ENTREPRISE54 – “I like to say there are three tiers of entertainment: movies, music and gaming,” says Lakunle Ogungbamila, CEO of Nigerian Internet gaming company, KULUYA. “Africa has achieved considerable progress at movie entertainment and her music is getting international attention. At gaming however, she’s yet to prove her existence.”

KULUYA, which means “action” in the Nigerian Igbo language, was founded in October 2012 and is currently headquartered in the Lagos SPARK building, which houses a network of 13 Internet start-ups seed-funded by a million-dollar injection from Nigerian Internet entrepreneur, Jason Njoku and his iROKO TV partner, Bastian Gotter. Njoku and Gotter raised $250,000 to establish KULUYA, bringing onboard a third partner, Chris Okonkwo. Lakunle Ogungbamila, who had previously served for three years as a web strategy lead for United Bank of Africa, joined the team as the CEO. Ogungbamila also oversees the KULUYA team, which comprises 13 young individuals: one sound engineer, three developers and nine artists, illustrators and animators. Just six months after starting up, KULUYA was valued at $2 million.

“Jason and Bastian always had the idea that gaming is another [form of] content not coming out of Africa,” Ogungbamila explains. “You really don’t find games around Africa or Africa-related stories. Plus, in the west, gaming is larger than movies. So we asked ourselves, ‘Are we not missing out on something?’ The gaming industry is very big. There are companies that spend $250 million developing just one game for three or four years and when it is released they generate like $500 million in the first week. Then there are those who produce mobile games. In a year, they’d probably spend hundreds of thousands of dollars to release three or four titles and then get paid. Then there are those who make casual games, where not as much effort is put into production. By their definition, they are usually 2D games you play for 10 or 20 minutes before walking away.”

The KULUYA founders and chief executive chose to go with casual games. Because these don’t singularly engage players for lengthy periods of time, gaming companies generally create dozens of them in order retain players’ interest for longer. “We had a combat game we started developing in January, Afro Fighters, but had to put it on hold because, to execute the project properly would take us a whole year of not doing anything else. So, when you weigh the risk of expending a whole year to design and produce just one title for a market you’re not really sure what the taste is yet, it’s a big bet. We can produce games as good as Angry Birds but we decided rather to bet on between 60 and 100 casual, fun-to-play games that we know four or five of them would catch on.”

Kuluya.com currently has over 70 games spanning a variety of themes, among them adventure, puzzles, sports, arcade and strategy. Though many of its games have Nigeria-centric plot lines, the hits on the site come from all over the continent – testimony to the appeal of African content. “Kuluya.com gets hits from Senegal, Ghana, Kenya and South Africa, though our advertising has not been expanded to target those regions,” says Ogungbamila.

The company is able to custom create games to suit the specific needs of interested corporate companies. Not surprisingly, they charge thousands of dollars for this privilege, though Ogungbamila admits that it is this revenue stream that will see the company break even by November 2013. KULUYA also generates revenue through an unusual skill-based model, where players buy a sort of table chip to compete with friends. Ogungbamila explains this rare income stream: “The model was made popular by King.com. They started in 2002 and are now bigger than Zynga.” (Zynga is the California-based mobile and online gaming company that launched Farmville, 2009’s best online game, which reached 10 million daily active users within six weeks.) Ogungbamila further states that this model has helped to grow revenue through the increased number of online players, though he admits the growth is gradual.

KULUYA has five as-yetun released mobile games still in its arsenal, and intends to partner with telecom original equipment manufacturers to have the games preloaded onto Africa-destined android smart phones. Ogungbamila says that android-based devices are the cheapest smart phones in Nigeria and that, although the market share is still small, it is expected to grow in the near future. “By mid next year they [android based devices] should have a significant share of Nigeria’s smart phone market so we plan to launch on mobile by then,” he says.

A 2013 Online Gaming report based on research undertaken in the US, compiled by US-based NPD Group, revealed that 72 percent of the 8,800 respondents said they played online games, an increase of 67 percent on 2012 figures. The trend is similar in emerging nations such as Brazil and China, the market strongly driven by deepened Internet penetration. The exact size of Nigeria’s Internet gaming market might still be unknown but given the size of the country’s population and the fact that there has been a 46 percent increase in Internet penetration in the last four years, the online gaming market definitely has potential.