This piece is a guest contribution from Stephen Ojo. A freelance writer based in Nigeria with an interest in gaming and the legal challenges faced by creative teams.
In line with our mandate at Games Industry Africa, which is to give deep insights into the game development space in Africa, we had a chat with Mr Nick Hall, who is one of the founding members of Interactive Entertainment South Africa. The aim of this chat was to get an overview of the game development industry in South Africa, with particular focus on the legal/regulatory concerns in the space, as well as the role of Esports in the development of the game development scene.
GIA: Can you give a brief introduction of yourself?
Nick Hall: My name is Nick Hall and I am currently the Chief Financial Officer (CFO) at a game development studio in South Africa called RenderHeads, and also the co-founder of the Africa Games Week, which is an event to shine the spotlight on Game Development in Africa. In addition to this, I am the head of the industry body called Interactive Entertainment South Africa, which was setup to lobby the South African Government on all matters relating to interactive entertainment.
GIA: What a rich profile. So, could you tell us about the game development scene in South Africa and the landmark achievements till date?
Nick Hall: Well. There are about 60 active game development studios in South Africa and a number of retail distribution/ancillary businesses to game development in South Africa. However, most of these game development studios are small in size with 2-3 people working on projects. SEA MONSTER ENTERTAINMENT is the largest gaming studio with around 36 staff.
As for landmark achievements, we have a studio like Free Lives, who made Broforce having over 1M sales and we have studios like Nyamakop being the first African studio to get their IP released on a Nintendo console (the Switch). Also, in October this year, we are going to be having a hyper casual games accelerator open in South Africa which is an initiative by Crazy Labs in collaboration with Carry1st. On the service side, we have successful studios like 24bit Games who do a lot of porting and optimisation for international publishers, there is also Carry 1st raising over $6M with backing from a global game development company like Riot Games and Balisti doing some amazing work for the AAA industry.
GIA: So, based on your experience in the industry and being a lawyer yourself, what will you say are the legal/regulatory challenges in the South African Gaming Space?
Nick Hall: While setting up and doing business is relatively easy, we do have a fair share of compliance and regulatory issues that can be a headache to deal with. However, there are, in my opinion, three main regulatory issues affecting the gaming scene in South Africa.
First, South Africa has a strict exchange control regulation that can make it difficult for payments to be made to external foreign contractors. Inbound payments from international services and platforms can also sometimes be an issue and can take a while to resolve. Linked to this is that the exchange control laws also regulate how “capital” can be transferred into and out of the country. This has a very serious effect on building businesses for exit, especially ones built on Intellectual Property as navigating the rules for the sale of shares and IP needs to be done carefully. Often this results in local companies setting up structures to house their IP offshore so they don’t need to deal with these issues.
Secondly, South African immigration policy make it difficult to get work visas for certain skills or types of workers. This poses a big challenge for local studios looking to specialise or grow as currently a lot of the specialised skills needed for larger projects just aren’t available in the country.
Thirdly, the Films and Publications Board (the South African governments agency tasked with rating and classifying games and films) has recently had its scope expanded to the regulation of online content. There are concerns that this could have dire consequences for game development and game tangential industries as non-compliance with the FPB’s laws could lead to certain platforms and distribution channels effectively being banned in the country.
GIA: Thank you for that wonderful explanation. So, in terms of future development in the South African Gaming Space, what should we be expecting from that space in the nearest future?
Nick Hall: Well, there is the Hyper Casual Games Accelerator by CrazyLabs coming in September, which will be a very interesting development to watch. A number of our studios are also in the middle of the development of their next projects, and while I can’t share details, there are a lot of very exciting things in the works. Games4Change will also be launching an Africa Chapter at Africa Games Week later this year, and an in-depth research report on the industry is due to be released very soon.
GIA: What is your take about African Gaming Space using Esports as a means to grow the Game Development Scene?
Nick Hall: This is a very good question. I have traditionally been quite sceptical about the linkages between eSports and game development. But new research has been able to suggest that it will be an important part in developing skills capacity for the game development sector in South Africa (and Africa as a whole). There is evidence that suggests that, where there are strong consumer markets for games, strong game development ecosystems will follow. In the African context, eSports has the potential to really build up the local consumer market to enable this, and it will act as a gateway for potential employees.
One of the issues we face in SA that is linked to our skills shortages is that game development (like many other creative industries) is not seen as a “real” job. A lot of work needs to be done to show people the potential that the games industry holds as a career path, and it appears that eSports will be the way that these conversations can start to happen.
On the other side, I know a lot of people are asking when a local or African studio will make a “eSports” title. This I think is still a while away. We simply don’t have studios with sufficient backing and skills to pull this off yet. But once we start seeing real growth in the industry, I’m sure it will follow.