How Trade Financing Can Help the Gaming Industry Overcome Their Financial Woes?


Peter Maerevoet, Global CFO and Regional CEO for Asia, Tradewind Finance

The digital gaming sector is one that many compare to a rollercoaster; experts describe it as a hit-or-miss market. Similar to a roller coaster, the gaming industry experiences spikes in demand during certain seasons and drops to near-zero sales during other times.

As people were confined to their homes and had to turn to internet entertainment during the pandemic, the video game industry experienced a significant uptick in growth. The pandemic also witnessed multiple new gaming companies jumping into the pile to take advantage of the massive and sudden demand.

However, once everyone resumed their typical routine of returning to the office and most physical grounds and sections had opened up after the pandemic, most video game firms reported their lowest-ever quarterly profits. The gaming business previously reported a drop in its fortune due to the pandemic squeeze. The US gaming sector reported a dip in video games of 11%, with a further decline of 8.7% projected for this year.

Additionally, this year had the lowest sales for consoles, including Nintendo, Sony’s Playstation, and Microsoft’s Xbox. The digital gaming market is not invincible and tends to prosper only during specific times of the year. This puts brands under a lot of pressure to make the most of the demand while it lasts.

How can gaming businesses ensure they have the proper financial support to capture the $3.14 billion MENA gaming industry?

Despite the ups and downs, it is predicted that the MENA gaming sector, particularly in the UAE, KSA, and Egypt, will increase to $3.14 billion by 2025. It is well known, however, that obtaining quick capital for a business is difficult despite the market potential, and it is critical to get your foot in the door when demand is high.

Opening a bank account specifically for an SME can take up to a year, and getting a loan is considerably more challenging because SMEs lack collateral and track records. This begs the question, what is the best alternative method of securing funding, especially when time is of the essence?

One way is to sell your receivables rather than apply for a loan. Loans are a time-consuming and complicated process, especially when it comes to financing an industry that is purely based on the right timing.

Selling your receivables can make better financing possible. In a financial transaction known as “accounts receivable financing,” a business sells its invoices to a factor.


3 things to consider when looking for financial solutions for the gaming industry:

  1. Opt for accounts receivable financing rather than loans

In a general setting, most games go without promotions as developers usually put all their money into making the game/app and have nothing left for promotions. Obtaining loans in these cases is often complicated as, other than predicted revenue, there needs to be more proof or collateral for the banks to rely on. This is where accounts receivable financing or trade financing is the most beneficial. A trade finance company can pay you for the predicted income upfront, which generally takes at least 90 days. The instant cash flows help the gaming industry clear up its bills and concentrate on other aspects of the business. Trade finance is an excellent substitute to fill the gap between when you issue an invoice and when you will receive the money. It also allows you to concentrate on other aspects of the business.


  1. Opt for simple and quick bankless finance methods

Banking has always been an intense procedure for new or upcoming businesses. According to a survey by the Pearl Initiative GCC in the first half of 2022, 39% of SMEs cited a shortage of cash or finance as one of their key challenges. A straightforward bank account can become complicated since banks see SMEs as a risky industry and have high minimum balance requirements and bureaucratic processes.

Therefore, as an upcoming business, starting with a financing company that does not require intense banking is good. In fact, there is no need to have a bank involved in a factoring or accounts receivables transaction – all transactions are handled through the trade finance company. It is one of the simplest and easiest methods for gaming companies to get the funding they need to ensure all finances go well.

  1. Choose a source that provides multiple injections of finance rather than just one major initial injection

A steady income stream is essential if one is working in the “prone to hiccups” gaming industry. The major problem with traditional financing is that it never produces constant cash flow because traditional accounting is based on a one-time sizable initial investment in the company. This makes it challenging to keep the wheels running after the initial investment is used and the accounts receivables still need to be submitted.

On the other hand, trade financing is a constant stream of capital into the business and is not dependent on a one-time injection. This occurs when a trade finance company purchases accounts receivable so that you can begin working on your next project immediately and avoid waiting 90 days. You will have consistent revenue from trade finance as long as you continue to serve your clients and have bills to collect.