Breaking Brazil

Breaking Brazil
Craig Chapple

By Craig Chapple

August 2nd 2013 at 12:25PM

The opportunities for UK developers in one of the world's biggest emerging markets

Brazil is home to 197 million people, with 90m internet users and a further 40m game players across all platforms. The Brazilan games market was said to be valued at $2.6 billion in 2012, and overall the country’s economy generates around $2.5 trillion a year.

But despite a large and untapped consumer base ripe for the taking in one of the world’s biggest emerging markets, there are still major issues plaguing the country, causing difficulties for developers looking to enter the region.

Much of the Brazilian populace does not use credit cards, meaning most items are billed through cash on delivery, a particularly difficult obstacle for developers making their titles available for digital download. Publisher Boa Compra claims that only 30 per cent of adults in the region carrying a credit card, and of these, only a fraction use an international card.

The country is also rife with game piracy due to huge impediments such as lack of payment options and the expensive nature of games – particularly in the console space.

So why is this country such a hotspot for game development, and why are developers expanding their operations into this emerging market? Develop sat down with Jagex CMO David Solari, Lockwood Publishing co-founder Joel Kemp, Boa Compra business development manager Christian Borneman, and Agnito Capital MD Shum Singh to find out what the market looks like, and if developers should consider branching out into the region.

Land of opportunity

Although social markets are in decline – one of the least played genres in fact, in part due to the difficulty of processing microtransactions – MMORPGS and Action MMOs are on the rise, while FPS titles are “eternally popular” in the region.

It’s this rise that has seen UK developer Jagex look to take a stab at expanding into the Brazilian market with its flagship MMO RuneScape. But with console dominating the emerging market in terms of revenue, can the studio really make a return on its investment in the browser space?

“Stats can be confusing sometimes,” he says.

“It's important to get out there and talk to people who live out there and the experts. It appears that, certainly for core gamers, they're spending a lot of their time on games and these guys tend to monetise better than the more casual gamers. So I think that core audience can only get bigger as the country develops.

“There's obviously a lot of early adopters, but there's still a lot of other people there. The main cities are just the beginning for Brazil, there's lots of people living in different parts of the country that haven't had the change to engage with this kind of entertainment as much.”

The studio has invested big in the country, translating four million words in RuneScape as part of its localisation efforts, a process Solari calls “brutally expensive”. He is bullish on Jagex’s chances however, and although he admits there are risks, he still hopes to make a return on the investment sooner rather than later.

“It's still a risk because we haven't really driven forward with the partnership yet (With Boa Compra). Absolutely it's a risk,” he admits. “I would like to see us have that money back in a year.”

Another UK developer, Lockwood Publishing, which focuses on PlayStation Home and recently moved into mobile, has also decided to test the waters in Brazil. But given the relative popularity of social titles compared to most other genres, are there really opportunities for social game developers? The studio’s co-founder and director Joel Kemp thinks so.

“We see it as a large market even though social is a smaller component of it,” explains Kemp.

“We are planning as well at addressing the long tail really. So being browser-based and cross-platform, we want small amounts of traffic in different places rather than having to achieve some big hit. Our running costs are pretty low, but I’m hoping even though social looks small on that graph, it's going to be an enormous market for us anyway.

“You know, PlayStation Home is what you would call a niche, small market too, and we do very well out of that.”

Unlike Jagex’s gamble on localising RuneScape, Kemp says the costs of localisation for his company are “fairly insignificant”. He explains that the studio avoids spoken dialogue and using voice actors, as that’s where the bills can rack up for developers when entering new markets.

Path of least resistance

Despite some of the present difficulties in the market, and the huge costs of localisation Kemp says Brazil is still the “path of least resistance”, and offers a new market that is also less crowded than some of the other big players such as China and Russia.

Shum Singh of finance capital firm Agnito Capital agrees, and describes opportunities for indies in other regions such as Russia as a “crap shoot”, in which there’s an equal chance of success and failure, and the problems with developing a significant presence in China.

“If you look at Russia, there’s already well established portals and game companies there,” says Singh.

“Some experiences of indie developers in the UK have not be so favourable, some have worked out but it is really a crap shoot, so to speak. India is too small. With china, you must have a local subsidiary and a local partner. The opportunity in China is huge, vast.

“The vast majority of online and mobile game growth, china as a country is probably bigger than any other country in the world. But you have to have an established presence there with a local subsidiary. Gree took seven years to establish a local trusted partner.”

The risks involved in expanding overseas into countries like Brazil may not be for everyone, particularly for small developers with games that will require a large investment in localisation. But Solari and Kemp both agree expanding operations into the region could worth a try for many, and one that, in time, could pay dividends.