Games are reaching a whole new level in Latin America. Thanks to two huge transformations, the passionate audience in LatAm is posed to experience the gaming market like never before thanks to the growth of mobile gaming and the arrival of cloud gaming.
Both are two sides of the same coin, driven by the significant mobile penetration and the development of internet connectivity throughout the region. First, this led Latin America to have more mobile gamers than the United States, as stated by Newzoo. Now it is opening the market to cloud-based gaming, which has the potential of breaking barriers for Latin American gamers who will be able to access high-quality games through any device.
According to Newzoo, the gaming industry is growing at a double-digit pace and generates a $7 billion revenue in Latin America.
“Both mobile and cloud gaming has a point of intersection when it comes to mobility and accessibility. They target different audiences, they offer different kinds of games, but they converge in many things”, says Roberto Tadeu Rodrigues, Global Digital Services Manager at Telefónica and lead of the company’s strategic partnerships with the gaming industry. The interview was published first at Beyond Borders.
Additionally, mobile and cloud-based gaming have the long-term potential that could be ground-breaking in Latin America. Especially, when gamers didn’t need a console or an excellent gaming PC to play.
More than half of the Latin American online population – or over 273 million people across the region – play mobile games, according to a study from Newzoo, the leading global provider of games and esports analytics. This is over 40% of the entire population in the region and more than all gaming players in the United States (212 million). If mobile gaming is a global phenomenon, it is safe to say that it is even stronger in Latin America.
“The mobile experience pushed online gaming to another degree of access in Latin America”, says Julio Vieitez, Head of Distribution at Garena in LatAm, interview for Beyond Borders. “You can see people on their phones, playing in the bus, in the subway. Gaming entered into a whole new socioeconomic segment in Latin America. In that sense, everyone is now a potential player.”
Garena, the gaming arm of the Asian internet giant Sea Limited, was one of the firsts to explore the mobile market in Latin America. The company is the publisher of Free Fire, a battle royale game that was the most downloaded globally in 2020 – and is especially popular in LatAm.
Garena realized the strong demand for battle royale games in LatAm, where gamers are especially competitive. But at the same time, no titles were available with reasonable quality to be played on an average mobile phone. Free Fire was launched with good quality but easily downloaded on any smartphone.
Due to the size of mobile gaming in the region, players are now more aware of ensuring a customized and localized experience to the Latin American gamer – whether it is in accessibility, the local language, payments, or gaming elements.
Many companies are partnering with local artists to launch songs and even characters inspired by them. Avakin Life, a global teenager-target game, has a “caramel dog” on its Brazilian map, a symbol of the country’s street dogs.
Mobile gaming has also been generating significant revenue in Latin America, which should reach 3.5 Billion USD by the end of 2021, as stated by Newzoo. Although the majority of games are free to download, most of them offer a ‘freemium’ experience, allowing users to buy extra features, passes, and lives through their cell phones.
The cloud around the corner
For some enthusiasts, the revolution caused by mobile gaming is about to happen again – this time, with cloud-based gaming. In early stages around the world, the concept behind cloud gaming is that playing high-definition titles will not depend on a console or computer anymore, both still very expensive for most of the population in LatAm.
In other words, this could break barriers for Latin American gamers, who would be able to access Triple-A games through their smartphones, smart TVs, or tablets.
The reaction from the Latin American public to cloud gaming is completely different from other parts of the world, in the experience of Rodrigues, from Telefónica. “In Europe, the cloud is basically another way of playing; the motto is ‘play anywhere’. In LatAm, it is about inclusion”, he says. “People can play games they couldn’t afford before. It brings inclusion and access to a Triple-A experience, without having to spend on a console.”
Cloud gaming has just started in Latin America: Microsoft launched its Xbox Cloud Gaming in Brazil and Mexico last October, the same month as GeForce Now debuted in Brazil, with games such as Fortnite, League of Legends, and Among Us.
It is important to highlight that even traditional gaming companies such as Microsoft, which have grown their way around console gaming, are now investing in cloud experiences.
One of the companies backing up a cloud-based approach to its titles is Ubisoft. Answering to LABS’ request, the company shares its vision of the new technology: “Ubisoft is a firm believer in cloud technologies, and we believe cloud gaming will help us reach new audiences, including players in Latin America”.
The developer behind blockbusters franchises such as Rayman, Assassin’s Creed, Tom Clancy’s Rainbow Six Siege, and many others now offers games on Google cloud platform Stadia, as well as Amazon’s Luna.
“Streaming technology allows us to deliver experiences to more players in more places than ever before, beyond hardware requirements, and we will continue to work with partners to share our expertise. Our subscription service, Ubisoft+, offers easier access to cloud gaming and we are eager to bring this to more territories”, states Ubisoft. The developer has launched successfully its subscription service in Brazil and Mexico, recently.
For others, though, despite its potential, cloud gaming is targeted at a different public, and there is still no guarantee it will bring in more people to online games nor become widely adopted in the near future. “It is a guess, an experience curve, just like with any other emerging technology”, says Vieitez. In his opinion, it is necessary to observe if there will be enough demand for cloud gaming if the business model will succeed, or even if emerging technologies could dethrone it along the way.
Either way, there is no question on where the future of gaming lies ahead in Latin America: smartphones. “Mobile gaming will just get stronger and stronger because now the smartphone is also a console”, says Rodrigues. Mobile devices will be key in giving access to more players in LatAm, either via mobile or cloud gaming and generating significant revenue for the industry in the region.
The gaming payments experience in Latin America
Differently from other markets around the world, the Latin American gaming industry needs to rely on more than credit cards to reach a massive number of players. Alternative payment methods such as digital wallets, prepaid cards (that work as vouchers and are sold in physical stores across the region), and, more recently, Pix (the Brazilian instant payment system), bring significant revenue to the industry.
According to Global Gift Card Survey, the industry will grow 15% compared to last year and cross $221 billion by 2024, despite COVID-19 related challenges.
With its gift cards distributed in over 500,000 retail points, in 35 countries, InComm Payments is betting on Latin America. The company focuses on a two-front strategy: relationship with retailers — mostly physical — and offering prepaid cards for services from global brands, such as Xbox, Uber, Spotify, Netflix, PlayStation, and others.
Nonetheless, right now, there are no challengers to the Gaming category of cards. InComm Payments‘ country manager for Brazil, Ricardo Olivieri is adamant this trend will sustain for a long time in Latin America.
In LatAm, gift and prepaid cards are a tool for access. Just a few have access to credit or bank accounts in the region, and our business model, per se, is directed at this public. “Today, everyone wants to watch Netflix, play League of Legends, and so on. So, the category is aimed at democratizing services”, points out Olivieri in an interview for LABS last October.
As for Ubisoft, the french company believes the gaming market has a different payment behavior in the region. “We’ve observed that our players use both credit cards and wallets. We regularly evaluate innovations and payment methods, such as the instant payments PICPAY and PIX, and add new payment methods relevant locally. We’re always looking for opportunities to enable more players to access our games with ease”.
Right now, there is also a crossroads worldwide on if and how gaming companies will charge consumers outside the app stores, like App Store and Google Play, directing consumers to alternate payment mechanisms and ditching the costs of up to 30% of tech giants. This is a primary challenge for both payment and gaming companies.
Finally, the subscription model that will rise with cloud gaming will also present new possibilities for the industry. Direct carrier billing, with payments being charged directly from the customer’s mobile phone, is one of them – and, due to the penetration of smartphones in Latin America, this should pave the way for gaming companies to reach a whole new set of players.
The Beyond Borders report is issued annually by the Brazilian fintech company with global operations EBANX. Take a look at the full Beyond Borders 2021/2022 survey here.