The global gaming industry is worth around $105bn according to SuperData Research. Video games are not only played in the bedroom, they are now major sporting events in their own right with electronic sport(e-sport) tournaments attracting millions of viewers on television and the internet. The size and spectacle of the international gaming shows underline how the video game industry is less and less American-centric. Asia dominates with a 47% share, according to the video game researcher Newzoo, while North America makes up 25% and Latin America is 4%.
In 2016, global profits for eSports grew to $696 million, a 41.3% increase over 2015. The largest portion of those profits – $517 million – comes from brands: $151 million from advertising, $266 million from sponsorships, and $95 million from media rights. Consumer spending in the past year on merchandise and tickets amounted to $64 million. The remaining $116 million came from the total investment made by game publishers in eSports.
One of the fastest growing regions in the world is Latin America. Latin America represents 110 million gamers. Latin America ranks 4th for number of mobile players behind China, Europe, and North America. Brazil makes up the largest percentage of the Latin American games market at 30%. Mexico follows close behind Brazil’s market percentage, at 19%. Colombia and Argentina combined nearly comprise the size of Mexico’s video game market.
In futbol dominated countries such as Argentina, Brazil, or Mexico; esports is becoming the second most popular sport behind futbol. In 2016 alone, the game market across Latin America saw an increase of 20%. Much of this growth is localized to mobile games, growing at a rate of 56% year-over-year. While PC games are expected to see 10% compound annual growth. Unlike other emerging markets, Latin America is also seeing console growth, at a 9% yearly increase. Both mobile and PC games represent $1.4 billion of revenue each! Mobile revenue is anticipated to be as high as PC and console combined by 2019.
There has been instances of great traction so far. Lyon Gaming, the League of Legend’s northern Latin American champion, and one of the games with the largest worldwide eSports audience has their team jerseys covered with sponsors such as Kultec, Supermex, Intel, Asus, and Arean(Cinemex). Lyon Gaming has faced adversity though. Under Armour told Lyon Gaming that they want nothing to do with them because it has nothing to do with exercise. The argument can be made that gamers do exercise as part of their training regiment. One of the important features of leagues, teams and organizations is their social network reach. Each post can get several hundred of thousand of likes on facebook from people from five different continents. Capturing audiences these brands would otherwise not have access to. Lyon gaming has capitalized on this in their process of gaining more sponsorships.
Another example of eSports earning the attention it deserves in Latin America is Spanish broadcaster Mediapro’s Argentina arm has produced and is commercialising the rights to one of South America’s main eSports events, the Copa Latinoamérica Sur Clausura. The event was transmitted by ESPN+.This is Mediapro’s latest stage of its strategic move into the eSports arena.
There has been backlash throughout Latin America toward eSports. Many companies in Latin America do not view eSports as an actual sport and is not seen as profitable. This has caused companies to not endorse or sponsor eSports. eSports provides the ideal entry into the favorite hobby of digital natives and Millennials for brands seeking to reach a new user base. Never before could brands so easily advertise in gaming! Yet the Latin culture is slow to accept this concept.
Gaming and eSports has grown a lot in Latin America. There are several obstacles still in the way though. One is the delay in receiving new video games. Since most video games are not made in Latin American countries, they take several weeks to arrive. A lot of games that might be popular in the States never make it to Latin America due to store owners sticking with the favorites of Fifa, Mario games, Assassin’s Creed and COD. Another issue is the price of the games and gaming consoles. Video game stores have to recoup their cost of taxes, shipping, and tariffs. Game prices can increase anywhere from 25% to 250% where as consoles can be upwards of a 400% price increase. These price increases depend a lot on what type of government these countries have. Governments who have a strong disdain for consumerism and 1st world countries view imported tech as an expression of being monopolized or colonized by other countries(ie Ecuador, Venezuela, Bolivia, and others) and tend to tax more for imported technology than those who are more open to a free market trade(ie Colombia, Peru, Chile, and others).
Gamers are trying to get around these wait times and expenses by buying directly from the States or pirating games. One of the strongest video game presence in South America is Brazil. 70% of Brazilian gamers play Xbox or Playstation titles, however, only 39% of the 70% actually spend money on these products. The rest pirate the games. Sony is the first of the big three console manufactures to promote and sell products on their own in Latin America, while Microsoft and Nintendo generally leave that up to retailers to do work while promoting themselves with occasional TV commercials.
Latin America is unique in that it boasts a growing console segment of a 9% increase year-on-year in terms of revenue. Newer machines such as the Xbox One and PlayStation 4 are growing, although older formats remain most popular such as the PS2 and Xbox 360 since they are more easily pirated. The PS2 is more popular than the PS4 in Argentina and the Xbox 360 is the most popular machine in Brazil.
The Latin American games market is the second fastest growing sector in the world. This year the region will have generated $4.1bn in video game revenus, a year-on-year rise of 20%. There are a total of 110m gamers across the region. The revenue figure puts Latin America just behind Southeast Asia in terms of games market growth worldwide.