As you contemplate the monetization of your games, have you considered which regions and markets to target? Are you focusing on Asia (including South Korea, Japan, and China), or are you looking to expand into North America and Europe? While these regions are known for being lucrative video game markets, it is crucial to explore the potential and opportunities in other markets to maximize your reach and revenue potential. What about other regions? Have you ever thought about entering the Central Asia market? Perhaps you are a developer based in Central Asia, aiming to introduce your game to local and global audiences. In this blog post, we will delve into the Central Asia market and outline why this region should be included in your expansion strategy.

Region overview

Central Asia includes five countries: Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan, with a combined population of nearly 80 million people. According to Statista, this region, hosting around 9 million gamers, is a rapidly expanding video games market, projected to achieve a CAGR of 8.70% (a CAGR of video games worldwide is 8.76%) from 2024 to 2027 across all five countries. By 2027, the region's video games market is anticipated to surpass $570.7 million in revenue.
Source: Statista Local governments’ incentives to boost the IT-sector In Central Asia, local governments play a significant role in fostering the growth of the IT sector through a range of strategic measures. These initiatives include offering tax incentives, investing in infrastructure, providing support for startups, and implementing digital literacy programs. Additionally, governments establish technology parks, create funding opportunities, and engage in collaborations with industry stakeholders to spur innovation and bolster economic development within the region. By actively supporting the IT sector, Central Asian governments are paving the way for technological advancement and sustainable growth in the region. In Uzbekistan, Kazakhstan and Kyrgyzstan, the countries where the majority of Central Asia players are located in, local governments offer the following tax benefits and exemptions:

• In Uzbekistan, residents of IT Parks benefit from exemptions on corporate income tax at rates of 7.5% or 15%, as well as a 12% VAT reduction. Personal income tax for IT park residents is lowered from 12% to 7.5%.
• In Kazakhstan, residents of Astana Hub enjoy tax exemptions, including a 0% corporate income tax rate (compared to the standard 20%), 0% VAT (standard rate: 12%), and 0% personal income tax (standard rate: 10%).
• Residents of the High Technology Park in Kyrgyz Republic are entitled to tax benefits such as a 0% profit tax (compared to the standard 10% rate for general residents), 0% VAT (standard rate: 12%), and a 5% personal income tax (versus the standard 10% rate).

Game development landscape The Central Asian region is home to over 100 local game developers, with a significant concentration in countries such as Kazakhstan (60+ domestic developers), Kyrgyzstan (20+ developers and studios), and Uzbekistan (10+ local developers). This growth in the number of game development companies and independent studios is attributed to government incentives and a rising interest in video games across the region. Challenges for local game developers Despite the increasing popularity of video games and local governments’ efforts to boost video game production in Central Asia, developers in the region still encounter challenges that hinder their global reach. These challenges include, but are not limited to:

1. Some countries in Central Asia, such as Kyrgyzstan, are not supported on digital platforms. This means that players from these countries either cannot access digital content or need to use VPN settings to make purchases from supported jurisdictions.
2. Following from the first challenge, many digital platforms may not offer payment processing in the local currencies of the region (KZT, UZS, KGS, etc.). Consequently, local gamers need to make payments in other currencies (e.g., USD) to access content, leading to currency conversion issues and potential price changes.
3. Local game developers also face limitations in distribution channels for their games, such as the inability to release games on platforms like Google Play. This restriction makes it challenging to showcase their games on a global scale and monetize them internationally, resulting in less players and locked revenue.

Accessing video game content and goods in Central Asia often involves additional steps, complex payment processes, and extra costs, making the overall gaming experience less convenient and more expensive.

Unlocking opportunities

However, game developers in Central Asia have opportunities to address these challenges by: Configuring payment portfolio By setting up a diverse payment portfolio that supports relevant payment methods across the region, developers can enhance the gaming experience for players, ensuring seamless in-game content purchases regardless of consumers’ location. It is essential to consider alternative payment methods (APMs) as they hold a significant presence in the local payment landscape (check our previous blog post to understand why APMs continue to be the preferred choice for numerous consumers worldwide). In Kazakhstan, approximately half of the population utilizes APMs for transactions, while in Uzbekistan and Kyrgyzstan, up to 80% of consumers prefer APMs over credit and debit cards. Establishing connections with payment partners capable of supporting local currency processing and other essential features (such as recurring billing for subscription products, refunds, and localized payment interfaces) can guarantee a seamless checkout experience without any unexpected expenses for consumers. Expanding reach: leveraging web shops for enhanced distribution Even if there are limitations to distributing your content through conventional digital platforms, consider exploring alternative channels for showcasing your games. One option could be establishing your own white-label digital store - web shop, allowing players to directly access and purchase your products and services from your branded website.

Why it's time to partner with Xsolla today

If the thought of handling payments, legal and tax compliance, distribution, and marketing tasks seems overwhelming, partnering with a professional could be the right decision. Xsolla, as an experienced Merchant of Record, created by gamers for gamers, offers a comprehensive solution tailored to your requirements. Here's how we can assist you:

• Expand into new regions and attract more players with Xsolla Pay Station, a robust tool offering over 700 payment methods across 200+ markets.
• Protect your games and players from fraud and streamline chargeback management, reducing fraud rates and increasing revenue with Xsolla Anti-Fraud.
• Expertly navigate global digital service taxes with our dedicated tax team.
• Create a seamless online store to generate new revenue from web purchases, from launch onwards.

Create an account to access Xsolla's set of publishing and development tools today. If you're interested in discovering how Xsolla can simplify the process of publishing your game across multiple platforms and regions, reach out to our team of experts. Written & Published By Yulia Mikhailova, Product Marketing Manager at Xsolla