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TERRITORY REPORT: MIDDLE EAST


Finding the Middle ground 40%


The retail landscapes of the Middle East’s wildly varied territories are in a state of flux. James Batchelor investigats how piracy and grey imports are offset by growth in the games retail market


Saudi Arabia’s market share of all software revenues


THE MIDDLE EAST is a highly fragmented region. Across its various nations, the potential of the video games industry varies wildly, as does every element of retail. While there is a growing culture of shopping malls in the more tech- savvy territories such as the United Arab Emirates, other areas such as Iran, Egypt and Pakistan depend on more primitive trader markets. As such, there is little consistency at retail. Everything from censorship to distribution is different for each region, which can make establishing concrete sales data near impossible. The lack of unified and global release dates has seen the rise of a formidable grey import culture, something local games firms are determined to stop.


Distributor Viva Entertainment’s general manager of sales and marketing Pranav Mehrotra says: “Release timing is very critical because it leaves these markets open to imports from the US and Asia. A same-day global release date is vital for the region.” Another shadow that looms over the Middle East is piracy. Almost every format suffers from this, tipping the sales balance exponentially in hardware’s favour. “Fortunately, piracy appears to be on the decline, thanks to recent strides by distributors and retailers to make genuine games easier and cheaper to buy,” says Arabian Computer Newseditor Ben Furfie. The introduction of newer PSP models has also helped prevent


THE MIDDLE EAST: AT A GLANCE PIRACY


Most Middle Eastern territories suffer from severe levels of piracy. While it is difficult to accurately work out how much software is illegal, research suggests that at its worst it accounts for over 99 per cent of PS2 games. As a result, shifting legitimate retail copies has become near impossible.


30 November 12th 2010 “ RETAIL


The Middle East has a wide range of specialists, hypermarkets and even book stores boasting a games offering. “This retail growth in the region is fuelled by the substantial mall culture, especially in Saudi and UAE,” says distributor Viva Entertainment’s sales and marketing GM Pranav Mehrotra.


Piracy appears to be on the decline, thanks to retailers and distributors’ recent action to discourage it.


Ben Furfie, ACN


gamers from playing illegally downloaded games, but as a result the format became less popular. But the PS3 has offered the region hope. As the only format to be piracy-free, the console has shown that sales of 20,000 units for key titles are possible – a significant improvement over the average 4,000 unit sales for 360 titles. And overall the industry’s outlook on the future is positive. The past year has seen a rise in legitmate sales of both hardware and software, and as the region develops there are more and more opportunities for games retailers and publishers. Furfie adds: “There is huge potential for games in the region, but that will only be realised once the other major issues are addressed.”


PRICING Unlike the UK, there is no aggressive retail price competition when it comes to new releases. Some software is price-protected by the region’s key distributors such as Red and Pluto, although significant price cuts were recently instigated by both companies to clear excessive retail stock.


DISTRIBUTION


Sony and Modern Electronics saw year-on-year growth of around 10 per cent in 2009. The two main distributors in UAE, Red and Pluto, also reported steady growth despite tough trading conditions. The overall sector’s growth has been less than experienced in previous years.


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