At home, without being able to go out to meet friends, family, go to a bar, or play sports during leisure time: a perfect scenario to strengthen online connections. Thus, the COVID-19 pandemic has been a jackpot for video games. While the Latin American startup Wildlife, a mobile game studio, is now valued at $3 billion, big listed groups such as Ubisoft have seen shares rise and earnings grow by 70% in the first half of the year across the region.
This is what Bertrand Chaverot, director of Ubisoft, told LABS. According to Chaverot, games like Just Dance saw a boom in volume sales during the pandemic. But Ubi now wants to increase its presence in the mobile sector, and more specifically in free-to-play titles.
Ubisoft produces, publishes, and distributes video games for consoles, PCs, smartphones, and tablets in physical and digital formats worldwide. “Now 85% of revenue is digital,” explains Chaverot, reporting that, on the digital realm, the company manages to evade the complexity of the Brazilian tax system. This is because consoles (hardware) and games (software) are classified in different ways by the Brazilian tax authority.
READ ALSO: Apple counter suits Epic Games while scheduling a special event
Still, Ubi in Brazil does not develop titles with a local branch. The French company offers its products under franchises as Assassin’s Creed, Driver, Far Cry, Imagine, Just Dance, Might & Magic, Petz, Prince of Persia, Rabbids, Rayman, The Settlers, Tom Clancy’s Ghost Recon, Tom Clancy’s Rainbow Six, Tom Clancy’s Splinter Cell, and Watch Dogs.
Present in 28 and selling games in more than 55 countries, Ubisoft has Brazil as a relevant market: the country generates 50% of Ubisoft’s revenue in Latin America. Mexico accounts for 25% and Colombia, Chile, and Argentina each account for between 10% and 15%, according to Chaverot. Despite the devaluation of the Brazilian currency against the dollar, widely felt during the pandemic, Ubi saw the region accelerate the consumption of digital entertainment.
READ ALSO: Spotify announces Esports partnership with League of Legends studio Riot Games
“We made investments in the competitive scenario because people were watching a lot of games on the computer as there was no soccer on TV,” he says. In the eSports segment, Chaverot highlighted a “spectacular” audience for the game Rainbow Six, which in Brazil has three teams: the ones that dispute the Brazilian championship, a second division championship, and a women’s championship.
Four out of ten Brazilians aged 12 or over have the habit of playing video games, according to a BGS/Datafolha survey, with data from the first quarter of 2020. The survey also reveals that about 40% of the population plays video games (67 million Brazilians). Lucas Patrício, General Director and Founder of GMD, a digital marketing agency that operates in the gaming market, told LABS that the perception of people’s interest in games grew rapidly.
“It was almost like the phenomenon of live web castings. As soon as people started to stay at home, the need to entertain these people grew”, says Patrício. “At the end of the day, what I think ended up happening was escapism. It is important because we are in a social experience of not being able to relate to people in the way that we were used to. And gamers could maintain the relationship that they already had with friends through online games, by communicating via Discord, for instance.”
READ ALSO: Searches for live streaming of music dropped by 70% in Brazil, according to Google Trends
The video game emerged as a possibility even for those who were not used to playing, which reflected in the increase in the number of gamers. “It is an audience that found in the video game an option, in addition to Netflix and Spotify, to take a little off the head this crazy thing that is the pandemic”, explains the journalist and gamer.
Unlike web castings, the gamer trend will remain
While soccer was on hold, people turned to eSports. If brands from the traditional industry previously advertised only in Olympic sports, the pandemic led them to invest in eSports, since traditional sports were suspended for a few months. “It is cool to partner with these brands to rejuvenate the brand, make high engagement operations with a little innovation,” he said.
HyperX, which manufactures products for gamers, invests in eSports and sponsors more than 30 teams around the world, in addition to sponsoring gamers, fans, and celebrities such as the Brazilian national team player Casemiro and the American rapper Post Malone. During the quarantine period, the company saw an increase of 52% in sales of its products in Brazil, and 98% in Latin America, in comparison to last year, according to what Paulo Vizaco, HyperX’s regional director in Latin America, told LABS.
READ ALSO: The rise of digital wallets in Brazil
The company, which is the gaming division of Kingston Technology, launched seven new products amid the pandemic in the Brazilian market, between April and June. Mexico was the country in the region that grew most for HyperX. “For us, the Mexican market is super important. Brazil is more consolidated, more than 45% of our sales are in Brazil”.
Gaming becomes a billionaire business
In 2019, according to SuperData‘s market report, digital games generated revenues of $ 20.1 billion. The mobile games alone saw revenues of $64.4 billion. Data from the Global Games Market Report and Newzoo point out that the electronic games market is expected to generate revenues of more than $159 billion in 2020.
Thinking about the spending of the gamer audience, Razer, an American multinational technology company that designs, develops, and sells gaming hardware, founded Razer Gold less than three years ago and has already reached 30% of its parent company’s revenues. “Razer Gold’s share reaching almost a third is really surprising. It shows that the services division is growing and the pandemic ended up helping,” said Dennis Ferreira, Latin America director at Razer Gold, to LABS.
READ ALSO: Nintendo online subscriptions soar driven by Animal Crossing fans
Razer Gold is a unified virtual credit platform that can be used worldwide to purchase digital games and content from more than 33,000 games. The idea is to democratize access for gamers who do not have a credit card. “We have a network of alternative channels that allow people to buy with this digital wallet that consolidates currencies”, he explains.
During the pandemic, physical points of sale that accepted Razer Gold cards had a drop in sales, except for pharmacies and groceries. But all cases of online purchases with the digital gaming wallet have grown. To Razer Gold, Brazil is the largest slice of the market pizza in the region, but Mexico and Colombia are growing fast, according to Ferreira. “In Peru, there is a demand that we did not expect and in Bolivia too”.
Even with devalued currency and taxation, Brazilians are substantial consumers of games
Ubi’s director Bertrand Chaverot told LABS that games’ prices in Brazil are the same as in other countries. But for acquisitions within games, however, there has been an impact for Brazilian gamers. “If the dollar remains above BRL 5.50, prices will increase a little at the end of the year, because it will not be possible to keep the same prices. If it were, everyone would come to buy in Brazil, it would be the cheapest in the world”, he said.
Brazil is one of the Top 3 markets for Ubisoft’s Just Dance. Assassin’s Creed is also loved by gamers in the country. According to Chaverot, the game was released a year ago, but Ubi made promotions during the pandemic and saw good results. The average time each player plays Assassin’s Creed is 81 hours, says the director.
READ ALSO: The Free Fire phenomenon in Brazil
But what is most successful in the country is the mobile free-to-play game Hungry Shark, with 20 million Brazilians adopters. PC, console, and mobile have different gamers’ profiles, according to Chaverot. And those who play Hungry Shark are more casual audiences. Compared to Ubi’s Rainbow Six console game (which has 3 million players in Brazil), Hungry Shark has almost six times as many players. Why? It’s free. The game’s revenue is based on the microtransactions within the game itself.
“We are therefore investing in this free-to-play market,” he says. Ubi recently launched the free game Hyper Scape, for computer and console. “There is no mobile version because it is heavier”, comments Chaverot. The Battle Royale-alike game, two weeks after launch, already had 500,000 players in the country.
READ ALSO: Microsoft’s Xbox Series X console will receive pre-orders within less than 2 weeks
With the arrival of Christmas and consoles in Brazil, such as the PlayStation 5, XBOX Series X and Nintendo Switch (Nintendo will return to distribute their consoles in the country), Ubi is feeling positive. “The Nintendo Switch represents 70% of Just Dance‘s sales,” he explains. But free games are still the target and valuable market for the region: “We will continue to invest in free-to-play games, whether on the PC or the console or the mobile because it is a huge market. Everyone has a cell phone or a tablet and a little time to spend pleasantly”.
