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The Emerging Markets of the Gaming Industry

Jun 5, 2018 7:00:00 AM

When you think of video games you think of studios like Nintendo, EA Sports and Blizzard Entertainment. The companies that spring to mind don’t usually include the likes of NGD Studios, Dark Polygon, or Squad. These Latin American studios may seem to be set in a region that is behind the curve, and although the region currently only accounts for 4% of the industry’s global revenue, its year-on-year growth reached 20% in 2016 (surpassing Asia’s 10% in the same period).

Mario Valle Reyes of Altered VC spoke about how similar the Latin American and Asia regions are to one another, pointing out the huge emerging talent in both geographies which is poised to propel the industry forward. This is not necessarily something new, as for the last five years investors have been looking at how the other markets in Southeast Asia will respond to the gaming boom in China. Aside from their rapidly developing user base, the likes of Anoman Studio in Indonesia and xx in India are helping put these markets on the map as well.

Taiwan, in particular, is an interesting example. 9Splay Entertainment Technology and MacroWell OMG Digital Entertainment both appear in the Financial Times’ FT 1000: High-Growth Companies Asia-Pacific. Taiwan is the 15th largest market according to game revenue, and its recent completion of a purpose-built eSports stadium demonstrates just how seriously it is investing in the gaming industry. Indonesia and India are right behind as the 16th and 17th largest revenue markets respectively.

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At the same time, the Latin America gaming industry is predicted to record a $5 billion USD revenue this year, with more and more studios opening up and a growing local demand for video games. Some of Latin America’s biggest success stories are titles including Colombia’s Papo y Yo, Uruguay’s Kingdom Rush (with over 100 million downloads on iOS) and Argentina’s Mundo Gaturro aimed at children. Mexico is the largest market in the region and the community in Latin America is most definitely growing and governments from Chile to Brazil are beginning to recognise the economic importance of developing the sector. Mobile video is a huge reason for this growth and Facebook has delved into the opportunity for brands and mobile use across Latin America.

The rapid development of these previously peripheral markets is due to a confluence of factors: the increased availability of high speed internet; the proliferation of accessible development software and tutorials; and the maturation and lucrativeness of the industry as a whole. In both Latin America and Southeast Asia, the growth curve has been accelerated by the flood of mobile devices and accompanying uptick in mobile gaming.

Macro factors, such as booming middle class populations, overall economic growth, and higher disposable income are similarly driving the growth of gaming as a whole in these areas. This is particularly in the developing Southeast Asian markets, as Deloitte’s report on ASEAN’S digital economy highlights: “Southeast Asia is the world’s fastest growing Internet region. Nearly 4 million new users will come online every month for the next 5 years. That translates into a user base of 480 million by 2020.” Many industry insiders would say that Southeast Asia is the most promising emerging market, and the one to watch as it is truly committed to advancing its internet technologies and infrastructure.

Despite their ever-increasing growth rates, both Latin America and Southeast Asia still have a way to go to catch up with the entrenched markets of East Asia, Europe and the US. However, the vast array of talent in these regions and the increasing output of their studios and developers are an encouraging sign, and we look forward to seeing their imprint on the industry develop further.

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