 per word). “The more languages you translate the game into the bigger appeal
your game will have,” says one of the founders.

They are particularly driven to produce more story and spectator-centric games, since this
has had a huge impact on game design, via the Twitch portal, which is specifically designed
to facilitate gamers watching other gamers play games.

A Start-up/Incubator studio

What sort of models and focus are guiding the development of new studios? Who is entering
the landscape now? Below follows a deep-dive into one such company, which is part of
Tshimologong’s incubator programme.

Given that all of the established studios detailed above are all focused on largely servicing
niche markets in the US and Europe and are doing so mostly for PC/console game formats, it
is interesting that this new company has chosen the opposite approach. This may be
motivated by a desire to upturn the status quo, as is suggested, but also speaks to a need to
address and be connected to local audiences.

Setswana for “new beginnings”, Tshimologong’s vision is to become a catalyst for the
development of world-leading African digital entrepreneurs which will be achieved through
their approach to digital innovation which is seen to be at the intersection of hardware,
software and content. The Tshimologong Precinct is located in Braamfontein Johannesburg
and is associated with the University of the Witwatersrand. It is a digital innovation ecosystem
that includes a coworking and maker space that also runs structured programmes for creatives
working in the digital sphere. Since the launch of their flagship incubation and acceleration

28
programme in 2017, 159 start-ups have been incubated and 231 entrepreneurs impacted
(Tsimologong, 2022).

Tshimologong focuses on three key pillars: 1) skills development through the Digital Skills
Academy which seeks to help grow the talent for digital ventures to thrive, 2) incubation under
the Enterprise Development model which accelerates the growth of digital ventures at every
stage of their business ensuring desirable and feasible technology, as well as viable business
models with sound operations, 3) the Digital Marketplace provides platforms of access to
markets, partnerships and funding for digital start-ups and creatives. Under skills development,
a Gaming Academy was launched in 2022 to focus on developing skills for this industry.

The incubation hub aims to develop and provide access to the market for intermediate SMMEs
that are geared up for growth. The main objective for the 2022 cohort is to help them to improve
the quality of their games by providing technical and business skills that will shape their video
games to be more commercially viable (Tsimologong, 2022). The gaming hub currently has
three black-owned start-up studios that are working on three different projects and are at
different development and production stages. One of these SMMEs is Case Study 2 who is
working on a game called Fatpack Joe.

Case Study 2

Established: 2021
Location: Johannesburg
Employees: 5

Games:
Fatpack Joe (in the testing phase)

About:

Case Study 2 currently has five permanent team members who are graduates from Wits
University (with whom Tshimologong is associated) in game design relating to game
engineering, art, animation and script writing. The team have at least three years of experience
each in the gaming industry. At times, the team expands to include freelancers to work on
particular aspects of their current project. They tend to work with the same few freelancers
who they would like to make permanent once they can afford it. Case Study 2 deliver gaming
products relating to 2D games, 3D games, gamification, prototypes, game assets, animations
and systems. These all combine to form stylistic games, passion projects and experimental
projects of different genres within the game design space. Having started working together in
2020, the company was formalised in 2021 to allow them to be eligible to pitch game ideas.

The team came together at a campus game jam with a cash prize but found that
Tshimologong’s problem statement at the game jam was inaccurate and so their participation
revolved around creating a game to illustrate this. Case Study 2 won the game jam and was
invited to be a part of the incubator programme both as an incubated company and to give
their inputs into the structuring and the set-up of the programme. This related to their
observations that talented graduates in the gaming industry are leaving South Africa and those
that do stay have no guidance and are not paid enough to tempt them to stay so that a vicious
cycle is created. Moreover, Case Study 2 felt that the South African gaming industry was not
catering to the skill level that would allow people to go into e-sports and develop the consumer
base in South Africa.

Their current project, which is being developed under Tshimologong’s incubator programme
is Fatpack Joe attempts to address the issues that Case Study 2 has identified. The game is

29
designed to nurture critical gaming skills such as spatial awareness and using the controls
intentionally as there are multiple objects to manoeuvre around as the player plots a path
through the game.

Case Study 2 identified a gap in the South African market for a game like this as they
recognised that most gamers in Africa use mobile devices on which they play games that are
quite simple to play, like Candy Crush, and do not engage them on a more developed skill
level which makes it unlikely that they will progress to playing more complex games that
require greater mastery of controls and within game awareness. If someone does try a more
complex game like Brawl Day, they often find it too hard and daunting. Moreover, many of
these games are too difficult to run on mobile which then excludes the majority of the African
market. Fatpack Joe thus acts as a bridging game as it develops the necessary gaming skills
on mobile that will allow gamers to progress to more complex games that require more
advanced gaming skills.

“We believe that giving the community a tool to form such relationships with games caters
towards bringing gamers on the periphery of gaming more into the main line. As such hopefully
producing more competitive players over time as well as game developers,” says one of the
founders.

Business Model:

As part of Tsimologong’s incubator programme, Case Study 2 receives financial support as

well as access to equipment (though they purchased their own equipment with the first
payment from Tsimologong). However, they feel that the most valuable support they receive
is the connections to the industry and the introductions that help build networks.

Fatpack Joe is due to be completed before the end of the year. Through their networks, Case
Study 2 has been in contact with Apple South Africa with whom they are moving forwards with
delivering the mobile build of the game. For Android distribution, Case Study 2 has an
opportunity to pitch to one of South Africa’s main cellphone network providers. Fatpack Joe
will be free to download and play and Case Study 2 has decided not to include advertisements
in their game to generate revenue as they believe that it quickly reaches diminishing returns
for South African audiences. However, players will be able to purchase skins to customise
their game character.

This particular cellphone network provider is in the process of launching a new business model
for mobile gaming whereby players use airtime to make in-game purchases rather than linking
a credit or debit card to the game (Marule). This may be more comfortable and acceptable to
South African mobile gaming audiences and parents as there is an unwillingness to link credit
or debit cards to games (Marule). This is a model that Case Study 2 may benefit from in
generating revenue from their game if their pitch is successful. This may help with converting
South Africa’s player base into a consumer base which is seen by Case Study 2 as one of the
main challenges in the South African gaming industry.

For the time being, Case Study 2 plan to work in mobile gaming as it speaks to their design
goal and mission statement of targeting African audiences for development. Currently, there
are only 700 000 consoles in South Africa out of a total population of 60 million people and so
they believe that the market is too small to be a viable target at this time as they will not be
able to grow the gaming market or to reach and inspire the next gamer or competitive player
through console or PC games.

This speaks to the personal experiences of the Case Study 2 team as they developed their
passion for gaming and the desire to work in the gaming industry by growing up playing games.

30
Through Fatpack Joe, they are attempting to replicate their own experiences with gaming in
developing critical gaming skills to develop a gaming audience and consumer base.

Summary of Studio characteristics:

• The majority of studios are based in Cape Town.

• Only one service-based company contracts for local businesses. All service-based
studios are dependent on revenue and clients from the US or Europe.
• Service-based companies are larger than those pursuing their own IP.
• South African studios are all mostly focused on production for PC and console games.
• Service-based companies have been involved in the production of mobile games but
their focus is on premium games for PC.
• Those studios driven by creating their own IP are usually aligned with an international
publisher.
• Most studios do not rely on outsourcing.
• Most staff are South African based.

6. Does SA make for a sustainable Gaming Development Hub?

Is the South African environment conducive to game development, whether for those studios
driving IP or producing for other studios and/or publishers?

As the chapter on consumers will clearly demonstrate, the gaming industry in South Africa is
not catering to locals. This is due to low fixed access internet connections amongst the
population generally while the group that does have fixed internet access and an interest in
playing niche indie games is too small to sustain them. This is coupled with the fact that South
Africans have a preference for mobile games.

As a result, the gaming companies are catering to an audience that is at a geographic remove
from them. In this way, particularly for those focused on IP, they have little idea what games
will appeal. This has led to fairly extensive games testing. However, for those companies that
are succeeding, for every 10 game concepts they come up with, only 1 may be able to sustain
a large audience over an extended period of time (Stakeholder A).This requires building many
prototypes of games. Yet there are no grants or public or private funds that support the making
of prototypes. As such, this is one of the barriers for companies, particularly the smaller ones
that do not have revenue from other previous games or via service work to build them
(Stakeholder A).

Prototypes are much cheaper to produce than a complete game since they require much less
labour and time. They can also be tested on the market for free – largely on Itch.io (see chapter
on economic value chains) where audience interest can be gauged and secured so that there
is potential for a successful prototype to attract an international publisher. The number of
downloads of a prototype on a ‘testing’ platform like Itch.io substantiates investment.

However, in the absence of local investment not only for prototypes but game development
not being realised locally, studios need to look to international publishers (if they don’t have
their own funds, which some of the more successful companies now do). As such being
located in South Africa, at such a geographical remove from these networks places them at a
disadvantage, as it is costly to travel to gaming conferences and they can be difficult to access
(Stakeholder E).

31
Some government funding to attend major gaming events has been made available, but in
some instances notification of a successful application is only received a week before the
event making it difficult for studios to secure meetings and arrive prepared. The Africa Games
Week event has tried to address this problem by inviting international publishers to attend, but
such invitations require resources that are not always readily available, according to
Stakeholder C. However, this year it is expected that representatives from EPIC, XBOX,
PlayStation, Ubisoft, Raw Fury, Xsolla, and Nintendo will be in attendance (Bowden, 2022).

A lower cost of living in South Africa, which is believed to translate into cheaper salaries for
gaming professionals, has allowed local studios to remain competitive in the global market.
Though as observed earlier, South Africa is not as cheap as labour in India or other countries
in the Global South.

“We are seen as workhorses not sweatshops” (Stakeholder B).

Not all stakeholders felt that a lower cost of living meant that gaming companies should offer
good quality work at bargain prices. Nor is cost always relevant to publishers, who are looking
for high quality games.

“We can make a game that is the same quality level as something else for half its budget. But
that also means that you're going to be stressed while you're doing it. So we prefer to say we
can do this for 80% or 90% of that budget. The publisher does not care that we're spending
less money. That's not the publisher's goal, the publisher's goal is to build a thing that is as
good as or better than the existing games in the market,” (Stakeholder C).

Those studios focused on operating as service providers cite that English-speaking staff and
being in the same time zone as Europe is a distinct selling point and this is pointed out on
some of their websites.

A lack of government support, and other unfriendly business trading practices were cited by a
number of stakeholders as a barrier to SA as a gaming development hub. Currently, there are
no tax incentives, grants or other financial incentives to enable growth (Tshimologong, 2021:
6) while the supports that do exist are not fit for purpose (Stakeholder B).

Recently, representatives from the Department of Trade and Industry have engaged with
some of the larger studios, inviting them to apply for some tax benefits afforded to companies
that provide services to those beyond South Africa. However, the criteria is not appropriate for
medium-sized enterprises.

“Policies appear to be aimed at companies that are providing outsourced skills that
predominantly bring money from outside the country, however, they are tailored for
larger companies from outside South Africa like Amazon. They request documentation
that is not befitting of our size. For them, it is a box-ticking exercise,” (Stakeholder B).

An unstable electricity supply that load-shedding by Eskom has created has been challenging
for gaming companies as not only do they need internet access, but they cannot work on
laptops when working with certain software and programmes. One stakeholder suggested that
unstable electricity could motivate them to relocate their company and disinvest from South
Africa.

Despite all of these challenges, the majority of the ‘Big 7’ do not appear to have any plans to
relocate their businesses as was indicated in the Tshimologong 2021 study. The majority of
stakeholders interviewed for this report suggested that remaining in South Africa allowed them

32
to be more competitive in terms of the quality versus cost they could offer if they were based
elsewhere.

Nevertheless, Stakeholder I affirmed that his company would establish an office elsewhere in
Africa which would allow them to benefit from less prohibitive exchange controls and other
policies that would allow them to grow their business into a more Pan-African one. According
to Stakeholder G, the majority of the Big 7 have holding companies in Mauritius. This does not
indicate that these companies intend to relocate their businesses to that African country, but
rather that Mauritius’ sophisticated banking operations allow for them to retain dollar-based
income in that currency and sidestep some of the exchange controls in South Africa. This
obviously also presents these companies with some tax benefits as they would be able to set
up subsidiary companies which would allow them to better track their investment in a particular
IP and measure their ROI, which in this industry can only be gauged in the long-term.

7. Gaming Economies & Value Chains

Figure 39 Gaming industry value chain for PC indie games

Pictured above is a visualisation of the gaming value chain specifically mapping the production,
processes and online channels for PC indie games. The dynamic it depicts is informed by the
experiences of the seven big South African studios. As such the mobile gaming economy is
excluded, as it largely appears not to be the focus of South African developers. At the end of
this chapter, this is discussed in more detail.

33
Some of the notable characteristics of this gaming economy are;

1) Testing on Audiences early in the process is vital. Gaining input and gauging player
interest at the prototype phase was listed by all as an essential element of their
business. The majority of studios cited Itch.io as the platform they preferred as it
targets indie players. It is smaller than Steam and there is no cost involved in uploading
a game. The games are available for free and if there is sufficient interest in the game,
the studio will consider investing the time and labour into developing the game properly.
If they cannot self-fund the game’s development, then they may approach a publisher
with the data on the game (gleaned from Itch) to pitch for investment. For South African
studios the early testing of prototypes is essential given the high-risk and niche
audiences that they tend to target.

“If people are willing to spend their time on a game, if they're willing to download it, it
most often means that they're also willing to spend money on it. So for us, it's been a
very good barometer of a game's viability” (Stakeholder A).

2) Unity/Unreal Engines are American-based engine providers that offer ‘premade’

elements or assets with different kinds of functionality that can be adapted in building
games. In this way, developers are not starting from scratch. The majority of the Big 7
Studios use Unity, and only one Unreal. Studios have to pay a licensing fee per seat
(per team member), per year or per month to use these engines. A subscription
service with Unity for a professional studio costs around US$1 800 (R32 000) per seat
per year.

3) A Vertical Slice would be commissioned or requested by a publisher in advance of

investing in developing a game. They would want to be sure that the studio is able to
create what they are proposing and therefore request them to generate a small section
of a game to get an idea of the look and feel of the game as well as the technical
abilities of the team to deliver on their vision.

4) Publishers play a fundamental role in the game value chain. They are involved in the
following activities; selecting game titles, either from independent developers or from
in-house teams, funding their development, overseeing production by assessing
progress against project milestones, management of testing, localisation, marketing,
manufacturing and distribution to retailers. Game publishers account for the bulk of
revenues in the value chain. Their main task is to identify titles and market these to
distributors, retailers and end users. Most South African studios work with smaller
publishers. However, there are large global companies that employ thousands of
people, mainly in marketing, who finance development costs and acquire intellectual
property rights for new games (Digital Vector, 2019: 118).

If a publisher invests in the development of a game, which essentially translates into

financial support of a studio’s overhead costs from two to three years, the studio will
not be able to claim full royalties on sales of the game until this investment and other
costs such as marketing, translations etc have been recouped. The standard royalty
split between a publisher and a studio is 30/70 in favour of the studio.

“Having a publisher reduces the stress on the team. It's important to have the people
who are working on the game be able to focus as much of their energy on the creative
side of it. A publisher is experienced in liaising with other partners and negotiating
contracts. So, if PlayStation wants your game then they will give you some sort of
incentive to get it on their platform and be sure to let you know when it is a good deal.
They are able to manage the long tail – and market your games” (Stakeholder A).

34
 The marketing of games is very time-consuming. Building audiences has to be done
in different community spaces and publishers are able to speak to those that are
beyond South Africa’s borders, perhaps in ways that locals might struggle with.
However, this means that studios do not have a public profile or manage it as such –
in other words, audiences will often associate a developer’s work with the publisher’s
brand and not necessarily the studio that has produced it (Stakeholder D).

On paper, you would expect South African studios to argue for a local publisher, and
while there is one, Carry 1st, they do not invest in PC games. They appear to be more
interested in mobile games, but also are not known to invest in developing games
(Stakeholder G) and some stakeholders observed that this publisher were
disconnected from the local gaming community and landscape. Most studios are more
interested in working with publishers who can reach their audiences, make deals and
are part of an international network that they cannot access.

A Profile of a US Publisher: Devolver Digital

Devolver Digital work with two of South Africa’s most successful studios. They were founded
in 2009 in Austin, Texas and have positioned themselves as a “punk rock” indie game label
that “favours the small, offbeat, retro, and hyper-violent game experiences” (Vanderhoef, 2019:
19) 1. To date, the publisher has 103 game titles to its name (including upcoming releases).
They have published a wide range of games created by studios around the world including its
notable debut titles of the HD remakes of the first two Serious Sam games (2009 and 2010)
with Croatian-based Croteam 2, Hotline Miami (2012) with Swedish-based Dennaton Games,
Reigns (2018) with UK-based Nerial and Inscryption (2021) with Canadian indie developer
Daniel Mullins Games.

Key to the success of Devolver Digital was its early decision to prioritise digital distribution
over the sales of physical goods by focusing on publishing for the online PC platform Steam
(Webster 2019). In addition, Vanderhoef explains that, unlike traditional publishers who
exercise control of content through development benchmarks and who often retain ownership
of intellectual property, smaller publishers like Devolver Digital profess to “understand the
proper support and distance to offer indies, who value their autonomy while still requiring
financial and marketing assistance” (Vanderhoef, 2020: 20). By negotiating deals with Steam
as well as other platforms such as PlayStation, Devolver Digital helps launch indie games in
new territories and handles the logistics of showcasing games at events like E3 and PAX.
Through the assistance it provides to game developers, Devolver Digital helps games become
more visible and increases their reach to wider audiences around the world (Webster, 2018).

Although the company was launched over thirteen years ago, Devolver Digital has remained
small in size. In 2019, it was recorded that the publisher had grown to a team of 16 people
with no physical office and a presence “scattered across the globe” (Webster, 2019). Towards
the end of 2021, Devolver Digital became a publicly traded company on AIM - the Alternative

1
Citing Keogh (2019), Vanderhoef further explains that commercial indie games and developers refers to the
“games and studios that exist to explicitly sell games in the marketplace with the goal of making a profit. These
contrast, for example, with more informal game development practices, such as non-commercial, DIY, and craft
game-making” (Keogh, 2019).
2
The co-founders of Devolver Digital had a prior business relationship with Croteam owing to work completed
by them whilst running a predecessor to Devolver Digital called Gamecock, which launched in 2007. The co-
founders of Devolver Digital also built a publishing label before Gamecock in 1998 called Gathering of
Developers. Both Gathering of Developers and Gamecock were eventually acquired by larger companies and
subsequently shut down (Webster, 2018)

35
Investment Market which is a submarket of the London stock exchange. Despite the bold
move, the company confirmed that employees would remain the majority owner of Devolver
Digital. In November of 2021, the company also simultaneously announced its acquisition of
several studios including Croteam, Dodge Roll, Nerial, and FireFly Studios.

5) Maintaining and engaging players remains an essential part of sustaining the life of
games. As has been pointed out throughout this report, this is not simply an activity
that takes place prior to a launch – games have a substantial long tail in terms of their
profitability. This requires continuous engagement with audiences, for example
through promotions and sales on Steam, as well as developing relationships on
Discord (an online platform where communities are built up around games and
exchange information with each other and the creators), particularly for smaller studios
that do not have a publisher marketing their products and cultivating communities
around their games. Creating a game that is ‘spectator friendly’ is part of this activity,
as a game that others will enjoy watching someone else play is the fundamental
motivation behind platforms such as Twitch, which no doubt drives sales.

6) Steam has democratised the dissemination of online games in that anyone can load
a game for US$100. There were 11.7k games released on Steam in 2021 (Video
Games Insights, 2022), which translates into 30 games being released on the platform
a day. It is a sophisticated and complex platform – uploading a game takes a certain
amount of expertise, so knowledge and experience are somewhat of a barrier.
Success rates are low. Only about 8% of the games released in 2021 sold 10 000 units
or more (Video Games Insights, 2022). As such, those South African studios that have
managed to earn a living selling their games on this platform have done so against
great odds, particularly in light of the fact that 95% of the games are classified as ‘indie’.

All the studios in South Africa barring those involved in service work sell their games
on Steam, that is how they generate an income. Only 20% of games are free-to-play
on the platform and that figure is said to be declining. There is also a cost to the studios
to sell their games on Steam as Steam takes 30% of sales revenue from the developer.
This revenue split is further adjusted if the game’s sales generate more than US$10
million or US$50 million.

7) PlayStation and Xbox have come to operate very much like Steam in that they
operate as digital storefronts. There is more of a filter or a form of gatekeeping involved
in that their games have to go through a vetting process before they are approved to
be sold on Xbox websites and/or listed in Xbox stores. Revenue is also split along the
30/70 percentage in favour of developers. However, both of these platforms also have
a subscription service (PlayStation Plus and Xbox Game Pass). In this case,
PlayStation and Xbox pay a lump sum to the developer for the game and a contract
will then further stipulate how long the game will be available, if it is exclusive and/or if
there are royalty percentages. As third-party publishers would more than likely act on
behalf of SA studios in negotiating these contracts, the lump sum would be split with
them (Stakeholder A). Netflix is also looking at expanding into this territory and has
been engaging with some local studios on this (Stakeholder B).

The Monetisation of Mobile Games

There are four ways that mobile games can be monetised. The “Free-to-Play” (often shortened
to “F2P”) model is the most common and popular and relies on in-App purchases to generate
revenue. Most of the stakeholders interviewed for this report suggested that this model
automatically shapes the design of a game in such a way that it exploits the psychology of the

36
player. This not only results in a game structured around extracting money from players but
also impedes the narrative, immersiveness and playing experience so that many have
compared this game design as being not too dissimilar to gambling (Stakeholder G,
Stakeholder A, Stakeholder C).

“The premium model (where you pay upfront for a game) is just more honest, right? It's like,
here's everything, I'm not going to try and hook you with some weird psychological tricks so
that you'll spend money two weeks from now,” (Stakeholder A).

F2P games can also monetise via advertising that is displayed throughout the game. The
owner of the game generates income for each advert that is screened. These are typically
adverts for other games (Tshimologong, 2021: 26). However, your game needs to be
incredibly popular to attract advertising and thus requires the game developer to advertise
their own game on other games, which might be at a fairly high cost. In light of this, you would
need to create not only a very popular game but also one of high quality. South African gaming
companies would not be able to compete at this level (Stakeholder G).

“You have to be spending a million US$ a month in advertising and user acquisition costs.
That money is going to the advertisers who are taking money from one brand to show it to
players in somebody else's game. In my head, that just doesn't make any sense as with that
money you could be producing 20 games on PC that have a better chance of generating an
income,” (Stakeholder C).

The third model is the premium model, which is in line with the PC and online gaming one
where a single, once-off fee is paid upfront. This is not so popular given the most common
model is F2P.

The fourth model being advanced by platforms such as Apple Arcade follows a subscription
model. Much like Netflix, users can subscribe to the service and play a number of games for
a monthly fee. In such a context, the developer is paid a lump sum as a signing bonus and
then receives some royalties based on sales that would be based on the number of downloads
(Stakeholder A). This kind of model is also being advanced in the PC/online gaming sphere
too, as outlined above with PlayStation and Xbox.

“Premium mobile games, for all intents and purposes, have completely died, and subscription
services are still very new and seem to rely on existing well-established development houses
(and their IP) for their content. With this in mind, we must fully understand how the F2P
monetisation model works for local developers and the local consumer market. There is
insufficient demand for ads targeting African consumers to drive up the value of the ad space,
making it next to impossible to get sufficient income to make a game profitable,”
(Tshimologong 2021: 26).

Summary

At different junctures in the production of games, US-based companies are profiting from
South African studios – in terms of the tech tools (Unity and others) and platforms for
dissemination. Those studios using a third-party publisher are losing up to 60% of their game
royalties – 30% to the publisher and an additional 30% to Steam (or other platforms). This
highlights the importance of selling volumes by creating games that have a very wide appeal.
These gaming economies draw attention to both the advantages of being part of a global
ecosystem – gaining access to audiences that do not exist in your own territory, but in doing
so, revenue generated from IP is flowing across the borders too.

37
 8. Consumers

As the previous chapter indicated, the majority of the gaming studios in South Africa are not
setting out to create products for the local consumer, whether it be for online, console or mobile
games. This is because it has not proven to make economic sense to do so. Our research into
global and local audiences for games substantiates this view, though it does point to a
potential pan-African and African diaspora market that is not being tapped.

In coming to grips with global trends and the patterns defining consumers globally, the aim is
to understand what portion of those audiences are relevant to local studios and to shed light
on the potential audience in South Africa. In other words, what characteristics can we discover
about global audiences for games that might help us understand South African consumers of
games? Or conversely, as is the case that follows, to look at what factors or conditions in
South Africa might be limiting or restraining audience numbers for online games. Naturally,
the characteristics which define a global audience might not translate to a South African one
– given the different socioeconomic conditions in this country, but they help provide a lens
through which to discover potential audiences or limits to developing them and indeed what
would be needed to do so in South Africa. Though figures for mobile games are presented
throughout, as the focus of local gaming studios is on games for PC, this is of more relevance.

Secondary data on global and local consumers, reflecting the ages, generations, education
level and engagement with technology is juxtaposed with primary data collected for this report
on popular games on various platforms from PC and mobile and the sale of console games.
This data can contextualise the size and focus of the South African gaming landscape, its
peripheral position within the global industry, and the lack of motivation for creating products
for local gamers.

Global Gaming Audiences

Our research illustrates that the demand for games at a global level is expanding each year.
Once considered a niche hobby with an elusive audience, gaming has become mainstream
with over three billion gamers, or approximately 40% of the world’s population (Patel, 2022).
There is no sign of the gaming industry's growth slowing down as it is projected to grow to
3.32 billion gamers by 2024 (see figure 4), an increase of over 1 billion gamers since 2015
(Newzoo, 2021).

38
Figure 4 Global player forecast 2015 – 2024 (Newzoo, 2021)

During COVID-19 lockdowns, global gaming audiences increased as people were confined to
their homes and turned to mobile and PC/console gaming for entertainment (Mordor
Intelligence, 2021). The pandemic also accelerated the growth of game live streaming
audiences. In 2021, the worldwide game live-streaming audience reached 728.8 million, up
10% from 2020 (Hotplay, 2021). One of South Africa’s largest service studios, 24 Bit, has
experienced sharp growth recently, which it partly attributes to this boom in online gaming.

While there were more players, the PC and console market shrank by 1% in terms of turnover
in 2021 due to the effects of COVID-19 in delaying the release of big games and shortages of
new consoles. It might be likely that the increase in revenue experienced by South African
studios relates to an increase in the niche gaming market, but this is only speculation. The
mobile gaming market, however, increased its revenue in consumer spending to US$90.7
billion in 2021, growing 4.4% from 2020 (Newzoo, 2021). This accounts for more than half of
the global games market revenue. The segment is also less vulnerable to the effects of
COVID-19 than PC and console gaming (Newzoo, 2021).

This data correlates with that tracking popular devices. Smartphones are the most popular
device, representing 45% of the global market, while console games represent 28% and PC
browser and downloaded/boxed games account for 20%. This means that in 2021, 2.8 billion
of the world’s 3 billion gamers played on a mobile device. This is compared to 1.4 billion on
PC and 0.9 billion on console (Newzoo, 2021).

39
Figure 5 2021 Global games market per segment (Newzoo, 2021)

As suggested by global games market data per device segment (see figure 5 above), the slice
of the veritable gaming pie that South African studios (particularly those creating IP) are aiming
to capture is the browser PC games (primarily) and downloaded/boxed PC games segments,
which only accounts for 20% of the global market in terms of revenue, which appears to be
shrinking. Of course, the service studios are involved in smartphone games, but this is only
the focus of one studio.

The service work and new IP being created by South African gaming studios tends to be aimed
at North American and European audiences, however, as the graph below outlines, the

40
highest concentration of gamers are located in the Asia-Pacific region, claiming 55% of global
gamers (Newzoo, 2021). It is also the region that generates the most income.
The Middle East and Africa represent the fastest growing regions with 10.1% year-on-year
growth from 2020 (Newzoo (2021).

Figure 6 2021 Global game players per region (Newzoo, 2021)

Nevertheless, the US, or the North American market generates more income than the Middle
East and African regions (see figure 6). This speaks to a number of observations made by
South African stakeholders that while locals play games, they do not spend money doing so
(Stakeholder G). This squares up with other statistics relating to South African consumers and
the lack of spending power of our youth, who are the population group most likely to be
gamers, given the global statistics and patterns outlined below.

41
Figure 7 2021 Global games market revenues per region (Newzoo, 2021)

Given that most South African games are released on Steam and that this is the primary
platform on which they release games, it is significant to note that based on a live snapshot
(Steam have a live map showing how many users are online) most Steam users are located
in the US and China with secondary hubs in Russia, Brazil, Canada, Australia and Europe
(Steam, 2022). However, Africa does not have many Steam users, though this could
potentially grow. South Africa currently represents 0.2% of global Steam traffic (Steam, 2022).
It should however be noted that there are other gaming platforms and means of purchasing
games which are not captured here.

Figure 8 Steam global traffic shown through total bytes downloaded per country

42
Who are Global Gaming Audiences, Where are They and What are Their Characteristics?

Gaming has become more mainstream and the audience engaging with games has become
more diverse, as such there is no narrow criteria to define them. The widespread popularity of
casual mobile games has helped to diversify the demographic of the modern gamer (Patel,
2022). As smartphone processors become cheaper and more powerful, more high-profile
popular games such as Call of Duty, Fortnite and Need for Speed, are becoming available for
mobile. This is especially true for emerging markets where mobile gaming has surpassed
console gaming in popularity due to a low price barrier to entry for gamers. This has fuelled a
massive growth in player numbers over recent years (Patel, 2022).

As the data shown earlier in figure 7 suggests, global gaming is dominated by the Asia-Pacific
market, with Middle Eastern and African markets experiencing fast growth. It has been found
that gaming is most popular amongst younger people, Millennials and Gen Z (see figure 9).

Figure 9 Average number of hours respondents who are frequent gamers spend playing video
games weekly across all devices (Westcott et al, 2021)

Despite this, gaming is becoming more popular with each passing generation (see figures 10
and 11 below) so that it is now the most popular source of entertainment amongst Gen Alpha
with 94% engaging with games and games content (Newzoo, 2022).

43
Figure 10 Percentage of leisure time spent per week per entertainment platform per
generation (Newzoo, 2022)

Figure 11 Share of gaming enthusiasts per generation (Newzoo, 2022)

The greater penetration of gaming among younger generations is attributed to them having
grown up connecting through digital networks and engaging with digital and interactive
entertainment. Gaming is meeting these expectations through unique immersive experiences
(Westcott et al, 2021). This connects to the concept of the metaverse as gaming ecosystems
are evolving into virtual worlds so that it fulfils needs beyond gameplay (Newzoo, 2022). As a
space for immersive and interactive entertainment as well as the community, gaming’s
popularity is likely to continue to increase.

Though most popular with younger generations, gaming is attractive to everyone as almost
half of Baby Boomers engage with games (Newzoo, 2022). Motivations and engagement with
games are diverse (see figure 12), making it important to understand gaming personas. While
most Baby Boomers and Gen X play games as a way to fill time, younger generations are
more multi-dimensional gamers as they enjoy the gameplay, the sense of community as well
as other related gaming content (Newzoo, 2022).

44
Figure 12 Share of each persona per generation (Newzoo, 2022)

Globally, 54% of gamers are male and 46% are female. However, whilst hardcore and midcore
gamers are most likely to be young males (92% and 86% respectively), females account for
52% of casual gamers (Xaxis, 2021). The e-sports audience also skews largely male and
millennial (Schiff, 2020).

A gamer’s spending power tends to be considerably higher than average. Consumer research
group Magid (2021) found that gaming enthusiasts, those who game for 10 hours or more a
week, have disposable income that is double that of non-gamers. The study also found that
the gaming community is becoming increasingly diverse, with the power gamer community
being comprised of women (33%), Hispanics (19%), and African Americans (14%). 40% of
this community graduated from college, 68% are employed and 42% are parents who may
share gaming with their children (Weiss, 2018). Younger generations also tend to spend more
on games (Newzoo, 2022). However, Gen Alpha and part of Gen Z do not yet earn their own
incomes. As they age, their gaming spend may thus increase.

Income

In service of better isolating South African audiences who may or could potentially be gamers,
their income and education levels might become relevant characteristics to identify. As such,
we identified secondary data from developed countries to gain some insight into the role
income and education might have in predetermining or understanding access to games and
spending.

In a sample of Earnest’s (2018) student loan refinancing applicants, it was found that
applicants with high school diplomas followed by Associate and Bachelor’s degrees were the
most likely to make video game purchases (see figure 13). The correlation between advanced
degrees and lower interest in the gaming industry could be a result of age as it takes time to
complete these degrees and so those holding these qualifications tend to be older (Morris,
2018).

45
Figure 13 Gaming by education level amongst Earnest student loan refinancing applicants
(Morris, 2018)

Based on this 2018 study, it appears that high income and high education are not factors
determining whether individuals are more likely to be gamers. Applicants with more advanced
degrees tend to have higher incomes and those making more than US$90 000 are less likely
to make gaming purchases (see figure 14). However, other than this, income does not seem
to make much of a difference to video game consumer spending (Morris, 2018). This was
further supported by Statista (2022) where UK video gamers did not show large differences
based on income (see figure 14).

46
Figure 14 Percentage of Earnest applicants with video game purchases by income group
(Morris, 2018)

Figure 15 Distribution of video game users in the UK in 2021, by income (Statista, 2022)

Access to Technology

47
Considering that outside of the Asia-Pacific region, the US generates the highest revenue for
gaming, it follows that a brief overview of their online connectivity might offer some insight –
particularly since there are significantly smaller audiences for online gaming in South Africa
and Africa, which will be shown to be linked (among other factors) to internet penetration.

As expected, in the US the internet penetration rate is 92% of the total population at the start
of 2022 (Kepios, 2022). In 2021, 77% of Americans had high-speed broadband services at
home (Pew Research Center, 2021). The quality and speed of the data is also fairly high. The
median mobile internet connection speed via cellular networks is 53.31 Mbps and the median
fixed internet connection speed is 134.10 Mbps (Kepios, 2022). 99.5% of mobile connections
are broadband (3G, 4G and 5G) (Kepios, 2022).

In terms of device ownership, 96.1% of US internet users own a smartphone, which shows its
dominance (see figure 16). In relation to gaming, 37.1% own a games console and 6.4% own
a VR device (Kepios, 2022)

Figure 16 Percentage of internet users aged 16-64 who own each kind of device (Kepios,
2022)

People in the US also reported gaming as a significant reason for using the internet. In South
Africa, gaming was not reported as one of the main reasons for accessing the internet (Kepios,
2022).

Consumer Taste in the Global Market

In order to gain insight into consumer patterns in the global market, we gathered primary data
to shed some light on what kind of games are dominating the online PC game sphere,
specifically Steam. This choice is motivated by the fact that South African producers/studios
primarily create games for PC and sell their games on Steam (though there are other platforms
that they also sell their games through). The data will also demonstrate which countries
appear to be claiming the largest market share based on the popularity of games on Steam,
which might offer some insight into the kind of revenue they might be generating.

48
 In reading the data it is necessary to bear in mind that there is no single or ‘standard’ way of
measuring popularity. An analysis of the data on Steam demands gauging it through different
filters from ‘positive reviews’ to ‘top sellers’ to ‘the most played’ games.

As pointed out earlier, one of the defining characteristics of the gaming industry is that
‘success’ is measured and driven by data points. Despite or due to this, there is some
transparency but also little absolutes with regards to the data on any of the platforms for PC
or mobile. This might be motivated by a need not to skew players' perceptions of certain
games. Due to the data having economic value in this industry as it gives publishers insight
into their products and what games are doing well, Steam might also (as with other publishers)
opt not to share all of the data they are generating.

Some of the results of the data sets on Steam regarding popularity that are presented below
are a snapshot taken on a particular day and time – all the data on their website is live and is
constantly being updated as it changes by the second or minute. As such, the data below
gives only a transient view into what is ‘popular’ – one would probably have to take snapshots
daily over a long period of time to discover more concrete patterns.

Steam Data
Two data sets were collected from Steam on the popularity of PC games. The first data set
illustrates the fifteen games with the most followers 3 (table 1) and the second data set lists the
top fifteen most played games on the platform (table 2). Both data sets were collected in July
2022 with the key difference between them being that table 1 illustrates popularity based on
a cumulative determining factor (ie the number of followers accumulated on the platform)
whereas table 2 offers a more time-sensitive account of popularity in PC games. Analysis of
the two data sets offers several insights on the games that are dominating the market, which
geographic regions they hail from, popular game genres as well as the behaviour of the global
gaming community. 4

Table 1 Most followed Steam games

Country
Develope (Develope
Title r Publisher r) Type Store Data

OVERKIL 8,003,316 followers

L - #427 in top sellers
a 521,182 positive reviews
Starbreez Starbreeze 62,603 negative reviews
PAYDAY 2 e Studio. Publishing AB Sweden Strategy 89.28% positive reviews

3
Steam followers are viewable for every released and unreleased Steam game and refers to the number of
people who decided to voluntarily subscribe to receive news and updates about a game without necessarily wish
listing it.
4
Although information on the best-selling games on Steam would have made for a useful (additional) data set
for analysis, Steam does not offer a comprehensive list of its top-selling games. Therefore the decision was
made to rather focus on two other measurable factors - the top fifteen most followed games and the top fifteen
most played games.

49
 3,194,197 followers
5,770,887 positive
reviews
767,471 negative
Counter-Strike: reviews
Global Offensive Valve Valve America Strategy 88.26% positive reviews
3,052,827 followers
1,156,399 positive
reviews
PUBG: 896,780 negative
BATTLEGROUND KRAFTO KRAFTON, South reviews
S N, Inc. Inc. Korea Strategy 56.32% positive reviews
2,543,640 followers
1,175,100 positive
reviews
210,413 negative
Rockstar Rockstar Action- reviews
Grand Theft Auto V North Games UK adventure 84.81% positive reviews
1,995,972 followers
1,479,433 positive
reviews
Action 301,277 negative
role- reviews
Dota 2 Valve Valve America playing 83.08% positive reviews

1,769,788 followers
#173 in top sellers
Ghost 138,660 positive reviews
Ship Coffee Stain 4,696 negative reviews
Deep Rock Galactic Games Publishing Sweden Strategy 96.72% positive reviews
1,416,396 followers
#163 in top sellers
495,744 positive reviews
Behaviour 113,483 negative
Interactive Behaviour reviews
Dead by Daylight Inc. Interactive Inc. Canada RPG 81.37% positive reviews

1,362,294 followers
#90 in top sellers
462,994 positive reviews
ARK: Survival Studio Studio Action- 98,889 negative reviews
Evolved Wildcard Wildcard America adventure 82.40% positive reviews

1,272,772 followers
824,796 positive reviews
56,708 negative reviews
Team Fortress 2 Valve Valve America Strategy 93.57% positive reviews
1,212,285 followers
#106 in top sellers
392,279 positive reviews
CD Action 129,971 negative
PROJEKT CD PROJEKT role- reviews
Cyberpunk 2077 RED RED Poland playing 75.11% positive reviews

50
 1,169,961 followers
#452 in top sellers
930,864 positive reviews
138,982 negative
Tom Clancy's Ubisoft reviews
Rainbow Six Siege Montreal Ubisoft France Strategy 87.01% positive reviews
927,657 followers
#28 in top sellers
704,833 positive reviews
108,412 negative
Facepunc Facepunch reviews
Rust h Studios Studios UK Strategy 86.67% positive reviews

924,183 followers
#20895 in top sellers
622,517 positive reviews
16,283 negative reviews
Left 4 Dead 2 Valve Valve America Strategy 97.45% positive reviews

854,097 followers
#596 in top sellers
Bethesda Action 229,943 positive reviews
Game Bethesda role- 53,164 negative reviews
Fallout 4 Studios Softworks America playing 81.22% positive reviews

Upon analysis of table 1, several key trends emerge with respect to the nationality of the game
developers as well as the preference of certain game genres. In terms of the origin of the
game developers of the most popular games on Steam, it is undeniable that the US dominates
with 40% of the most followed games on Steam originating from American-based developers.
Impressively, of the 40% share that American game developers have in the data set, Valve is
responsible for developing and publishing over half of the games (four out of six) which include:
Counter-Strike: Global Offensive; Dota 2; Team Fortress 2; and Left 4 Dead 2. Following
America, game developers from the UK and Sweden also make a notable contribution with
13.3% of the most followed games originating from each country.

51
Figure 17 Game developer country of origin for the 15 most followed games on Steam

Shifting the focus to genre, of the top fifteen most followed games on Steam, more than half
(53.3%) are categorised as strategy games. This refers to games in which players engage in
“combat between many controlled units with skilful planning and tactical thinking” (Digital
Vector, 2021). It is notable that the two other most popular game genres are also action related
- 20% Action role-playing and 13.3% Action-adventure.

Figure 18 Game genres of the 15 most followed games on Steam

52
 Table 2 Most played games on Steam

Country
Develope (Develope
Title r Publisher r) Type Store data
3,194,197 followers
5,770,887 positive
reviews
Counter-Strike: 767,471 negative reviews
Global Offensive Valve Valve America Strategy 88.26% positive reviews
1,995,972 followers
1,479,433 positive
Action reviews
role- 301,277 negative reviews
Dota 2 Valve Valve America playing 83.08% positive reviews

271,635 followers
124,541 positive reviews
Smilegate Amazon South 44,142 negative reviews
Lost Ark RPG Games Korea RPG 73.83% positive reviews

63,253 followers
Player 33,461 positive reviews
First Warner Bros. 3,680 negative reviews
MultiVersus Games Games America Action 90.09% positive reviews

343,249 followers
Respawn 417,554 positive reviews
Entertain 67,156 negative reviews
Apex Legends ment Electronic Arts America Strategy 86.15% positive reviews
2,543,640 followers
1,175,100 positive
reviews
Rockstar Rockstar Action- 210,413 negative reviews
Grand Theft Auto V North Games UK adventure 84.81% positive reviews

1,272,772 followers
824,796 positive reviews
56,708 negative reviews
Team Fortress 2 Valve Valve America Strategy 93.57% positive reviews
3,052,827 followers
1,156,399 positive
PUBG: reviews
BATTLEGROUND KRAFTO KRAFTON, South 896,780 negative reviews
S N, Inc. Inc. Korea Strategy 56.32% positive reviews
927,657 followers
#28 in top sellers
704,833 positive reviews
Facepunc Facepunch 108,412 negative reviews
Rust h Studios Studios UK Strategy 86.67% positive reviews

53
 1,362,294 followers
#90 in top sellers
462,994 positive reviews
ARK: Survival Studio Studio Action- 98,889 negative reviews
Evolved Wildcard Wildcard America adventure 82.40% positive reviews

570,143 followers
403,932 positive reviews
77,238 negative reviews
Destiny 2 Bungie Bungie America Strategy 83.95% positive reviews
85,085 followers
EA #2020 in top sellers
Canada 70,457 positive reviews
&; EA 18,105 negative reviews
FIFA 22 Romania Electronic Arts America Sports 79.56% positive reviews
41,379 followers
#107 in top sellers
15,523 positive reviews
Football Manager Sports 1,296 negative reviews
2022 Interactive SEGA UK Sports 92.29% positive reviews

8,003,316 followers
OVERKIL #427 in top sellers
L - a 521,182 positive reviews
Starbreez Starbreeze 62,603 negative reviews
PAYDAY 2 e Studio. Publishing AB Sweden Strategy 89.28% positive reviews
599,173 followers
#11 in top sellers
462,328 positive reviews
FromSoft FromSoftware 51,304 negative reviews
ELDEN RING ware Inc. Inc. Japan RPG 90.01% positive reviews

Table 2 illustrates the most played games on Steam and, like table 1, details the origin of the
game developer as well as the genre of the game. The order of the games listed in table 2
reflects the number of active players at the time of data collection (on July 31, 2022) in
descending order. Although reflective of the information accurate at the time of data collection,
the similarities and differences between the games that appear in table 2 relative to table 1
offer interesting results.

Firstly, with consideration of the developers of the most played games on Steam, again, the
domination of American game developers is unquestionable with a 53.3% share. The UK also
surfaces as a notable contributor with 20%. Additionally, Asian game developers make a more
considerable contribution to the top fifteen most played games on Steam with 13.3% of the
titles originating from South Korean studios and 6.7% of games being developed in Japan.

54
Figure 19 Developer country of origin for the 15 most played games on Steam

Turning to an assessment of genre for the most played games on Steam, the strategy genre
once again prevails as the most popular (46.7%). Like the most followed games, other action-
related genres also prove to be popular among the gaming community. The sports genre
emerges as a new addition to the mix with a notable 13.3% share of the top 15 most played
games. The two titles that contribute to this result are FIFA 22 and Football Manager 2022.

Figure 20 Game genres of the 15 most played games on Steam

55
EA’s FIFA 22 and Sports Interactive’s Football Manager 22 are both the most recently
released titles in their respective series, whereby new and updated games are released on an
annual basis (both titles were released in 2021). As such, these two games are inherently
quite different from other games such as Valve’s Counter-Strike: Global Offensive and Dota 2
which are stand-alone releases. The popularity of new instalments in game series
demonstrated in table 2 speaks to the preference of gamers for relevant and updated material
when playing games. Looking closer at the release dates of all the most played titles as
represented in table 3, the surfacing of newly released titles is a trend that can be observed
given that three titles were released in 2022 including Lost Ark (2022), Multiversus (2022) and
Elden Ring (2022).

Simultaneously, table 3 also illustrates that older titles on the platform still continue to be
popular among gamers - and in many cases, older titles continue to be significantly more
popular. For example, although released a decade ago in 2012, Counter-Strike: Global
Offensive surfaces as the most popular game (in terms of player numbers) on the day of data
capture (table 2) and assumes the rank of the second-most followed game on the platform
overall (table 1). A further piece of information extracted from Steam and shown in table 3 is
the date and time that the games last received an update from the developer.

Table 3 Most played games release year and update information

Year
Title Released Last Update - 29 August

Counter-Strike: Global Offensive 2012 29 August 2022 – 17:30:33 UTC

Dota 2 2013 29 August 2022 – 09:56:42 UTC

Lost Ark 2022 26 August 2022 – 01:28:00 UTC

MultiVersus 2022 29 August 2022 – 16:53:11 UTC

Apex Legends 2020 29 August 2022 – 17:29:27 UTC

Grand Theft Auto V 2015 29 August 2022 – 17:33:29 UTC

Team Fortress 2 2007 26 August 2022 – 02:12:33 UTC

PUBG: BATTLEGROUNDS 2017 26 August 2022 – 01:27:32 UTC

Rust 2018 26 August 2022 – 01:27:17 UTC

ARK: Survival Evolved 2017 29 August 2022 – 18:22:14 UTC

Destiny 2 2019 29 August 2022 – 18:20:44 UTC

FIFA 22 2021 26 August 2022 – 09:27:22 UTC

56
Football Manager 2022 2021 26 August 2022 – 03:57:58 UTC

PAYDAY 2 2013 29 August 2022 – 15:15:00 UTC

ELDEN RING 2022 26 August 2022 – 01:27:50 UTC

As can be seen, Counter-Strike: Global Offensive was updated the very same day that data
was collected. Moreover, all the top fifteen most popular games on the platform received an
update within the last four days of data collection with most receiving an update on the very
same day that data was extracted from Steam (29 August 2022). This consistent update cycle
raises an important point about the online PC game landscape - although one might assume
that new releases would naturally replace and displace older titles in terms of popularity and
sales by offering gamers more advanced and relevant games to play and engage with, being
on an online platform like Steam offers two key advantages. Firstly, the ability for developers
to continually update and upgrade their games allows them to appeal to existing players and
attract new ones and secondly, it also allows them to adapt to updating technologies and
operating systems in order to prolong their relevance.

Discussion

Asia claims the biggest market share of the global gaming market in terms of audience and
turnover numbers. Africa and the Middle East boast a larger number of users than North
America or Europe, however, the two latter continents boast a larger income. This might relate
to the fact that Steam and many other publishers that act as conduits for gaming companies
in the Global South are based on those continents and are benefiting financially from growth
elsewhere. As the chapter on economic value chains has shown, different US platforms are
profiting from South African gaming studios at different junctures and through different tools.
No doubt this would be a similar picture in other developing countries. Nevertheless, the larger
income generated from games in the US and Europe is also most likely due to players
spending more money online than in Africa.

One of the most significant determinants for game consumption appears to relate to age or
generation. As the secondary data demonstrates, while Baby Boomers and Gen Xs are
gamers, it is Millennials and Gen Zs that account for the most gamers. Indeed, an interest in
gaming and the adoption of it as a pastime is much stronger in these younger generations.
Therefore, isolating potential audiences in South Africa for gaming consumer data relating to
these generations is most pertinent in predicting future growth and understanding the current
status quo.

There appears to be little correlation between income and education as factors encouraging
gaming, this needs to be taken into consideration, though with an awareness that there are
considerable income and education gaps between the US/UK and South Africa.

Substantiating the secondary data is primary data collected on Steam which shows that in the
online PC gaming sphere, America claims the majority market share in terms of production.
This fact also bears out when considering that South Africa’s top-selling game on this platform,
Broforce, is primarily played by an audience in North America (Stakeholder A).

American domination in terms of studios and publishers also aligns with the fact that South
African studios, whether advancing their own IP or servicing other studios or publishers mostly
rely on companies in the US. As such, establishing a foothold in the gaming industry as a

57
studio producing indie games demands forging a relationship with either a US publisher or
selling it on a platform, like Steam, that services this audience.

An analysis of the titles of the most played games reveals two seemingly contradictory
characteristics of the gaming economy; a hunger for the new, but also continued support for
older games, which speaks to the long tail nature of the return on investment of games.

In terms of genre, as the South African gaming fraternity is less focused on the most popular
genres or at least in a traditional approach to them as indie games can be a subversion of
commercial typologies – they more than likely cannot compete with those AAA games
reaching heights in those genres. The success they are more likely to achieve could be down
to a creative interpretation of these genres that would appeal to an audience interested in indie
games.

Undoubtedly, given that South African audiences do not carry much influence on Steam at a
global level, it follows that local studios that are interested in developing IP are not designing
games that target them, which perhaps colloquial references might make. Indeed, when Case
Study 1 released a game with South African flavour in terms of the lead character having been
a soldier on the ‘border’ during the Apartheid era and voice-over actors from South Africa, they
were prompted, due to its reception, to rather use American voices/accents in their next game.

On paper, generating local content is viewed as important but “not necessary… African
gamers don’t want African games, they want to play the best games in the world”
(Tshimologong, 2021: 28). This sentiment is not unique to the mobile market, however.
Several stakeholders raised the point that an African “themed” game, or the fact that it was
“made in Africa” are not unique selling points that have value – players simply do not care. If
one wants to find commercial success (internationally and in the local market) you have to first
ensure you are making a world-class game (Tshimologong, 2021: 28).

Nyamakop is said to be in the process of creating a game with an African flavour, but they are
doing so with an African American audience in mind. It is the African audience in the diaspora
in the US and Europe that could perceivably be more open to African content.

African Americans make up a significant portion of US gamers and are the second-likeliest
ethnic group to play, after Asian Americans (Nielsen Company, 2018). 73% of African
Americans aged 13 and older are gamers, compared with 66% of the total population (Nielsen
Company, 2018). This group also tend to play on fewer devices than the total population, with
64% of African American gamers using only one device, versus 48% of the total population of
gamers (Nielsen Company, 2018). The majority (55%) of African American gamers prefer
playing on a game console (vs. 49% of total gamers), while 31% prefer gaming on a mobile
device (vs. 30% of the total population) and only 15% prefer a computer (vs. 21% of the total
population) (Nielsen Company, 2018). Despite the large number of African American gamers,
there is a lack of diversity and diverse stories within the games themselves and within gaming
developers in the industry (Nielsen Company, 2018). The need for diversity and storylines that
appeal to this audience would likely also apply to African audiences.

To this end, established studios in the west are recognising the need to diversify their
workforce to enable the creation of this unique content. South Africa, Africa, is in a prime
position to capitalise on this demand, however in South Africa especially, the inability of the
local industry to tap into the full potential of the workforce is notable (Tshimologong, 2021: 35).

Authentic representation of diverse cultural characters in games and gender representation

within games could have a positive impact and benefit on perceptions, socio-cultural and
economic value of the video games development industry as a whole. South African game
developers could potentially benefit from this, however, they would need to have the support

58
of a publisher in the US or Europe that could fund, market and publish games that advance
these social ideals, as it might prove too risky to do so independently. An international
publisher would have little motivation to support ‘African’ content, given they wish to reach the
largest audience possible and might view Afrocentric games as limiting sales rather than
increasing them.

African & South African Consumers

From a pan-African perspective, the growth in the gaming industry is tied to an increase in
ownership and use of smartphones. As stated above this is a global phenomenon, however,
as a brief overview of the gaming industries in Kenya and Nigeria shows, this has not
translated into a robust industry in those countries. As in South Africa, this is primarily due to
the fact that local gaming economies do not pivot or profit from mobile gaming, even in a
country such as Kenya which has more business-friendly policies in place that encourage co-
productions, and different ownership models.

Indeed, this trend is further substantiated via a look at African consumers on Steam, which
does not reflect a large number of gamers using the platform on the African continent (Steam,
2022). This may not be tied to a preference for playing games on mobile, as a close look at
South African consumers reveals it is also connected to a lack of access to a PC and/or fast
internet connections in order to play games on the Steam platform.

The African Market

The African gaming market is expected to double in revenue in the next five years; it was
valued at US$1178.40 million in 2020 and is expected to reach US$2861.04 million by 2026
(see figure x), registering a CAGR of 15.2% during 2021-2026 (Mordor Intelligence, 2021).
This potential growth is based on the following factors;

• A large and growing young population who are the main target audience for games
• Growing penetration of smartphones and the internet which increases accessibility
• The growing popularity of multi-player games which makes gaming a more sociable
activity

Figure 21 African gaming market projected growth (Mordor Intelligence, 2021)

59
Some of the continent’s leading gaming markets are Egypt, South Africa, Morocco, Nigeria,
and Algeria (Mordor Intelligence, 2021). Their growth appears to be more closely related to
mobile games as opposed to those on PC or console. According to data.ai (previously App
Annie), South Africa ranked top on the continent in 2020 for app store downloads, consumer
spend and hours spent on mobile with total consumer spending in app stores (iOS, Google
Play and third-party Android combined) being US$210 million (Mordor Intelligence, 2021).

There is potential in the African mobile game consumer market, unlocking that potential has
been incredibly difficult thus far. “There is a perception that one cannot make money from
users [in Africa], which we believe is false. In our opinion, it is an infrastructure problem. The
future is here in Africa. And if you do want in on the African market, you need to do it on mobile,
because that is where the gamers interact. However, they are not traditional players”
(Tshimologong, 2021: 27). The interviewees in the Tshimologong (2021: 27) study also
pointed out that for a mobile game to be commercially successful in the African market, it
needs to be F2P and monetised through In-App-Purchases. However, it was also pointed out
that “traditional payment methodologies don’t work. [You] need a regional approach and
acquire users relatively easily and cheaply.” This cannot be done with the existing international
ecosystem and storefronts (Tshimologong, 2021: 27). This will be explored in more depth in
the chapter on gaming economies and value chains.

Nigeria

Sub-Saharan African countries are fairly new to the game development industry. The increase
in smartphone penetration and the availability of the Android platform for software
development has directed much of the region’s focus towards mobile game development
(Tshimologong, 2021). So while Nigeria is described as “a fast-moving tech ecosystem,” it has
failed to capitalise on the growing interest in video games which took hold in the mid-2010s in
terms of establishing its own game development industry (Tshimologong, 2021: 75). Though
the first game studios were operational from around 2012, many failed to survive
(Tshimologong, 2021). Despite this, as in South Africa, gaming spend has been increasing;
Nigeria’s total entertainment and media market spend on video games for 2018 was US$67
million and is projected to reach US$176 million by 2023 (PWC, 2019).

As such, there is a great disparity between the revenue being generated and the lack of growth
or robustness of the industry. This is partially attributed to insufficient quality content being
made to drive the market forward, lack of cataloguing and documentation of Nigerian game
development efforts, game development education and an inability to compete with the
popularity and marketing of other games (Tshimologong, 2021).

Consequently, the Nigerian consumer patterns are following the same trends in South Africa
where the traditional gaming sector is growing more slowly and has been eclipsed by the
booming social/casual or mobile gaming segment, which is seeing rapid forecasted growth at
a CAGR of 25.3% between 2018-2023 (PWC, 2019). Data consumption for gaming purposes
was 61 million GB in 2018 and is set to grow to 156 million GB in 2023, placing Nigeria in a
similar situation to South Africa in terms of growth in data consumption for gaming (PWC,
2019).

Kenya

Unlike South Africa and Nigeria, Kenya’s market is still reliant on traditional gaming which
accounted for 71% of the market in 2018, rather than being dominated by social/casual mobile
gaming (PWC, 2019). Kenya’s total entertainment and media market spend on video games
for 2018 was US$83 million and is projected to reach US$153 million by 2023 (PWC, 2019).

60
However, there will be growth experienced in social/casual gaming, an 18.6% CAGR in 2023,
which is attributed to an increase in smartphone ownership (PWC, 2019).

Growth in the Kenyan games industry has been spurred through African collaborations which
have resulted in skills being imported into Kenya. This is based on a friendlier business
environment as 30% of a business is required to be Kenyan owned as compared to 50% local
ownership in other African countries (Tshimologong, 2021). Recently, Kenya has started to
participate in global gaming events such as the Global Game Jam which has increased their
visibility and enabled the growth of local talent (Tshimologong, 2021). On the local level,
growth and development have been encouraged through game development meet-ups, tech
incubators, support programs, and government grants for ICT (Tshimologong, 2021: 77).

However, as in South Africa, the gaming industry has been hindered by a lack of a skilled
game development workforce, funding opportunities and the challenge of monetizing games
(Tshimologong, 2021: 77).

Yet the future outlook for gaming should be positive given it was found that games will be the
fastest rising content type for which data is used, going from 12 million GB in 2018 to 80 million
GB in 2023 with a CAGR of 47.3% over the period (PWC, 2019).

The South African Market

The development of the games industry in South Africa depends to a large extent upon
technology. With regards to online gaming, which is the focus of South African gaming
companies, the spread of broadband has defined the limits of the market. Demographics,
income and preferences of computer game players have naturally impacted the growth and
shape of the industry.

The games market in South Africa is said to be growing at a fast pace with revenues reported
to have reached US$124 million in 2018. The games sector is deemed to be the fastest
growing sector in the media and entertainment industry in South Africa and was projected to
reach US$150 million by 2020 (Digital Vector, 2019: 617).

61
Figure 22 Market size of the games industry in South Africa (Digital Vector, 2019).

South Africa’s total video games revenue is set to increase at 9.2% CAGR, but as with other
African countries and the global market at large, this will mainly be through social/casual
gaming spend (PWC, 2019).

As figure 23 below suggests, there has been a slight increase in revenue of PC games since
2014, but it has been nominal, particularly in comparison with the rise in turnover in
social/casual gaming which primarily is taking place on mobile devices.

Figure 23 South Africa video games revenue by segment (R millions) and year-on-year growth
(%), 2014-2023 (PWC, 2019)

The traditional gaming sector includes video games on PCs and game consoles that can
connect to TVs and have portable hardware. The console industry is thought to be strong,
especially in countries where consumers cannot afford to buy the newest models, which keeps
older models in demand and gamers trade used console games with one another.

62
It was expected that the console market would continue to be popular due to the higher costs
of digital video games and a lack of network infrastructure, especially in developing economies,
which will keep physical distribution relevant (Digital Vector, 2019). However, combined
revenue from physical console and PC games is expected to fall gradually from R789 million
in 2018 to R608 million in 2023 with a -5.1% CAGR (PWC, 2019). According to Games 4U, a
local company that has been in existence for a decade that promises to offer the “cheapest
prices” for the latest video games, consoles and accessories in South Africa, the decline in
sales of physical games is due to the growth of high-speed internet and gamers buying games
online or making use of subscriptions services (Bechoo, 2022).

However, an analysis of consumer and population data in South Africa shows that the majority
of the population does not have access to a fixed internet line. For this reason, mobile and
hand-held games is the fastest growing segment (see figure 23), followed by console games
(Digital Vector, 2019). The PC games segment is the slowest growing segment (Digital Vector,
2019).

Figure 24 Market size of the mobile games industry in South Africa (Digital Vector, 2019).

Figure 25 Revenue breakdown by mobile game genres in South Africa (Digital Vector, 2019).

63
Social/casual gaming surpassed traditional gaming in 2017 as the main revenue segment in
South Africa’s gaming industry (see figure 26). It represented 56.6% of total video game
revenue in 2018 and will increase its dominance to 68.4% in 2023 (PWC, 2019).

Figure 26 Breakdown of South Africa’s video games market, 2014-2023 (R millions) (PWC,
2019)

However, as indicated earlier, the majority of the large South African studios do little to no
work in the mobile sector, with console and PC being the platforms responsible for the majority
of their revenue (Tshimologong, 2021: 3).

As shown in figure 27, consumer spending on video games in South Africa was reported to
have reached R3 433 million in 2018 and is projected to reach R5 344 million by 2023, while
spending on e-sports and VR is also increasing (PWC, 2019). However, it is more likely that
this figure is substantially higher, given that Bechoo (2022) estimates that Game4U sells
between R4-6 million worth of console game titles in a year. At least 60-70% of that would be
from the titles listed below, which they have indicated are the top 10 selling games in 2021;

1. FIFA Series (18,19,20,21,22)

2. Grand Theft Auto V
3. Marvel’s Spider-Man Franchise
4. God of War
5. Forza Horizon Series (FH3, FH4, FH5)
6. Red Dead Redemption 2
7. Call of Duty Franchise (Modern Warfare, Black Ops 4)
8. Minecraft
9. Pokémon Franchise
10. Mario Franchise (Super Mario Bros. Mario Kart)

Significantly, none of the titles listed above are produced by South African gaming companies,
despite the fact that many have ported their online games to console in order to sell hard
copies of their games.

64
Figure 27 South Africa consumer media and entertainment spending 2014-2023 (PWC, 2019)

Not surprisingly, streaming videos drive the vast majority of data consumption in South Africa
with games at the lower end of uses for data consumption at 49 million GB in 2018 (see figure
28. It is expected that this figure will increase considerably over the period at 18.9% CAGR to
117 million GB (PWC, 2019). This seems likely given the Covid-19 pandemic which saw a
migration of work and entertainment activities taking place online. Covid-19 may have further
impacted on an increase in online gaming beyond what was forecast in the graphic below
(Figure 28).

Figure 28 South Africa data consumption by content type 2014-2023 (PWC, 2019)

The quality and speed of internet connections has also impacted the PC gaming segment with
many data servers being located far away from South Africa, resulting in a high latency and
thus a poorer online gaming experience.

South African Consumers

In an effort to identify a potential or existing audience for gaming, in particular online/PC

gaming – given this is the focus of the local gaming studios, we have analysed different
demographic information relating to the South African population that could offer insight into
them. As such we have looked at the following, which had been identified previously as
defining global audiences;

1. Access to technology - cellphones, PC and the internet.

65
 2. Unemployment, which could point to a percentage of the audience who may not be
able to afford to buy equipment, data and games.
3. Age – as highlighted the largest audiences are Millennials and Gen Z.
4. Education – there was little correlation here though high-school students are the
largest market.

Technology

The vast majority of South Africans have access to a cellphone (97.3%), while 27.3% have
access to a PC (see figure 29), both of which could potentially be used for gaming (StatsSA,
2021).

Figure 29 Percentage of households who have a functional landline and cellular telephone in
their dwellings by province, 2021 (StatsSA, 2021)

Figure 30 Percentage distribution of households who own a computer, by urban/rural status,

2021 (StatsSA, 2021)

In 2017, there was a turning point in South Africa where the smartphone emerged as the most
popular communication device. South Africans are now amongst the top users of smartphones
globally with the most popular content-related activities that these devices are used for being
games, short videos and navigation (see figure 31) (Deloitte, 2017). It should be noted that a
preference for playing games on mobile devices is not only due to greater
adoption/accessibility of mobile technology, but also relates to the fact that most games are
based on a free-to-play model, whereas online games can be free, but the premium ones are
acquired via a once-off-payment.

66
Figure 31 Usage frequency of content-related activities by age (Deloitte, 2017)

67
Figure 32 Device penetration (Deloitte, 2017)

There were 41.19 million internet users in South Africa in January 2022 with the country’s
internet penetration rate standing at 68.2% of the total population at the start of 2022 (Kepios,
2022). Mobile accounts for 76.36% of web traffic share and PC is 22.16% which shows that
most South Africans are accessing the internet through their phones and may not have fixed
connections in the home (Kepios, 2022).

South African internet speeds are also relatively slow at 30.54 Mbps for mobile and 29.73
Mbps for fixed internet connections (Kepios, 2022). This has implications for mobile and online
PC/console gaming as the faster the internet connection speed, the better the online gaming
experience.

South Africans spend above the global average time on the internet each day at 10 hours and
46 minutes (see figure 33). They also spent 1 hour and 3 minutes per day on average using
a games console (Kepios, 2022).

68
Figure 33 Average amount of time spent using the internet each day

77.5% of South African households had at least one member who had access to or used the
internet at locations such as their homes, work, place of study, internet cafes, or at public hot
spots. Access to the internet using all available means was highest in the Western Cape
(89.1%) and Gauteng (86.7%) and lower in the more rural provinces (StatsSA, 2021).

66% of the population (See Figure 32) have access to laptops which appears to be a positive
sign with regard to audiences for online games (Deloitte, 2017). However, while it is possible
to play online games on laptops, this is not considered an ideal device and if used for gaming
would need to be of a certain type and quality. Owning a desktop computer would be more
ideal and penetration within the South African population is considerably less at 47% (Deloitte,
2017) . Naturally, as the decrease in console games evinces, the demographic or consumer
characteristics that would need to intersect to increase the potential of gaming would be a
desktop computer combined with a fixed internet line.

However, shockingly only one-tenth (10.4%) of South African households have access to fixed
internet at home (see figure 33) (StatsSA, 2021). Access to the internet at home was highest
among households in the Western Cape (25.9%) and Gauteng (16.4%), and lower in the more
rural provinces (StatsSA, 2021). This has implications for the uptake of gaming in South Africa
as console and PC games would be played mainly in the home. When you compare this figure
to the US, where 77% of Americans had high-speed broadband services at home, it is easy
to see why South African gaming studios claim that the majority of their audience is based in
that country.

69
Figure 34 Percentage of households with access to the Internet at home, or anywhere, by
province, 2021 (StatsSA, 2021)

Moreover, while 17.2% of households in metropolitan areas had access to the Internet at home,
this was true for only 1.2% of rural households in general (see figure 35) (StatsSA, 2021). It
is thus more likely that hardcore South African gaming audiences (as well as people working
in game development) would be located in metropolitan areas. Nevertheless, as the majority
of South Africans (69.4%) have access to the internet via mobile devices, it follows that mobile
gaming would be more popular (StatsSA, 2021).

Figure 35 Households’ access to the internet by place of access, urban/rural status and
province, 2021 (StasSA, 2021)

Township Internet Connectivity

Internet connectivity from a fixed line in households is currently very low. However, many
companies have set their sights on townships and smaller markets, popularly referred to in
the sector as the secondary or underserved markets. Innovative ways to provide affordable

70
fibre to homes in underserved areas are required to address connectivity shortfalls in the
country, and the pay-as-you-go model is one such solution, as it is flexible and removes the
need to commit to lengthy contracts. Fibre would also be a cheaper option than mobile data
for many South African households (MyBroadband, 2022). According to ISP Vumatel, the
poorest households in South Africa use up to 3GB or 4GB of data per day if you give them
uncapped Internet for free (MyBroadband, 2022). The South African government is committed
to increasing connectivity and has announced its intention to provide high-speed internet to
every community by 2024, with free data provided for those citizens in need (Mwareya and
Simango, 2022).

A number of providers including Vumatel, Telkom’s Openserve, and MetroFibre already offer
low-cost prepaid fibre services in underserved areas. These providers offer fibre connections
with 20Mbps download speeds for pay-as-you-go options ranging from R20 for 24 hours to
between R400 and R450 for 30 days access (MyBroadband, 2022; IT web, 2022). Access to
the internet is seen as a crucial economic enabler used for education, spreading information
and entertainment. By potentially providing low-cost fibre to the home connections for millions
of South Africans, the digital divide could be addressed. This would open up the market for
digital services including streamed entertainment content and online gaming.

How Affordable is Access to Gaming Technology?

Below is a list of all the necessary equipment required to play online PC or console games
from gaming console sets, to headsets, computers, gaming laptops and monitors, as well as
the monthly cost of an internet connection. Included are different options ranging from the
cheaper to the more expensive.

• Xbox Series X – R11 999

• Xbox Series S – R6 999
• Xbox Game Pass Ultimate – R1 428 pa
• Xbox Game Pass PC and Console – R948 pa
• PlayStation PS5 – R11 999
• PlayStation PS5 Digital – R9 999
• PlayStation Plus Deluxe – R1 429 pa
• PlayStation Plus Extra – R1 239 pa
• PlayStation Plus Essential – R749 pa
• PC and Console Games – R700 – R1 599
• Steam Games – R80 – R1 400 (also many free games but may have in-game
purchases)
• Headset – R500 - R2 000
• Controller* – R350 – R2500
• Gaming Desktop** – R17 500 – R44 999
• Gaming Laptop*** – R16 999 – R36 000
• Mouse – R400 – R1 500
• Keyboard – R600 - R2 799
• Monitor – R2 500 – R16 999
• Nintendo Switch – R6 999
• Nintendo Switch Lite – R4 499
• Nintendo Games – R699 – R1 999
• Other accessories can be purchased like a gaming chair, a camera so that you can
see your friends while you play, or a steering wheel or joystick for some driving and
flying games.

71
*For wireless controllers, you may also need to purchase a charging station separately or
replace a charging station (R499-R899)
** Individual components can also be bought to build a gaming desktop and/or to upgrade the
one you already have.
*** You could buy a non-gaming laptop which would be cheaper (starting price from around
R5 500), however, it may not be able to support some of the more complex or larger games
in terms of memory, poorer graphics, loading/buffering etc.

Internet

Fibre ranges from R3 468 pa to R16 164 pa. LTE is cheaper though slower. It is likely that
hardcore gamers would prefer faster internet connections and would need uncapped options
in order to play online and download games (50-100GB depending on the game).

Shown below are the average download rates for Steam clients on the most popular internet
service providers for South Africa, sorted by the number of bytes delivered to that network.

Table 4 Prices for popular internet service providers for online gaming

Network Average Download Rate Price (per annum)

Vox Telecom 38.8 Mbps R3 468 fibre
R840 LTE
Telkom Internet 17.4 Mbps R5 988 - R16 140 fibre
Web-Africa-Networks 39.8 Mbps R2 388 LTE
Rain 18.2 Mbps R5 988 – R11 988 5G
HeroTel 18.8 Mbps
Vodacom Business 27.4 Mbps
AFRIHOST FIBRE 51.8 Mbps R5 964 – R16 164 fibre
Cool-ideas 49.6 Mbps
*Prices for some providers were not freely listed on their websites and only cover certain areas
of South Africa so will only quote once you have entered your address

As the above costs outline suggests, though there is an upfront capital outlay to buy the
computer, the console set and other accessories, the monthly costs are relatively low.

South Africa’s Middle Class

Assessing the viability of these costs in the context of South Africa’s ‘middle class’ can be
difficult given the financial disparity in this population group and the difficulty of defining this
group. Economist Justin Visagie (2013) describes the middle class as a household of four
persons with a total income of between R5 600 and R40 000 per month after direct income
tax. According to Statistics South Africa’s employment report for the fourth quarter of 2021,
the average worker’s salary in South Africa is R23 982 per month. This amounts to R287 784
annually. The middle class is thus effectively classified as a working person who earns an
annual income upwards of just R87 000 (Businesstech, 2022). From this perspective, some
middle class people could afford gaming while others might not be able to.

Only 20% of South Africans belong to the middle class, of whom 50% are black Africans,
according to a 2014 study by the University of Cape Town and the Department of Monitoring
and Evaluation in the president’s office (Zarecruitment, 2022). However, it has recently been
suggested that South Africa’s middle class is shrinking, declining from 6.1 million to 2.7 million
individuals between 2017 and 2020 (Pitt, 2022).

72
If you work on the assumption that South Africa’s middle class could afford the technology to
play online games, you would then also have to assume that of the 20% of the population
group who could, only a small fraction might do so, and they are more likely to be of a younger
generation.

Employment/Age

Given that younger generations are more likely to be interested in games and are more
assiduous gamers, we took a look at some of the characteristics defining South Africa’s youth.

In 2022, South Africa’s total population was estimated at 60.6 million people (StatsSA, 2022b).
Gaming tends to be most popular amongst younger generations – Gen Alpha, Gen Z and
Millennials. In South Africa, these groups make up approximately 71% of the population which
means that gaming should be popular in South Africa, or has the potential to become so. The
potential for gaming amongst these generations may be limited by unemployment and income.
For 15-24 year olds (the approximate Gen Z population group), unemployment was 63.9%
while for 25-34 year olds (the approximate Millennial group), unemployment was 42.1% (see
table x) (StatsSA, 2022a).

Table 5 Generational breakdown of South Africa’s Population (StatsSA, 2022b)

Generation Age Group Population %

Gen Alpha 0-14 17 012 769 28
Gen Z 15-29 14 984 807 25
Millennials 30-39 10 725 759 18
Gen X 40-54 10 022 284 17
Baby Boomers 55-64 4 106 259 7
Silent Generation 65+ 3 753 114 6
*South Africa reports population statistics in 5 year age intervals and so these
population estimates do not directly correlate with generation intervals

Education

According to Earnest’s data (Morris, 2018), gaming is most popular amongst those who have
completed secondary education (high school) and a Bachelor’s degree. In the case of South
Africa, this should mean that there is a good interest in gaming as 43.7% of South Africans
have completed secondary education, though only 4.1% hold a Bachelor’s degree or higher.
This group would also tend to earn higher incomes and so could potentially have a higher
spend on games.

Table 6 Distribution of persons aged 20 years and older by level of education (StatsSA, 2016)

No Schooling Primary Education Secondary Bachelor’s Degree

Education
7.1% 81.5% 43.7% 4.1%
*because of accumulating persons, the percentages do not add up to 100%

High-schoolers were shown to be the most likely to play games in a global study (Morris, 2018).
However, in the South African context where there is such a high unemployment rate, it is
likely that many high-schoolers (who depend on their parents' income) who might be interested

73
in playing online games do not have access to a fixed internet line at home or a computer –
either at school or in the home (Stakeholder H).

You could work on the assumption that those students enrolled at private schools in South
Africa are more likely to have access to a fixed internet connection at home or school and can
play games. However, that number is relatively small. In 2021, 703 092 South African students
were enrolled in private schools (Department of Education, 2022).

South African Consumer interests

Given that South African gamers are more focussed on mobile games, and indeed it is
possible to discover what preferences consumers from this country have in terms of games
on this platform, data can be extracted that offers some insight into their behaviour.

Below follows data reflecting the most popular mobile games from the Apple App Store as well
as the Google Play store. As before with Steam’s gaming data, there is no standard
measurement for popularity on the Apple App Store, though it is possible to glean this via
ratings – not unfortunately according to downloads/sales. However, as shall be explained in
the next chapter, most games on mobile follow the free-to-play model and it is through in-App
purchases that revenue is generated.

Table 7 Top 20 trending games in South Africa on the Apple App Store

Rating figure - Rating figure -

Apple store Apple store
Game Global SA Developer Country Type
5
Fortnight Epic Games America Sandbox
2.5M Ratings - 49K Ratings -
Candy Crush Saga 4.7 4.7 King Sweden Casual
1.1M Ratings - 7.4K Ratings - Rovio
Angry Birds 2 4.6 4.6 Entertainment Finland Casual
2.2M Ratings - 34K Ratings -
Toon Blast 4.7 4.7 Peak Games Turkey Puzzle
458.6K Ratings - 8K Ratings - Crowdstar
Design Home 4.6 4.5 Inc. America Simulation
Huuuge Casino - 50.7K Ratings - 549 Ratings - Huuuge
Slot Machines 4.5 4.3 Global Ltd Germany Casino
Heart of Vegas - 60.6K Ratings - Product
Slots Casino 4.5 Madness UK Casino
2.2M Ratings - 14K Ratings -
Clash Royale 4.6 4.6 Supercell Finland Strategy
Episode - Choose 2.4M Ratings - 32K Ratings -
Your Story 4.7 4.5 Pocket Gems America RPG
16K Ratings - Playrix
Gardenscapes 1M Ratings - 4.7 4.6 Games Ireland Casual
Vikings: War of 11.7K Ratings- 127 Ratings -
Clans 4.4 4.3 Plarium LLC Israel Strategy
1.5M Ratings - 20K Ratings - Playrix
Homescapes 4.6 4.5 Games Ireland Simulation

5
Fortnight is no longer available on the Apple App Store as of August 2020.

74
Cashman Casino 156.1K Ratings - 707 Ratings - Product
Las Vegas Slots 4.6 4.5 Madness UK Casino
32.9K Ratings - 118 Ratings - Com2uS South
Summoners War 4.2 3.9 Corp. Korea RPG
1.1M Ratings - 5.6K Ratings -
Brawl Stars 4.8 4.7 Supercell Finland Action
Matchington 282.1K Ratings - 1.9K Ratings - Firecraft
Mansion 4.2 4.2 Studios Ltd. America Casual
Sniper 3D Assassin: 38.4K Ratings - 38K Ratings - Fun Games
Gun Games 4.7 4.7 For Free America Action
Big Fish Casino: 200.1K Ratings - 596 Ratings - Big Fish
Slots & Games 4.6 4.6 Games, Inc America Casino
453.7K Ratings - 5.4K Ratings -
Hay Day 4.7 4.6 Supercell Finland Casual
Candy Crush Soda 583.5K Ratings - 9.9K Ratings -
Saga 4.7 4.7 King Sweden Casual
Source: Adapted from Digital Vector, 2019.

The data collected from the Apple App Store echoes the findings observed with PC game
ratings on Steam, with the US emerging as the dominant player in the mobile game
development space with 30% of the most popular mobile games produced in that country.
Finland is an additional leader in the field with a considerable 20% share. Contributing to this
result are the games produced by Supercell (Clash Royale, Brawl Stars, and Hay Day) and
Rovio Entertainment (Angry Birds 2). Other countries also finding a strong foothold in the SA
consumer market are mostly European based; Ireland (10%), Sweden (10%) and the UK (10%)
with South Korea being the only other contributing region beyond Europe or America claiming
a 5% share.

Figure 36 Developer country of origin for the top 20 trending games on South Africa’s Apple
App Store

75
Turning to genre, an analysis of the top twenty games within South Africa reveals that there
is a considerable variety of popular game genres in the mobile space with two dominant
genres - casual (30%) and casino (20%). Whereas casual games encompass puzzle-related
and short-duration games, casino games refer to games that mimic those found in a traditional
casino and which emphasise gambling with real or fake currency (Digital Vector, 2019).

Figure 37 Game genres of the top 20 trending games on South Africa’s Apple App Store

Below represents the top 20 games in South Africa on the Google Play Store. Unlike the Apple
App Store, no data on game ratings or downloads is regional. As such while Candy Crush is
the top trending game, the 1 billion downloads do not reflect figures in South Africa, but
globally. A detailed analysis taking into account the developers and genres of the games
follows.

Table 8 Top 20 trending games in South Africa on the Google Play Store

Rating figure - Download

Game Playstore Global s Developer Country Type
4,6 - 8,51M
Candy Crush Saga reviews 1B+ King Sweden Casual
4.5 - 3.6M
Toon Blast reviews 50M+ Peak Games Turkey Puzzle
4.6 - 59.2M
Clash of Clans reviews 500M+ Supercell Finland Strategy
King of Avalon: 4.3 - 1.16M Diandian
Dragon Warfare reviews 50M+ Interactive America Strategy
4.2 - 1.14M
Design Home reviews 50M+ Crowdstar Inc. America Simulation
4.4 - 11.4M
Gardenscapes reviews 100M+ Playrix Games Ireland Casual

76
 4.3 - 569K Diandian
Guns of Glory reviews 50M+ Interactive America Strategy
Lords Mobile: Battle 4.3 - 7.78M
of the Empires reviews 100M+ IGG.COM Singapore Strategy
4.3 - 799K Huuuge
Huuuge Casino reviews 10M+ Global Germany Casino
Empires & Puzzles: 4.3 - 2.27M Small Giant
RPG Quest reviews 50M+ Games Finland RPG
Casino Slots: House 4.5 - 1.54M
of Fun reviews 10M+ Playtika UK UK Casino
Billionaire CasinoTM 4.3 - 299K Huuuge
Slots 777 reviews 10M+ Global Germany Casino
4.4 - 2.04M
SlotomaniaTM Slots reviews 50M+ Playtika Israel Casino
Heart of VegasTM 4.3 - 400K Product
Slots reviews 10M+ Madness UK Casino
4.3 - 11.3M
Homescapes reviews 100M+ Playrix Games Ireland Casual
4.3 - 9.05M
Township reviews 100M+ Playrix Games Ireland Casual
Candy Crush Soda 4.6 - 8.52M
Saga reviews 100M+ King Sweden Casual
4.3 - 5.54M
Fishdom reviews 100M+ Playrix Games Ireland Puzzle
4.3 - 2.05M
Golf Clash reviews 10M+ Playdemic UK Sports
4.2 - 12.8M
Hay Day reviews 100M+ Supercell Finland Casual
Source: Adapted from the Digital Vector (2019).

In terms of the geographic origin of game developers for the most popular Google Play Store
games, Ireland can be seen to make a much more notable contribution with a 20% share.
Four games produced by Playrix Games inform this result including three casual games
(Gardenscapes, Homescapes and Townships) and one puzzle game (Fishdom). As such,
Ireland stands out as the more dominant region for mobile game development than both
America and Finland with a very respectable 15% share each.

77
Figure 38 Developer country of origin for the top 20 trending games on South Africa’s Google
Play Store

Turning attention to game genres, similar trends emerge with casual (30%) and casino (25%)
games proving to be the most popular with strategy games coming in a very close third.

Figure 38 Game genres of the top 20 trending games on South Africa’s Google Play Store

78
 A key difference between the PC and the mobile games space is that genre preferences vary
considerably. The lack of multiplayer capability offered by mobile games relative to PC is a
key contributor towards this result. Additionally, unlike in the PC space, game series do not
seem to be a feature of the mobile gaming landscape. That said, the ability for game
developers to continue offering updates to mobile game applications once already installed
on user devices allows mobile games a longevity that is undefined by their initial year of
release. To this end, it can be said that owing to the continuous interaction between game
developers and game consumers afforded by the current digital climate, the popularity of a
game, mobile and/or PC, transcends its age provided the content and gameplay remains
relevant and accessible to players - existing and future.

Clearly in the mobile space, casino games emerge as a genre that South African gamers have
a preference for over and above casual games.

South African Produced Games - Mobile and PC

In no particular order, the table below lists some of the games produced by South African
developers for PC and mobile.

Table 9 South African developed games

Download STEAM -
s - Google https://steamdb.inf
Title Type Developer Publisher Platform(s) Play Store o

973 followers
99 positive reviews
13 negative reviews
Cali4ways Cali4ways 88.39% positive
Boet Fighter Action Games Games PC reviews
BigBrave (for
Brand- Tru-Cape) Mobile (Google
Centric Shine App Store and
Fruit Full gaming Interactive BigBrave Apple App store) 500+

111 followers
9 positive reviews
35 negative reviews
Celestial Celestial 20.45% positive
Toxic Bunny Adventure Games Games PC reviews

Windows 437 followers

Mac 34 positive reviews
Linux 4 negative reviews
Puzzle Clockwork Android 89.47% positive
Jetstream game Acorn Noodlecake iOS reviews

97 followers
6 positive reviews
Microsoft 0 negative reviews
Monsters and Puzzle Clockwork Clockwork Windows, Linux, 100.00% positive
Medicine game Acorn Acorn macOS reviews

79
 4,467 followers
#18570 in top sellers
52 positive reviews
Every Single 55 negative reviews
Her Majesty's Soldier (pty) Every Single 48.60% positive
Ship Simulation Ltd Soldier PC - Paid reviews
Spider World Wild Foot
Multiplayer Simulation Games Mobile - Android 1M+
Horses of the Wild Foot
Forest Simulation Games Mobile - Android 1M+
Nintendo Switch,
PlayStation 4, 105,905 followers
Microsoft #1713 in top sellers
Windows, Linux, 47,604 positive
macOS, reviews
Macintosh 1,456 negative
operating reviews
Devolver systems, Classic 97.03% positive
Broforce Action Free Lives Digital Mac OS reviews
22,005 followers
#3181 in top sellers
7,180 positive
reviews
436 negative reviews
Devolver 94.28% positive
GORN Simulator Free Lives Digital PC reviews
27,291 followers
#4611 in top sellers
8,332 positive
reviews
726 negative reviews
Genital Devolver 91.98% positive
Jousting Casual Free Lives Digital PC reviews
Business/Fi
nance -
Education/S
My Lemonade erious IOS AND
Day Games Sea Monster ANDROID 1K+
Brand-
Centric
gaming/Fina
nce/Serious Sea Monster
Livin' it up Games (Capitec) Android and iOS 100K+
Brand-
Pick n Pay Centric Sea Monster
Super Cards gaming (PnP) Android and iOS 10K+
2,615 followers
Good 231 positive reviews
Shepherd 30 negative reviews
Entertainmen PC, Mac and 88.51% positive
Semblance Action Nyamakop t Nintendo Switch reviews
Puzzle OrangeSpice Android and
WORDFIX game Games Windows 10K+

80
Mini Killer
Sudoku Puzzle OrangeSpice Android and
SUDOMATIK game Games Windows 1K+

1,931 followers
222 positive reviews
48 negative reviews
Rogue Moon Rogue Moon 82.22% positive
System Crash Card Game Studios Studios PC reviews

517 followers
57 positive reviews
26 negative reviews
68.67% positive
Rooks Keep Action RuneStorm RuneStorm PC reviews
59,468 followers
#503 in top sellers
14,996 positive
Viscera reviews
Cleanup Detail 1,099 negative
- The space- reviews
station janitor 93.17% positive
simulator: Action RPG RuneStorm RuneStorm PC reviews
PS Vita, Windows
Tasty Poison Phone, iOS,
Pocket RPG Action RPG Games Android, OUYA 50K+
11,642 followers
#12557 in top sellers
392 positive reviews
The The 97 negative reviews
Beautiful Brotherhood Brotherhood 80.16% positive
Desolation Adventure Games Games PC reviews
15,093 followers
#15233 in top sellers
1,336 positive
reviews
The The 302 negative reviews
Brotherhood Brotherhood 81.56% positive
Stasis Adventure Games Games PC reviews
HotPixel
Line Smash Adventure Games Mobile - Android 50+
QUARTER
CIRCLE
Desktop FORWARD +
Dungeons Strategy DESIGN Mobile - Android 1K+
Tornado Strike Simulation Distinct
Zone Game Media Mobile 500K+
Simulation Distinct
Its TITANIC Game Media Mobile 1M+

81
 264 followers
#17916 in top sellers
16 positive reviews
Strategy 11 negative reviews
World Empire simulation iGindis iGindis 59.26% positive
2027 games Games Games Mobile and PC 1M+ reviews
Strategy
simulation iGindis
Asia Empire games Games Android 500K+
Strategy
Europe simulation iGindis
Empire games Games Android 1M+
Mosola
Super Warrior Game
Adventure RPG Studios Mobile 100K+
Barber Shop, Mosola
Haircut Game
Simulator Simulation Studios Mobile 50K+
SMART
GECKO
SOFTWARE
Hansel and DEVELOPM
Gretel in ENT (PTY)
Afrikaans Education LTD Mobile 10K+
SMART
GECKO
SOFTWARE
DEVELOPM
ENT (PTY)
Free Spel Pret Education LTD Mobile 10K+
Slapmania 3D
- Slap Kings Bestmobs
Game Action International Mobile 100K+
Bestmobs
Cannon Ball! Arcade International Mobile 10K+
BOXlogic -
Think outside Puzzle JBC
the box game Interactive Mobile 10K+
WordAce -
Afrikaanse
Woordsoeker
& Blokraai Puzzle JBC
Helper game Interactive Mobile 5K+
Sudoku Ninja
– For Sudoku Puzzle JBC
Grandmasters game Interactive Mobile 5K+
Fun Monster
Math: Addition Puzzle
and game/ TnTGameWo Mobile - Android
Subtraction Education rks and IOS 50K+

Destiny of 2,112 followers

Ancient 86 positive reviews
Kingdoms Action UDEA PC 88 negative reviews

82
 49.43% positive
reviews

Kea's World: The Africa

Tselane and Space
the Giant Adventure Programme Mobile 100+
I-Imagine PlayStation 2,
Final Armada Action Interactive PSP
Amina's KIMARD
Journey Adventure STUDIO Mobile 100+
KIMARD
MindCiti Education STUDIO Mobile 1K+

As can be deduced from the above discussion, no South African game has made its way into
the top popularity charts for either PC or mobile - globally or locally. It is however notable to
highlight the cases of significant success generated by local studios.

Firstly, in the PC space, games by Free Lives stand out as the most successful in terms of
follower numbers on Steam. Secondly, In the mobile space, several game developers have
produced games which have been downloaded more than 1 million times: Wild Foot Games,
Distinct Media and iGindis Games. The imprint made on the industry by other local game
developers appears much smaller in both the PC and mobile space.

Given that console gaming makes up a very small share of the South African gaming
landscape, the focus of this discussion has been concentrated on PC and mobile games.

Summary

South African gamers have a preference for playing games on mobile devices. This is not only
shaped by the fact that the penetration of smartphones has been high, but because there is
more and better connectivity to the internet through smartphones and cellphones. Only 10%
of the population have access to a fixed internet connection, which is generally a prerequisite
for PC and console online games.

The economic models underpinning mobile games are also more accessible as they tend to
be free-to-play with in-App purchases, while premium PC games require an upfront fee. This
may not be a high fee, but the outlay required to buy a PC, hard drive, screen and other
accessories to play at home does require a healthy income. Given the statistics around South
Africa’s shrinking middle class and the income brackets that define this group, the market for
online gaming is small.

On paper South Africa should boast a large group of online gamers, however, the age group
that should account for the largest consumers of games is at a disadvantage not only
economically, but due to this in terms of accessibility to technology.

Those that are playing games on mobile devices are playing games that are primarily being
produced by developers in the US and Europe. As such, the predicted growth and revenue
expected on mobile devices with regards to gaming is not feeding into the local gaming
ecosystem in any way.

83
As most of the stakeholders interviewed for this report indicated, it is impossible to make
games for mobile devices given the current free-to-play model that underpins it.

It seems unlikely that the plans to increase access to fixed internet at homes in townships will
translate into growth for online/PC games. However, given that gamers are more interested in
the genre of games than the origin of them – that Steam does not have a function , which
allows gamers to browse games according to the country where they were produced
substantiates this motivation - means that any growth in online gaming might not translate
into any immediate gains for the local gaming industry as locals would not be able to find
South African games. This is a truly globalised industry, which is fortunate for local gaming
studios as the population statistics in South Africa reveal a minuscule market for the products
that they are generating.

9. Conclusion & Recommendations

The Impact of the absence of local investment

The lack of local funding for games has to some degree left some South African studios
either unable to generate their own IP – shifting their focus to service work - or
beholden to publishers in the US as they cannot self-fund new games development.
As noted throughout the report, publishers have operated as a go-between as they are
more connected and embedded in the global network. This has huge benefits for local
developers because there are insufficient audiences for online indie games in South
Africa. Local funding opportunities would not disrupt this relationship but would put it
on a better footing from launch, allowing local companies to enjoy more royalties from
early on in the process and perhaps spread out profit sharing over a longer period
rather than waiting for upfront costs to be recouped in an early tranche.

An education drive or series of presentations on the gaming sector’s business models

and investment potential targeting venture capitalists or the like might work towards
galvanizing interest in supporting grants or investment schemes in gaming. The
Department of Trade and Industry, the Department of Small Business Development
and the financial press could work in partnership to propel the gaming industry forward.

An intervention to support growth

Building and testing prototypes (that are more likely to fail than succeed) is part of the
ongoing process to discover a game that appeals to audiences in other countries – as
this is hard to predict. If grants were available for the funding of prototypes, it is likely
that more South African games would be produced, leading to an increase in smaller
studios and the growth of existing ones. It is far easier to secure funding for a
successful prototype than to attempt to do so off the back of an untested concept. As
has been the case, a successful prototype which attracts funding can create up to 25
jobs for a three-year period. There is also a potential to create even more jobs off the
back of a successful game given that the long tail economic benefits could extend for

84
up to a decade. During this time, a company would more than likely build other games
based on the success of the first game and be able to offer more long-term
employment to more people.

Harnessing the mobile platform and its popularity

Given the monetisation models bearing down on mobile platforms, the disconnect
between the growth of mobile gaming and local companies' interest in premium gaming
for the online indie gamer is not likely to be reconciled any time soon. However, the
mobile space could and does seem to have great potential for non-profit serious games
(with an educational intent) for locals or other Africans. The #GamingForGood
movement, which is a pan-African initiative that advances the “Made In Africa, For
Africa” campaign, is a good example of this. Mobile games are seen as a means to
drive, share and inculcate social values through 'serious' games ideals that are “non-
violent and gender-inclusive games that entertain, engage and educate” (Gaming for
Good, 2020). In this way, the popularity of gamification is being harnessed to address
social challenges across the continent. These games might not prove to be as popular
as Candy Crush, but their continued existence and growth could at least offer an
impactful counterpoint to popular social/casual games and allow Africans to play
games that are tailored to them and reflect local cultural norms.

Promoting SA companies on the global stage

Small gaming studios struggle to connect to global networks from such a geographical
remove, though it is vital to their success. Some observed that they could not afford to
attend many international events and while there have in the past been grants made
available to support attending gaming events, this might not be the only available
option. One stakeholder suggested that South Africa should rather have
representatives attend these international events in the form of a national stand that
would promote SA companies involved in service work and draw attention to those
studios that have good track records, some interesting new prototypes being tested
and those successfully driving their own IP. Connecting to global players could also be
further advanced via travel grants that bring them to gaming events staged in South
Africa.

Resolving the skills deficit

A skills deficit is a barrier to growth in this sector as well as the animation one. An
industry roundtable discussion with various stakeholders from both is needed to work
towards brainstorming solutions to address this issue. As the deficit is not at a junior
level but at a mid-to senior-level specialist, the current or future graduates in this field
will not be able to address this gap. A study looking into how this might have been
resolved in other countries might also be required. Identifying precisely which set of
skills is in demand across the board might also be needed in advance of any
roundtable.

Government support for prototypes could entice some of those skilled workers to leave
banking and gambling industries that have been offering them higher wages. If their
prototypes are successful, and the pipeline to production is supported they may be
happy to pursue gaming on a full-time basis.

Workshops and programmes designed at upskilling junior staff members should be

encouraged.

Tax Incentives

85
The current tax incentives for gaming studios are not fit for purpose according to
stakeholders. Closer engagement between the sector and government should be
encouraged in an attempt to identify the specific requirements that do not apply to
small and medium gaming companies. Other interventions from government with
regards to taxation of gaming companies could also be considered, particularly given
the long-tail nature of the ROI. Such as long-term costs being off-set against current
profits.

Transformation of the sector

The transformation of the gaming sector in terms of race and gender remains a
pressing issue. Two of the ‘Big 7’ Studios are committed to shifting the status quo. As
most of the studio owners grew up playing games, it seems essential that growing an
audience for online premium games is not only connected to establishing more fixed
internet lines, but also in encouraging a new generation of gaming fanatics who may
become creators.

As such, the growth of creative (and other) tech industries in South Africa will be
constrained by the lack of access to technology combined with the lack of resources
that a shrinking middle class indicates.

SA as an outsourcing hub

The growth of the studios offering third-party services suggests there is potential for
more of these entities and further growth of existing ones. None of the Big 7 gaming
studios indicated any interest in relocating their businesses to other countries, nor did
they express interest in employing staff from outside South Africa unless essential.
These two points were investigated due to being raised in the Tshimologong report
and were not found to be accurate.

86
 10. Bibliography

Bechoo, S. (2022) Interview email Arabella Rogerson. Date etc.

Bernevega, A. and Gekker, A., 2021. The Industry of Landlords: Exploring the Assetization of
the Triple-A Game. Games and Culture, 17(1), pp.47-69.

Bassey, V., 2022. State of the African Games Industry 2022 - Games Industry Africa. [online]
Games Industry Africa. Available at: <https://gamesindustryafrica.com/2022/01/17/state-of-
the-african-games-industry-2022/> [Accessed 8 July 2022].

Bassey, V., 2021. Gaming in Sub-Saharan Africa more than doubles - Games Industry Africa.
[online] Games Industry Africa. Available at:
<https://gamesindustryafrica.com/2021/11/29/gaming-in-sub-saharan-africa-more-than-
doubles/> [Accessed 8 July 2022].

Bowden, R., 2022. Gaming. In: Durban Film Mart.

Deloitte. (2017). Global Mobile Consumer Survey 2017: The South African Cut.

Digital Vector. (2019). Global Animation, VFX and Games Industry Strategies, Trends and
Opportunities. Digital Vector: London.

Evotel. (2022). Why Fibre is the New Utility – and What it Means for South Africa. Tech Central.
19 May 2022. [Online]. Available: https://techcentral.co.za/why-fibre-is-the-new-utility-and-
what-it-means-for-south-africa-evoprom/211293/ [Accessed 25 August 2022].

Hotplay. (2021). Mobile Gaming Market and Usage Statistics for 2022. Hotplay. [Online].
Available: https://hotplay.games/mobile-gaming-market-and-usage-statistics-for-2021/
[Accessed 5 August 2022].

IT Web. (2022). MetroFibre Joins Pay-as-you-go Fibre Race. IT Web. 9 June 2022. [Online].
Available: https://www.itweb.co.za/content/nWJadMbNaBLMbjO1 [Accessed 25 August 2022].

Keogh, B. (2019). From aggressively formalised to intensively in/formalised: Accounting for a

wider range of videogame development practices. Creative Industries Journal, 12(1),
14-33.

Maher, C., 2020. Over 2,000 people and 14 studios worked on The Last of Us Part 2. [online]
VG247. Available at: <https://www.vg247.com/the-last-of-us-part-2-cast-
crew#:~:text=Aside%20from%20the%20developers%20at,2%2C169%20developers%20and
%20163%20thanks.> [Accessed 7 September 2022].

Mordor Intelligence. (2021). Africa Gaming Market (2021-2016).

Mwareya, R. and Simango, A. (2022). South Africa Wants to Give Every Resident Free
Broadband. Can it Pull That Off? Fast Company. 31 May 2022. [Online]. Available:
https://www.fastcompany.com/90750021/south-africa-wants-to-give-every-resident-free-
broadband-can-it-pull-that-off [Accessed 25 August 2022].

MyBroadband. (2022). How Much Data South Africans Who Live in Shacks Use if You Give
Them Uncapped Internet. MyBroadband. 11 July 2022. [Online]. Available:

87
https://mybroadband.co.za/news/fibre/451844-how-much-data-south-africans-who-live-in-
shacks-use-if-you-give-them-uncapped-internet.html [Accessed 25 August 2022].

Newzoo. (2021). Global Games Market Report: The VR & Metaverse Edition. [Online].
Available: https://newzoo.com/insights/trend-reports/newzoo-global-games-market-report-
2021-free-version [Accessed 6 August 2022].

Newzoo. (2022). How Consumers are Engaging with Games in 2022.

Patel, V. (2022). Understanding Gaming Audiences. Venatus. 12 February 2022. [Online].

Available: https://www.venatus.com/blog/understanding-gaming-audiences [Accessed 4
August 2022].

PWC. (2019). Insights from the Entertainment and Media Outlook: 2019-2023 An African
Perspective. [Online]. Available: https://www.pwc.co.za/outlook [Accessed 11 August 2022].

SACO. (2018). Unlocking the Growth Potential of the Online Gaming Industry in South Africa:
Challenges and Opportunities. SACO: Port Elizabeth.

Schiff, A. (2020). The Gaming Audience is a Lot More Diverse and Desirable Than You Think.
Ad Exchanger. 21 May 2020. [Online]. Available: https://www.adexchanger.com/gaming/a-
marketers-guide-to-breaking-down-stereotypes-in-the-gaming-audience/ [Accessed 6 August
2022].

Statistics South Africa. (2016). Community survey 2016. [Online]. Available:

https://www.statssa.gov.za/ [Accessed 10 August 2022].

Statistics South Africa. (2021). General Household Survey 2021. [Online]. Available:
https://www.statssa.gov.za/ [Accessed 10 August 2022].

Statistics South Africa. (2022a). Quarterly Labour Force Survey. Q1: 2022. [Online]. Available:
https://www.statssa.gov.za/ [Accessed 10 August 2022].

Statistics South Africa. (2022b). Mid-year Population Estimates 2022. [Online]. Available:
https://www.statssa.gov.za/ [Accessed 11 August 2022].

Steam. (2022). Steam Download Stats. [Online]. Available:

https://store.steampowered.com/stats/content/ [Accessed 4 August 2022].
The Nielsen Company. (2018). From Consumers to Creators: The Digital Lives of Black
Consumers.

Tshimologong. (2021). For the win: developing a strategy to grow and transform the South
African game development ecosystem 2021. Wits University: Johannesburg.

Video Game Insights. 2022. Video Game Insights - Games industry data and analysis. [online]
Available at: <https://vginsights.com/insights/article/video-game-insights-2021-market-report>
[Accessed 22 September 2022].

Vanderhoef, J. (2020). Brews, Burgers, and Indie Bombast: The Antiestablishment

Neoliberalism of Devolver Digital. In, M. J. Clarke & C. Wang (Eds.), Indie Games in the
Digital Age (pp, 17-34). Bloomsbury: New York and London

88
Vermeulen, J., 2016. Desktop Dungeons has made South African developers QCF Design R9
million so far. [online] Mygaming.co.za. Available at:
<https://mygaming.co.za/news/business/91691-desktop-dungeons-has-made-qcf-design-r9-
million-so-far> [Accessed 7 September 2022].

Weiss, G. (2018). Fullscreen Study Finds Avid Gamers Have Twice As Much Discretionary
Income As Non-Gamers. Tubefilter. 10 February 2018. [Online]. Available:
https://www.tubefilter.com/2018/10/02/fullscreen-study-discretionary-income-gamers/
[Accessed 6 August 2022].

Westcott, K., Arbanas, J., Arkenberg, C., Auxier, B., Loucks, J. and Downs, K. (2021).
Streaming Video on Demand, Social Media and Gaming Trends. Digital Media Trends, 15th
Edition, Fall Pulse Survey. Deloitte Insights.

Webster, A. (2018). Indie game publishers are the new indie rock label The Verge.
https://www.theverge.com/2018/4/4/17199388/indie-game-publishers-double-fine-
annapurna-devolver-skybound [Accessed 13 August 2022].

Webster, A. (2019). Why gaming’s most influential indie label has stayed small for a decade.
The Verge. Available at: https://www.theverge.com/2019/6/5/18652878/devolver-digital-
anniversary-hotline-miami-serious-sam-indie-gaming [Accessed 13 August 2022].

Xaxis. (2021). How gaming helps marketers engage new and diverse audiences. [Online].
Available: https://www.xaxis.com/how-gaming-helps-marketers-engage-new-and-diverse-
audiences/ [Accessed 4 August 2022].

89