BRIC Video Games MarketsMarket Data & Demographics

Part 1- BrazilWhy Brazil could be your number 1 region within 5 years.

Brazil• Capital: Brasília

• Currency: Brazilian real

• Language: Portuguese

• Population: 196,655,014 (2011)

• GDP: $2.477 trillion USD (2011)

Brazil’s market is strengthening with the official distribution of consoles like PlayStation (Sony) and Xbox (Microsoft). Estimates also identify Brazil as a market of about 40 million players across many different platforms. Brazil has the largest distribution of mobile phones in the world with over 180 million devices that provide a great opportunity for mobile gaming. Brazil's market for PCs is the fifth largest in the world and projected to become one of the top three.

Brazil will host both the 2014 FIFA World Cup and the 2016 Olympic Games

BRIC Social Comparison

Brazil Economy• E-commerce in Latin America is forecast to be worth $73bn by 2015

• In Brazil, 59% of internet shoppers are most likely to buy consumer electronics and computer equipment.

• In Brazil, 56% of internet shoppers consider ease of the online checkout process as a deciding factor on whether to buy.

Brazil accounts for 61% of all ecommerce

spending in LATAM

Brazil Internet Usage• Brazil dominates LATAM for internet

usage.

• 36% of all internet users for the region are located in Brazil.

• 61% of all Ecommerce for the region takes place in Brazil.

• Total number of internet users is estimated at 40M+ more than UK, South Korea, Canada and Italy.

Global Internet Usage

Brazil Games Landscape• Publishers with a local office

• Disney Interactive Studios

• Electronic Arts

• Gamemaxx

• Microsoft

• Sony Computer Entertainment

• Ubisoft

• Digital Retail Landscape

The country is starting to embrace digital distribution with Steam firmly established in the region. However, like its High Street counterparts, the digital retailer’s sales are lower than expected due to high levels of piracy.

There are even a number of pirate games stores that only sell illicit copies of new releases, winning over customers with a more flexible offering than legitimate outlets. Gamers are even allowed to swap titles in store shortly after purchase if they did not enjoy them.

Part of the reason for piracy is that the tax rates are exceedingly high. Titles that are only six months old are often sold for in excess of $100.

Local Governing Bodies and Organisations• Abragames - Founded in 2004 by a group of development

companies, Abragames, Brazilian Association of Developers of Digital Games, emerged as a nonprofit entity and with the aim of strengthening the domestic industry of game development.• http://www.abragames.org

• Brasil Games Show - The Brasil Game Show is the first Brazilian Game Fair held for the fifth consecutive time. The event is an achievement of a 100% national company focused on the growing market for electronic games.• http://www.brasilgameshow.com.br/

• Association Commercial, Industrial and Cultural Games - ACIGAMES is an association created in order to represent and regulate the industry and trade of electronic games and culturally stimulating the area of games in Brazil.• http://www.acigames.com.br/

Video Game Taxes in Brazil• Retail Physical Product

• 20% import tax

• 30% IPI (industrialised product tax)

• 9.25% Pis/Cofins (social contribtions)

• 18 to 25% (province tax)

• Digital Downloads• No IPI

• No ICMs

• 20% import tax (possibly avoided by local entity?)

• 9.25% Pis/Confins

• 5% ISS (city services tax)

Taxes – Typical Examples• Physical Goods

• Original Cost $50 + Taxes $26 = Total $76

• Digital Download• Original Cost $50 + Taxes $18.25 = Total $68.25

• Average retail mark-up 30%

• Final Consumer Costs• AAA console title $100-$150

• AAA PC title $70-$90

Piracy in Brazil• It is estimated that only 15% of digital copies of games in Brazil

are official copies.

• 81% do not pay for digital copies of games.

Brazilian Gamers• 42% of Brazilians list video games as one of their recreational

habits. The top platform being the mobile phone.

Brazil Key Demographics• Class AB – Income US$ 2800+

• 20 M Brazilians

• 10.6% of Population

• Computer ownership or access 94%

• Internet penetration 81%

• Class C – Income US$ 660 to US$ 2800• 50.5% of population

• Computer ownership or access 33%

• Internet Penetration 66%

Gamer Demographics• Casual Games the most popular in Brazil

• Followed closely by Social and Mobile

• Whilst MMO games and PC Download games are popular to play due to prices and piracy publishers not benefiting to full potential.

• Console games have poor penetration due to import costs.

Games Monetisation• Brazil No2# for Social Gaming by monetisation model

• Free to play also one of most popular models

• Poor uptake of subscriptions and paid downloads – possibly due to piracy and prohibitive costs.

Brazil Payment Methods• Credit Cards dominant but closely followed by local bank transfer option

Boleto.

• Main future opportunities around mobile payments and wallets

Marketing In Brazil• Brazil• Marketing Mix in Brazil

Brazil Regional Diversity

45.2% of mobile access lines are located in the

south east of the country.

Online Video Usage in Brazil

Brazil loves twitter! – 20%+ market reach

Brazil has second highest Twitter penetration in the world at 20.5% behind Indonesia at 20.8%. [Source: comScore, August 2010]

Internet Consumerism• Internet usage and ecommerce expanding rapidly.

• Most middle class consumers regularly using the internet.

• Consumers readily adapting to ecommerce.

Top Retail Sites in Brazil

Key Online Categories in Brazil

Coupon Site Popularity• In June 2011, 14.2% of regional visitors accessed the coupon

category.

Brazil Marketing Mix

Brazil: Main Media & Portal Owners

Number of internet users in Brazil is increasing by 20%. [Source: comScore, February 2011]

Brazil Social Networking

Facebook Brazil• Facebook has now overtaken Orkut as the dominent social platform in Brazil.

• Facebook’s growth appears to be based on the games available to play on the social network. According to a survey of 250 Brazilian Internet users 18 to 35 years old undertaken by the Universidade Católica de Pelotas (UCPel), Brazil, nearly nine out of 10 users (86%) indicated that games are their favorite thing to do on Facebook, and a strong motivation to keep coming back.

Brazil Search Marketing• Paid search is expected to grow by 20.6% in 2011 and by a

further 15.6% over the following five years.

• 4.79 percent of paid search clicks in the region come from tablet users. The cost per click in Brazil is also lower for tablet ads, at $0.12 compared to $0.16 for desktop.

• 35% of mobile users in Brazil have internet access on their phones.

Internet Advertising

• Investment in online advertising in Latin America is expected to increase to $4.9bn by 2015

• Around 5% of advertising spend is currently spent online in Latin America.

Desktop Browsers• In South America Internet Explorer is the most popular desktop

browser with 39.58% market share.

Mobile Browsers• Top nine mobile browsers in South America, October 2010 –

October 2011.

Brazil Mobile Commerce• A Smartphone revolution taking place in Brazil -- a recent Nielsen

survey showed a 165 percent increase in smartphone sales year-on-year.

• There are 19 million smartphones in Brazil, almost 9% of the total mobile phone market.

• Brazil currently puts a hefty fee on imported goods. Despite these (which reportedly can triple prices) iPhone already accounts for an estimated 10 percent of local smartphone sales. (In Brazil, the iPad 2 retails at $887).

• However, Foxconn plans to build its next Apple plant in Sao Paulo. This will effectively bypass import laws and possibly give market dominance in the region.

Brazil Mobile Commerce• 33.9% of Brazilian mobile owners access social networks through

their phones.

• 83% of Brazilian mobile owners who use mobile internet also access social networks through their phones.

• 33% of Brazilian mobile internet users access social networks through mobile phones as much as or more than from their computer.

Brazil Mobile Commerce• 14.5% of mobile owners in Brazil have made purchases via mobile

websites or apps.

Brazil Mobile Commerce• In Brazil, making purchases via mobile is more prevalent among

the higher classes.

Brazil Mobile Commerce• 62.6% of iPhone owners in Brazil have made purchases via mobile

websites or apps.

Brazil Mobile Commerce• 34.6% of smartphone owners in Brazil are aged 25-34.

Brazil Mobile Commerce• In Brazil, games are the most popular mobile app category.

Brazil Mobile Commerce• In Brazil, social network apps are considered the most important.

Brazil Mobile Commerce Marketing • Ad agency mobile marketing plans in Brazil. [Source: Nielsen,

June 2011]

• 83% of agencies in Brazil believe that mobile marketing is a channel that can be better exploited.

• 62% of the agencies surveyed in Brazil launched mobile marketing campaigns in 2010, a figure that is expected to increase to 87% in 2011.

• Most mobile marketing initiatives in Brazil use multimedia with games and music and video downloads, and for 2011, 50% of campaigns will reach iPhones users alone.

Blogs & Brands• Blogs and user reviews are major

influencers of user behaviour in Brazil.

Brazil Video Games Markets Conclusions• Vast potential for ecommerce, social and free to play.

• Gamer culture.

• High taxes and piracy barrier to entry.

• No established major retailers.

• Internet penetration increasing rapidly.

• Most pronounced increase in mobile internet and smart phone use.

• Internet use highly social with most users having either Facebook, Orkut or Google+ accounts.

• Potential to be top 3 locale within 5 years.

• Key marketing areas• Social

• Mobile & Tablet

• Portals

Game Over

About the Author: Philip Driver is a digital distribution, online retail and marketing expert specialising in the field of video games.

A video games industry veteran of nearly ten years he lives in the UK and finds that having children really gets in the way of playing Skyrim.

You can follow him on Twitter http://twitter.com/PobiWan Linkedin http://uk.linkedin.com/pub/philip-driver/14/538/b16

References• The Gamer is always right – White Paper

– www.superdataresearch.com• Monetizing Emerging Games’ Markets

– Global Collect/Newzoo

• The future of Brazil Games Market– Gameworld/Tambor

• Brazil Digital Market Landscape Report– Econsultancy

• Google• Wikipedia • Facebook