5 Reasons to Launch Your Gaming App in Latin America

November 14, 2014

7:00 am

Gaming is leading in the three most important consumer usage behaviors on mobile devices: reach, engagement, and monetization. More people have mobile phones, people are spending longer time on their phones, and spending money on mobile games.

“We’ve moved from million-dollar games to billion-dollar games,” said Kristian Segerstrale, a game investor at Initial Capital in a recent interview.

This trend is also being seen throughout Latin America. A 2013 prediction poised the Latin American market to reach $3.9 billion, which is more than South Korea’s online and mobile game markets combined (SuperData Research).

“This growth is spilling over to Latin America, and no other region comes close in terms of growth potential. Between 2013 to 2014 Latin America takes the lead with a year-on-year growth rate of 60% and is projected to grow the fastest with a CAGR of 50% over the next three years alone,” explains Ana Maria Yumiseva, CEO of Frecuencia Latinoamérica. Yumiserva is hosting M2 Games Latam in Miami, that will focus on the growing gaming industry in the region (Full disclosure: Frecuencia Latinoamérica is working with a company I co-founded).

With the increase in demand for mobile games, it should be no surprise that Latin America is fast becoming a gaming mecca for developers and game startups.

Here are a few reasons why:

1. Brazil

Brazil is currently number 11 in terms of games revenue, making it the highest ranking country in the LATAM region. Brazil has one of the highest player per payer ratios in the world with 61% of its 48.8 million gamers spending money. Brazil’s large population and strong Internet penetration has made the country a promising opportunity for game developers worldwide. Candy Crush Saga (King) and Subway Surfers (Kiloo) are examples of popular games accessible through Facebook, the number one social media network in the country. Brazil now has 50 million users on Facebook, with an astounding growth rate of 144 percent per year, making it the second biggest country on Facebook after the U.S., according social media analyst company Socialbakers.

614xBrazil

 

However, Brazil game developers face a few challenges like high taxes on imported goods (consoles and smartphones). So there has been a lot of buzz around Uruguay’s growing game development community.

2. Smartphones For All

Part of the reason why the gaming industry has taken off in Latin America is due to the high smartphone and tablet penetration rate. According to the International Data Corporation (IDC), via Latin Link, smartphone sales across Latin America hit 16.6 million during the first quarter of 2013, which is an increase of 53 percent from the same period during the previous year.

Screen Shot 2014-11-11 at 3.25.35 PM

(source: Statista)

As the region’s mobile usage increases, so do the opportunities for game development companies aimed at this specific customer base.

3. More Bang for Your Buck

According to SuperData Research, the region’s projected mobile gaming growth coupled with the region’s low cost of acquisition per player is ideal, with an average (CPI) of $1.51 / $0.76 for Brazil and Mexico, and $1.17 / $0.45 for the other countries, on iOS and Android respectively. Simply put, it cost less to develop, test and market the game in Latin America.

In terms of spending power, the Latin American market is comparable to China. According to Alta Ventures, China’s population of 1.3 billion commands an average disposable income of a little over $2,200 per person ($2.9 trillion in total). The population of Latin America is less than half that, about 594 million, but commands an average disposable income over $4,700 ($2.8 trillion total).

Some of the infrastructure is lagging behind, especially when it comes to online payment. However, developers have worked around the issue with tactics like selling pre-paid cards in drug stores and super markets or having people pay by SMS.

4. The talent and labor costs

The quality of game developers in the region from countries like Brazil, Argentina, Mexico, and Uruguay have proven to be competitive to both U.S and Europe. Although we refer to Latin America as one, the region is not monolithic and presents different challenges and opportunities in each country. As more local game development shops emerge, more culturally focused games successfully launch in each market. Compared to the United States, the cost is lower and the likelihood of getting it right is higher.

5. Preguntados (Trivia Crack) and Mini-Fazenda

Argentina’s game development shop Etermax recently launched Preguntados, an app that quickly became on of the most downloaded apps in the region. It reached 180 million users, with 60 million just in Argentina.

“The goal of Etermax was to reach new markets with a product that surpassed the success of previously launched games. I saw that most trivia games lacked elements that would make them attractive and addictive at the same time. So we decided to give the classic game of questions a twist by implementing an intelligent system that would continually refresh content at once,” explains Maximo Cavazzani, CEO of Etermax.

 

And then, Mini-Fazenda launched by Brazilian company Vostu, has become one of the country’s most popular games on Facebook and recently launched its mobile version.

As to why these companies have been successful in Latin America, Cavazzani says it has to do with the local know-how and competition.

“The main advantage of launching in Latin America is that there are no competitors offering games with local content. Companies like Zynga, Gameloft, EA King or global product launch only without considering the local content. Latin America may be the gateway to the world , achieving success in a market that has 600 million inhabitants ; however, many of these companies do not pay attention,” he says.

 

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Camila has been heavily active in South Florida’s tech startup community, where she is a co-host of a local radio show called pFunkcast. Camila previously worked at Greenpeace International and the Organization of the Prohibition of Chemical Weapons (OPCW) in various communication roles. A proud Brazilian who spent most of he life in Peru, she is passionate about traveling and documentaries.

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