The success of SA's video gaming industry is the result of understanding the migration to digital and making money from this shift.
This is according to Charles Stuart, social director for technology, information, communication and entertainment media at professional services company PricewaterhouseCoopers (PwC).
Following a recent PwC report, which forecast a 9% annual growth rate for the industry over the next five years, Stuart believes astute business models in the video gaming industry have attracted new customers, while retaining existing ones. He points to the "freemium model", where certain games are made available for free, with money (premium) being charged for advanced features, functionality or virtual gaming goods.
"This model has helped break new customers in and allows them to assess the possibilities of what the industry has to offer, at very minimal costs," he says.
Another model used to positive effect, notes Stuart, is micro-transaction, which involves an in-game-currency or service bought with real-world money but only usable within the online game. Through this model, he explains, users are also able to pay a little more to give their video game characters special powers, or to skip a level.
"What the industry has also been successful at doing is, instead of adverts, the actual product becomes a part of the game's story, which means royalties and more value for the game," states Stuart. He notes, however, that continued limited broadband access has been a challenge, as it means gamers cannot just gravitate to an online game and have the same quality and experience that they enjoy on console games.
"Globally, the console market took a dip because everyone is waiting for the next-generation console games. South Africa has bucked that trend," he says. "Because consoles are a more expensive investment in this country due to relatively lower income levels, people play on older consoles for longer." He explains that while there isn't a robust alternative, which is good for the console games market, there is limited access to playing high-quality and more collaborative games.
"This constrains the South African market somewhat, in that the industry is unable to fully penetrate this online segment," Stuart adds.
For Vicky Myburgh, head of entertainment and media at PwC, piracy is another challenge that has plagued the industry for some time. "Where online and digital games are able to address this problem through the provision of free games and digital rights management, PC games in particular struggle with that, and that's leading to their decline," she says.
She notes that, unlike with US and European markets, where users just switch between the segments they are playing, SA's video gaming industry has seen new participants entering the market. Myburgh adds that the video gaming industry seems to have learned tough lessons from the music and movie sectors.
"The next five years look very positive; with mobile gaming growing by 15% to 19%, there's a lot going for the industry - the focus should be the creative talent that designs the games, and also the talent that makes them multi-platform, as well as backwards-forward compatible," she concludes.
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