Financial and Monetary Systems

How fintech innovation can unlock Africa’s gaming revolution

Digital payments are helping to expand the African gaming industry.

Digital payments are helping to expand the African gaming industry. Image: Unsplash/Fábio Magalhães

Lucy Hoffman
Co-Founder and Chief Operating Officer , Carry1st
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Financial and Monetary Systems

  • The African gaming industry is emerging as the fastest-growing for mobile gaming, driven by a young population, increasing smartphone adoption and a burgeoning interest in mobile games.
  • Limited access to traditional banking in Africa presents a unique opportunity for fintech innovations. Mobile money facilitates digital payments and expands the gaming industry across the continent.
  • The growth of direct-to-consumer strategies in gaming allows game developers and companies to increase margins and engage more directly with consumers by bypassing app stores.

Africa is the final frontier for the video game industry. Over the past few years, gaming has become the dominant form of entertainment globally, grossing nearly $350 billion worldwide in 2023, according to one industry executive. With the last decade’s rise of mobile gaming, the sector is now bigger than movies, music and streaming combined, moving the industry’s audience beyond former archetypical customers of US-based adolescent boys who could afford the relatively pricey gaming console.

This year, Africa solidified itself as the fastest-growing market for the mobile games industry. That is hardly surprising given demographic trends in the region – the continent has the fastest-growing population in the world, with more of it classed as millennials or Generation Z than the United States and China combined.

By 2050, 25% of the world’s population is expected to be African. Combine that with the rapid adoption of smartphones and you can see strong organic growth of new gamers engaging with popular mobile games such as Call of Duty Mobile, FC Mobile or Clash of Clans.

Serving this new generation of players still presents challenges. For example, just 3.92% of Africa’s population can access a credit card. However, herein lies fintech’s transformative potential for gaming as well as financial inclusion continent-wide.

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Africa’s digital payments landscape

In recent years, there has been an explosion of innovation concerning payments in Africa, with many areas leapfrogging traditional banking methods and directly embracing digital payments. In Nigeria, for example, fintech unicorns, including Opay, Flutterwave and Interswitch, are coming one after the other. Kenya has the most mature and robust mobile money market in the world, much thanks to Safaricom’s M-PESA mobile banking service.

Mobile money is so prominent in the region that Sub-Saharan Africa comprises 66% of global mobile money transaction value – making it the world’s leader in mobile money innovation and adoption. In North Africa – Fawry (Egypt) and WafaCash (Morocco) are among those helping to bring their largely cash-based economies online.

These fintech offerings have enormous implications for profitably scaling games in Africa. Historically, the traditional app stores have made it seamless for game developers in Los Angeles to publish their games globally and get paid US dollars, regardless of where their customers were based.

However, these traditional platforms have yet to keep up with the rate of fintech innovation in Africa. As a result, many willing customers are unable to transact leveraging payment methods that are accessible and ubiquitous – excluding them from fully experiencing the entertainment, connection or competition they seek. Importantly, it prevents game developers across Africa from being able to build profitable businesses that serve their home audience.

Arts and entertainment present a huge opportunity for economic growth across the continent if the platforms exist to connect creators with their customers. What’s more, the knock-on effects extend beyond the creative economy. Today, for example, the Carry1st Shop offers a wide selection of vouchers for essential services such as electricity or prepaid mobile phones and internet services. There's no ambiguity here – fintech and gaming is a partnership where everyone stands to benefit.

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Direct to consumer

The direct-to-consumer trend is not distinct to Africa – we’ve seen gaming-specific commerce platforms explode in other markets over the last decade. Before launching their hit game, Free Fire, Singapore’s Garena built a multi-billion dollar business distributing global games across Southeast Asia. Before establishing itself as the world’s largest gaming company, Tencent started publishing games like Fortnite in China, subsequently collecting payments through WeChat.

In Western markets, publishers Scopley and Playtika have invested heavily in building a web experience for their mobile players – with Playtika reporting that over 25% of sales are direct. Playtika’s direct-to-consumer platform leverages rewards to switch players from Google Play and App Store versions of apps to its independent platform, which allows players to purchase in-app content directly from the company.

The direct-to-consumer strategy is not exclusive to gaming, either. Consumers have a relationship with the brands they love, whether it’s Candy Crush or Nike. For example, Nike’s direct-to-consumer brand generated $21.3 billion last year, more than double what it did five years prior. Increasingly, brands are realizing the value of building infrastructure that serves their customers directly. In the process, they are transforming global commerce.

The opportunity for the African gaming industry

The payments landscape for gaming sits at an exciting inflection point. In 2020, Epic Games initiated legal actions against Apple and Google, accusing them of maintaining unlawful monopolies with their app stores. This lawsuit contested the 30% commission the corporations levied on app store transactions and their rules that prevented developers from incorporating other payment options.

While most developers are excited by the prospect of increasing their margins on existing sales in the West, unlocking payments in emerging markets can vastly increase revenue, widening access and everyone’s slice of the pie.

While our research suggests that the African gaming industry will exceed $1 billion in 2024, the actual demand will likely be much more. By understanding and truly serving gamers in the region, we can unlock the suppressed demand for engaging, immersive, social experiences that mobile games can provide.

Africa is not a monolith but a vibrant, diverse landscape of gaming communities in Nigeria, South Africa, Morocco, Egypt and beyond, representing vast, untapped potential. As businesses localize their offerings to meet the unique needs of these customers, the opportunity to build meaningful, scalable businesses in Africa is immense, potentially rivalling large global consumer internet companies that dominate headlines today.

With fintech propelling the African gaming sector forward, the region and its customers are not to be underestimated.

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