South Africa’s video games market is driven by the success of traditional core titles, but what challenges do local retailers and distributors face as the market broadens? James Batchelor investigates
THE OLDEST continent in the world is home to a video games market that, on the surface, seems to be set in the past.
The biggest selling formats are from the previous generation of consoles, the likes of Wii, Kinect and Move have yet to bring in a broader audience of gamers and even the threat of downloads is almost non-existant.
But that’s not to say there’s no value to this region.
There is a strong installed base of core gamers with PS3s, disposable income and a taste for the same blockbusters that top the charts in larger markets.
The ten best-selling games in 2011 included FIFA 12, Gran Turismo 5, Uncharted 2, Modern Warfare and Grand Theft Auto IV– titles that wouldn’t look out of place in our own charts. Naturally, Sony’s dominance in South Africa means its first-party titles fare better than they do here in the UK. “PlayStation holds a 68 per cent
market share across PS3, PS2 and PSP, followed by Nintendo Wii and
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Xbox,” says Mario Dos Santos, CEO of distributor Sterkinekor. “Software performance follows the UK market with key franchises being the pillars. FIFAis the strongest franchise, followed by Gran Turismoand God of War. Social games are not particularly strong here.”
If you want to bring your product to South Africa, make sure you get a good
understanding of the distribution dynamics. Mario Dos Santos, Sterkinekor
Interestingly, with the exception
of FIFA 12, there are very few 2011 titles among the nation’s best- sellers. This is largely because low prices sway consumers more towards back catalogue than new releases.
“Pricing is an area of much activity and focus as the South African market has become extremely price sensitive,” explains Catapult Business Solutions founder Chris Stanton-Jones.
“This has partly been caused by recessionary issues and partly by the entrance into the market of a large number of lower income consumers – for whom video gaming is now just affordable. At the right price, a product’s sales will take off. “As the market broadens, it seems that there are less hardcore gamers insistent on getting their game on the launch date. Many consumers are prepared to either wait until the price is reduced or wait for a pre- owned version – a sector that is being driven by the leading gaming specialist retailer, BT Games.”
BIG ON BOXES
The lack of downloads means that the local games industry is dependent on boxed sales. Fortunately, there is a healthy selection of distributors to choose from, although some have
succumbed to economical decline over the past few years.
“The biggest development in our sector has been the consolidation of distributors,” says Dos Santos. “Key publishers have moved from smaller distributors to the likes of Sterkinekor and Megarom. “If you want to bring your product to South Africa, make sure you get a good understanding of the distribution dynamics and evaluate your pricing strategies.”
And while the PS2 and PSP may still rule the roost, PS3 and Xbox 360 are both gaining ground. As this userbase expands, sales for newer games stand to improve dramatically.
“The potential from the emerging black-middle class consumers, and trading up new large base of PS2 users to next gen formats is a key opportunity,” says Stanton-Jones. “Furthermore, the slow
development from online gaming and direct download sales will leave the traditional box market strong and unaffected by it for several more years to come.”