As a Pakistani, it takes some effort to find hope in times like these. Over the past few weeks, capital market players have seen this in the impressive rise in the KSE-100 index. Some may be excited about his two recent acquisitions, Aramco buying a 40% stake in GO and Etisalat scooping Telenor’s local operations. While some companies have traditionally respected the flow of venture capital, that is long gone and will take some time to truly recover.
There are other reasons, although they are less mainstream or obvious. For me personally, it is Pakistan’s place in the global mobile app ecosystem. It has been the fastest growing market in terms of downloads for the past two years in a row, surpassing even the likes of India and Indonesia. According to app intelligence platform Data.ai, the country recorded 3.5 billion downloads in 2022, making it 9th in the world.
This makes us by far the largest market in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region. The next two countries on the list, Egypt and Saudi Arabia, lag behind with 877 million and 1.7 billion downloads, respectively. In other words, Pakistan accounted for more than 35% of the total installs in the region. However, in monetary terms, the story was completely different: Japan’s consumption expenditure was $82.9 million, which was even lower than Oman’s.
Obviously, that shouldn’t be news to anyone. We are a large market in terms of number of people, but a small market in terms of amount of money. However, in many cases, it can work to your advantage, albeit temporarily. For example, Careem relied heavily on Pakistan to show growth in the number of users of its hockey sticks, as investors were primarily concerned with sales volumes at the time. With the withdrawal of venture capital, such cases may be rare now, but their frequency is only temporary.
Pakistan recorded 3.5 billion app downloads in 2022, making it the largest market in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region.
On the supply side, we are comfortably ahead of our regional competitors. According to Appfigures, there are around 4,700 app publishers in Pakistan. This is higher than the UAE’s 4,600, even though many studios around the world register for legitimate purposes as it is a business-friendly jurisdiction.
Similarly, Appfigures estimates that Pakistan also far outpaces other countries in the number of apps created by local publishers, with over 21,000. The United Arab Emirates came in second with about 18,000, followed by Saudi Arabia with 13,000 and Egypt with just 8,000.
But that’s where the optimism starts to fade. Despite a healthy publisher base and large consumer market, the two don’t really overlap well. Basically, Pakistani developers are not capturing a large share of the domestic demand, which is instead directed towards more international products. In fact, if we restrict ourselves to products with more than 5 million installs, he only has 221 apps out of 21,000.
Most of Pakistan’s biggest apps are international by necessity, from Tiktok to Instagram to virtually all tools and utility products. Even the local names you come across may happen to have foreign roots or technology that was primarily made abroad. Daraz and InDrive are two notable examples, but there are many others. His one explanation for this could be that private consumption is small. This is causing domestic publishers to look beyond their borders for better monetization opportunities.
Actually, it makes a lot of sense. Build locally at low cost and sell to markets that pay more. Except that doesn’t happen much either. Traditionally, games have accounted for half to two-thirds of all mobile spending. So if Pakistani publishers are optimizing their monetization, you would expect them to focus on Pakistan.
According to a report by Mindstorm Labs and Pakistan Software Houses Association, the country’s gaming sector generates approximately $300 million in revenue, of which $158 million comes from exports. These are not small numbers. But it does little to undermine overall global opportunities. Unlike Vietnam, which boasts Peak Games’ Tolkien and his OneSoft, we have few studios that boast international brand reputations.
Export-driven monetization opportunities are not limited to gaming. Games typically require a lot of resources to develop and involve significant risks. There’s a big market for simple apps, like note-taking apps or tools that let you add text on top of images. Seems basic. In fact, some local companies have managed to make a name for themselves in such niche fields.
For example, Pak Data is a world leader in Islamic apps, Vyro.ai has rapidly scaled to tens of millions of users with its background changer, and Codematics is the world leader in universal remote controls. The app world can get weird like this. The only question is whether you can identify it fast enough and turn it into cash.
Published in The Business and Finance Weekly Dawn on December 18, 2023