Pakistan’s game development industry earns an estimated $400-480 million a year. But a large part of that money never makes it home. Faced with rules that require half of export proceeds to be converted into rupees, caps on incoming transactions, slow remittance screening and a 27pc tax on top-ups used to buy ads on platforms such as Google and Unity, many companies have registered abroad and run their finances from there. This means the industry is far bigger than the official figures suggest.Industry insiders say virtually every studio has also registered a company outside Pakistan.
The reason, they explain, is that a typical game earns a profit margin of only 20-25pc, and a large part of the cost goes on marketing through international services such as Google or Unity to reach a wider audience. With so much of their spending in dollars abroad, studios say the current 50pc conversion requirement makes little business sense, and this has held back an industry (animation, graphics and games) that, according to State Bank of Pakistan (SBP) and Pakistan Software Export Board (PSEB) data, accounts for 10.5pc of the $4.6 billion in IT exports recorded in FY26.
Independent estimates put the figure at $500-600m and growing.
According to a PSEB report, thegaming market itself is divided into mobile, console and PC games with the industry primarily dominated by mobile games with around half of the total market share. This divide is also visible in Pakistan with mobile game development being the major driver of the industry. Explaining the industry, Syed Bilal Qasim, the project director at the Centre of Excellence in Gaming & Animation (CEGA), Ministry of Information Technology and Telecommunication, told Dawn’s Business & Finance that in Pakistan, some companies were working with internationally-established game publishers, others were self-publishing their own games, while some only focused on developing and selling game assets for in-game or platformbased stores. Other offshoots of the industry include individuals and companies providing animations and ad development services.
‘Game development is currently the dominant industry in Pakistan with an estimated value of more than $200m.
Major focus is on mobile game development, there are also a few studios here that are working on PC gaming.
The reason for this, he elaborated, was the rapid revenue cycle of mobile game development as well as a lower investment and infrastructure requirements.In terms of the existing work-force, Pakistan had a large number of good developers but lacked skilled animators.
‘A small gaming studio in Lahore has at least 30 or more people working and large studios have hundreds ofstaffers,’ he said, adding that a recent change in the industry had been brought about by Steam, a gaming platform, where many Pakistani developers were now focusing their efforts.
Affak Sheikh, the co-founder ofmobile gaming startup, Gamistan, said the industry had developed very rapidly in Pakistan compared to other countries in the region.
‘There is a mature ecosystem of mobile game development with many established companies,’ he added.
Bilal believed that the actual size of the industry was much bigger than the official figures as it was a norm to register a company in any country due to the restrictions imposed due to the regulatory framework in Pakistan. ‘For Pakistan, different numbers are quoted, starting from $200m to around $450m but the actual size is much bigger.
‘Other industry insiders share the same constraints and say that a company can retain half of its earnings in dollars and the rest has to be converted into rupees and this does not make business sense for this particular sector as its major cost is in dollars which has to be spent on platforms, which are outside Pakistan usually in the US. Secondly, they say, if any company brings in their entire revenue into Pakistan, then there are major roadblocks in receiving and spending money. These and high taxes become the limiting factor for the industry in Pakistan.
Mr Affak said operating from Pakistan had many challenges including online platforms restricting companies based here, which he believed was due to some users abusing the system on these platforms.
Explaining why companies opted to register themselves abroad, he said taxation became a major cost as there was a 27pc tax on top ups for spending money on online platforms marketing.
‘Studios register their companies abroad and finances are handled from abroad,’ he said.
Saadaan Waqar, a cofounder of Heritage Arc Studios, has been working on producing a PC and console game, which he wants to publish on Steam. This segment, he says, requires a lot more resources including the time to publish. He said: ‘There are not many studios working on PC and console game development in Pakistan, whereas there is a large market for this part of the industry. It has a higher cost for getting off the ground but there is a lack of developers for Unreal Engine in Pakistan, the platform on which we are developing our game. Currently, there are 10 interns, and half of them are fromother countries, including the UK and USA.
He also echoed the same regulatory challenges and the workaround of getting registered abroad to avoid the higher costs of financial dealing from within Pakistan.
Industry insiders who spoke to Dawn also highlighted the artificial intelligence-induced disruption coming to the industry with development cycles getting shorter, complete games developed by Al by non-developers, and restrictions and checks being imposed by platforms on Al-generated games.
Bilal was of the view that Al was a major game changer for many industries, and it would certainly disrupt the gaming industry, but believed that it was too early to make a definitive prediction. However, he remained optimistic with the view that games were an art form and an artist’s creation carried a greater value. ‘It might become a complementary part of the whole development cycle. As for the Pakistani industry, small development teams and studios are much more agile and can quickly adapt to such disruptive changes.’