During the recent quiet period with sports events cancelled and betting shops being forced to close their doors, virtual sports have played a crucial role in minimising the negative impact of COVID-19 for so many operators, particularly in Europe.
So why has Africa fallen behind? George Shamugia, CEO of Singular, identifies a couple of “major culprits” for why Nigeria – Africa’s biggest economy and most populous country – has struggled to transfer the success of retail-based virtuals to the online space.
Across European operators, virtual sports betting and esports turned out to be a good substitution for the real sports betting. In the UK alone, almost five million viewers watched the Virtual Grand National, and bets placed on the race raised £2.6 million for the NHS.
As Europe, North America, and Asia witnessed a spike in online gaming, the African market was falling behind. According to our data from the region, the number of online players didn’t increase. This is very contradictory to the recent market developments towards a mobile nation.
Market’s shift towards online
The Nigerian market has recorded an increase in smartphone ownership, with 87% of the traffic coming from mobile devices or the 113.9 million mobile internet users (Source: The Nigerian Communications Commission). Additionally, the launch of a 4G network across Nigeria increased the usage of mobile wallets.
The numbers show that about 63% of Nigerians who access the internet, have bought something online. The government has also joined forces with FinTech startups to shift payment transactions toward mobile money and away from cash with waiving fees, simplifying registration, imposing higher fees on cash withdrawals from mobile wallets. As a result, just OPay in Nigeria had a 44% transaction volume increase between January and April.
Despite the market’s shift towards online, one of the leading iGaming operators on the market saw only a 20% increase of online visitors, which did not translate to increased revenues as only a small subset of new online users made a bet.
Betting preferences in Nigeria
Across the African continent, particularly in Nigeria, fixed-odds betting dominates the gaming industry as a primary revenue generator. Despite the advancements in internet accessibility and increased smartphone ownership, the majority of the revenue still comes from retail. What is even more unique for this market is that virtual sports betting is the main revenue driver for operators, substituting in-play betting across the betting shops. In Nigeria, Africa’s biggest economy and the most populous country, tickets placed on Virtual Sports VS real sports events are 70:30. However, while Virtual Sports were gaining popularity across the globe, the African market failed to transfer their success from retail to online.
Players were so reluctant to play and bet online that even plummeted the iGaming market in some countries. For example, in Kenya where roughly 60% of the population has access to mobile money, the betting market crashed almost to zero during the retail shops’ closure.
Analysing the market we identified two major culprits: spotty internet and expensive mobile data packages. The spotty internet connection with high latency is making it practically impossible to stream virtual sporting events online. Second, high mobile data prices make it unaffordable to bet online on Virtuals multiple times a day as they used to do at betting shops.
Despite the 87% mobile penetration, Nigeria has the world’s most expensive prepaid mobile data plans compared to median incomes. According to the World Bank, MTN Nigeria’s lowest and cheapest data plan costs $0.28 for 50 megabytes of data, while more than 68% of Nigerians live on less than $1.25 a day.
Mass content delivery as a solution
Once again, a copy-paste strategy from the European or Asian markets will not work. Let’s step back and analyze how retail shops deliver Virtuals. Due to internet connection disruptions, almost every retail delivers the shop odds, and the video feeds through a satellite feed. According to SES (Market study, 2017), in Nigeria, out of 35 million TV homes, 10 million are served by satellite and 25 million TV homes are receiving digital TV signals.
This market has the potential for mass content delivery. Operators can deliver high-quality Virtual Sports feed to players without any interruption or lag by launching their tv channel over satellite and digital pay-tv services.
Once video and odds feed delivery are not an issue anymore, bets can be accepted through multiple channels to make the service accessible for a wider audience. For example, lite weight mobile apps and sites, Opera Mini compatible sites. Also, USSD Menu and SMS when the internet connection is unavailable. Along with traditional online payments, carrier billing service can also be explored as a means of reaching a wider audience.
Operators can even take this to a whole new level by holding virtual tournaments and creating their tv shows with live commentary. Therefore, making the whole experience more engaging for bettors.
We have been providing iGaming and Sports betting platforms to operators in Nigeria and several other African countries for the past five years. We have seen the same trend over and over again: this market is unique. Despite its hurdles, it holds huge opportunities for the market players who are ready to overcome unexpected obstacles with out-of-the-box thinking and tailored approach.