Addressing the challenges and the potential of the LATAM gaming market
There's no doubt that the investment in the online gaming sector in Latin America has a high potential to yield results, since it represents a yet untapped source of new customers. However, such a considerable and complex gathering of emerging markets requires a more subtle approach.
For this reason, the main question that rises in the minds of many gaming merchants is "how to hurdle the challenges that a fragmented geo-economic region, such as Latin America, presents?" in order to successfully seize this business opportunity. This is one of the topics that will be addressed in this article in order to help your expansion into the LATAM gaming market with a reduced impact on your business.
The potential of Latin America: an impressive performance in the gaming market
Although Latin America is an heterogeneous set of countries, each one with its own cultural and socio-economic specificities, the fact is that the impressive and encouraging numbers present the region as one of the fastest-growing in the world concerning the gaming sector, and thus becomes more attractive to investors.
As a whole, the Latin American market has been registering a steady growth concerning both gaming revenues and internet users, as can it be seen in the table below. Although internet speeds in LATAM are slower than the ones enjoyed in USA and in Europe, they have been improving over the years and are fast enough for the majority of the mobile and the PC based online experiences, such as gaming.
Through the analysis of the numbers broken by country, gaming merchants can ascertain the potential of the internet user base and growing internet penetration of the main LATAM countries, a combination that makes these emerging markets ideal for an expanding business.
The challenges which need to be addressed by gaming companies in LATAM
Like any other business interested in entering in the LATAM markets, the gaming companies will have a group of challenges to hurdle, such as:
- Language localization, since Spanish and Portuguese are the predominant official languages.
- Dealing with cultural preferences and local traditions.
- Setting up local support services.
- Handling local finances policies and bureaucracy.
- Currency and price localization.
- Adapting to the internet infrastructure (e.g. download speed).
- Offering local payment solutions and also alternative payments, since estimates put the number of the unbanked population at around 400 million in Latin America & in the Caribbean (approximately 70% of the total population).
Companies need to acknowledge that a one-size-fits-all approach does not work in the LATAM scenario, and to successfully overcome this fact they must adopt three solutions:
1. They must be prepared to invest in teams that will help with the localization of the website, social media, gaming related content and customer support. Since English is not widely spread as a second language in Latin America, localization may be a key to success in your international business: you can offer the language localization in Spanish (Latin America) and Portuguese (Brazil), as separate options from Spanish (Spain) and Portuguese (Portugal).
2. They must take advantage of the array of special dates, holidays or celebrations that are unique for each one of the LATAM markets, which are often connected with e-commerce events or even with the sale of specific items. Events such as Carnaval in Brazil or El Buen Fin in Mexico have a strong potential to increase sales and for targeted marketing campaigns.
3. They must partner with a wide and reliable network of partners, which may help to boost your sales. For example, by partnering with a payment aggregator that understands the complications related to regional differences you will have access to a deep understanding of the markets' regulation, a monetization system through local payment methods and insights regarding checkout optimization.
Why Brazil is a reference in the LATAM gaming market
Within the LATAM markets, Brazil has been a reference to the game industry and holds an enviable set of features:
- 7 million gamers in 2018.
- USD 1,484 million gaming revenues in 2018.
- 83% of paying gamers spent money on in-game items or virtual goods in 2018.
- 3rd position in the top 50 world rank of most enthusiastic fans.
- Highly skilled players in top-tier international teams and popular local influencers.
- 87% Brazilians participate in online gaming, and 14.5% participate both in online and virtual gaming.
- 617 active eSports competition players.
When it comes to genres, the Brazilian gamers show a preference for first-person shooters (9.23%) and casual games (8.96%), as it can be seen in the table below. Understanding the customers' preferences will help you to prepare strategies to draw in the target audiences for your games and to gratify their needs, as well as to have an idea of the growing potential for your revenue sources.
According to Game Brasil, 67.2% of Brazilian gamers consider themselves as casual gamers. The casual audience is mostly composed by women (58.8%) and have a preference for playing on their smartphones (57.8%), because they value practicality and mobility. These type of gamers prefer to download free games and usually play up to three times a week in sessions of up to 3 hours.
Pair up with a partner to win the game
Despite the regional differences in terms of culture, consumers' habits, local payments and gaming preferences, the LATAM markets present themselves as emerging economies with boasting features that predict a strong revenue growth, especially in the online gaming industry.
To be successful in pursuing their expansion goals and to ensure the highest possible growth prospects, it is recommended that the gaming companies partner with a local expert, such as BoaCompra, with the know-how needed to evaluate and analyze the LATAM markets. This know-how will help to minimize the most common challenges, including access to local financial players and understanding the culture in each country.