This article originally appeared in Miami Herald Last month Benedict Evans, Partner at Andreessen Horowitz took the stage at the WSJ.D conference with a presentation entitled, Mobile is Eating the World and he couldn’t be more right. Mobile is transforming the world, as we know it industry by industry at a pace never before witnessed. Let me explain, there are currently 2 billion people using smartphones today.
Just to give you an idea, the time spent on mobile apps is now greater than all the time spent on the web in the U.S. today and by 2020, 4 billion people or 80% of adults will own a smartphone. Those are impressive statistics. Even more impressive is mobile phone and tablet sales now make up almost half of the global consumer electronics industry by revenue. But what does this mean for Latin America? Well, according to Pyramid Research, by 2017 there will be 145 million smartphones sold in Latin America. This presents a huge opportunity for the mobile gaming industry.
During the last years many regional companies have emerged as a successful business models in cross-platform game developing in Latin America. Argentina’s Etermax is a good example. In 2013 its game Trivia Crack was released and quickly became a the most downloaded application in Latin America and a worldwide hit, with 60 million downloads to date and more than 60% of Argentines using the game regularly. Today, Trivia Crack has become a TV show on broadcast television winning important awards, becoming a brand and establishing huge opportunities for advertisers to brand themselves in the mobile games space. Let’s explore a few reasons why the mobile gaming industry can no longer ignore Latin America’s booming mobile potential.
According to Newzoo, a global market research firm focused purely on the games market, the fastest growing segment towards 2017 is mobile gaming with a Cumulated Annual Grow Rate (CAGR) of 19%. Mobile gaming will secure over a quarter (27%) of the global games market by the end of 2014, yielding revenues in excess of $21Bn. In the course of 2015, monthly mobile game revenues will surpass those generated by TV and handheld consoles combined. This growth is spilling over to Latin America and no other region comes close to in terms of growth potential. Between 2013 to 2014 Latin America takes the lead with a year-on-year growth rate of 60% and is projected to grow the fastest with a CAGR of 50% over the next three years alone. Low Cost User Acquisition The Cost Per Install (CPI) has increased 288% on mobile gaming in the U.S. over the past two years, according to SuperData Research, from $1.30 in January 2012 to $4.36. LATAM’s projected mobile gaming growth coupled with the region’s low cost of acquisition per player is ideal, with an average (CPI) of $1.51 / $0.76 for Brazil and Mexico, and $1.17 / $0.45 for the other countries, on iOS and Android respectively.
This means that although the monetization projections may be lower than the U.S. the ability to test and market the app is much lower and can yield valuable insights and fixes for the app before moving into more costly markets. In short, mistakes in app development and marketing hurt your bottom line much less when tested in Latin America that in the U.S.
Low Risk Testing Market
A clear advantage to penetrating in the LATAM mobile gaming market is that Latin America, culturally, is not so different from North America or Europe as opposed to say China. In fact, the highest grossing gaming apps that dominate the iOS charts in Brazil and Mexico mirror the U.S. gaming app market, like: Clash of Clans, Candy Crush Saga, Game of War-Fire Age, Farm Heroes Saga, Hay Day and Pet Rescue Saga.
This suggests if a gaming app is easy adopted and scales quickly through LATAM, where development and user acquisition costs are a fraction of the price of the U.S., it has a high chance of similar adoption in the U.S. For example, in Argentina, the game sector represents $85M in revenues, with 70 companies actively working in the country (ADVA) and 95% of such developments are exported to USA, Europe and Asia.
The Perfect Storm
The culmination of all of these factors is forcing big industry players to answer the question: How do we tap into this booming LATAM mobile games market? This is the question that is at the forefront of mobile gaming and the key to unlocking a highly profitable region of growth for years to come. And that, my friends, is the big game changer! Publisher and CEO of Frecuencia Latinoamérica, the Region’s leading mobile market intelligence portal and organizer of M2Games LATAM and M2Content & Apps LATAM taking place in Miami, Dec. 2th-4th, 2014 at The Light Box at Goldman Warehouse.