Olá Brazil: Why the Latin American country is the newest hunting ground for Indian gaming firms
As regulations tighten and customer acquisition costs shoot up in India, Indian gaming companies are looking to launch their games in Brazil owing to its striking similarities to India and the allure of greater revenue per user.
Last month, New Delhi-based gaming firmwent all out to market its mobile games at the BrasilGame Show in São Paulo. The company put up quite a show as it proudly displayed several of its ‘Made in India’ game titles for thousands of gaming enthusiasts who had gathered there to check out the latest in the market.
WinZo’s participation at the BrasilGame Show—Latin America’s largest gaming conference—signals the company’s intent to capture a large market beyond India, the United States, and China.
It is not just WinZo that has set its sights on Brazil. Other Indian gaming companies, including Lucid Labs and Kratos Studios, are also testing the Brazilian market, which shares many similarities with India.
For starters, both are emerging markets and have a young user demographic. Those between the ages of 15 to 24 years account for 16.5% of Brazil’s population, as per Brazil’s Central Intelligence Agency.
The user profile and proclivities too are similar; intense games such as Battle Ground, Free Fire, and Call of Duty, and casual ones like HopScotch are popular in both countries.
“In terms of choice of games, if you see the top 10 games in India and you compare it to Brazil, there are large overlaps. From a diasporic demographic standpoint, they are both emerging markets with a large young audience,” says Paavan Nanda, CEO and Co-founder of WinZo.
Tightening laws in India
In recent times, gaming firms in India—both large and small—have had to revisit their plans in the country in the face of new regulations, particularly the one pertaining to the goods and services tax (GST).
The new GST regulation requires gaming companies to shell out 28% tax on player deposits. Several gaming companies have called this a “body blow” to the industry, as it would make the cost of operations more expensive. This, coupled with rising customer acquisition costs in the country, is prompting gaming companies in India to explore options in international markets.
Many Indian gaming companies are already present in countries such as the United States, China, and Europe, and a chunk of their business comes from these markets. They are now adding Brazil to the mix as it is an exciting market with new possibilities.
Brazil, the new land of opportunities
With a young population that has increasing access to high-speed internet at a low cost, Brazil is the fifth largest gaming market in the world by number of players and one of the fastest growing markets in the Latin American region, according to a report by research firm NewZoo. Brazil is also ranked 10th in worldwide gaming revenue, with $2.7 billion generated in 2022.
India is the largest consumer of mobile games with 15 billion downloads annually, followed by the United States and China, according to the All India Gaming Federation. Brazil ranks fourth with 5 billion game downloads.
According to the World Bank, about 80.9% of the South American country’s population now has access to the internet.
“Since the majority of Brazilians have smartphones or access to mobile devices, it makes sense to target them as they are interested in trying new things … Especially since Brazil has so many new users who are new to the internet,” says Chirag Chopra, Founder of New Delhi-based gaming studio Lucid Labs.
Apart from the rapid rise in smartphone penetration, gaming companies are also thrilled by the growing average revenue per user (ARPU) in Brazil.
All these factors make Brazil a lucrative land of opportunities, prompting Indian gaming firms to firm up investment and launch plans in the country for the next couple of years.
WinZo, which roped in Mahendra Singh Dhoni as its brand ambassador last year, is worth nearly $336 million, as per Tracxn data.
At the time of the announcement, Dhoni had said, “Together with WinZO, we will strive to make this Indian brand become the global powerhouse of gaming and entertainment.”
The gaming company recently launched, in Brazil, over 100 of its game titles in the casual games category, including Bubble Shooter, Ludo, Snakes and Ladders, and is looking to spend nearly $25 million in the region in the next 12 months for the distribution of its games.
“The early response is pretty good,” says Nanda.
Going forward, WinZo plans to create games that cater to the local population of Brazil, akin to local games like Ludo in India.
Apart from WinZo, other companies too have drawn up big plans in the Brazilian market.
In August, Accel-backed Kratos Studios said that it would be expanding to Brazil. The company has handpicked a team of developers and community builders to work out of the country. And Lucid Labs, which is backed by Google Accelerator, recently launched its casual mobile game Bloom: A Puzzle Adventure in Brazil.
Monetisation and revenue
For gaming studios, exploring an emerging market like Brazil is a way to reach a more diverse and engaging audience at competitive customer acquisition costs.
“At the soft launch stage, trialling your game in countries like Canada and the US can be expensive. But in these regions [like Brazil], acquisition can be sometimes less than $1,” says Chopra of Lucid Labs.
The average gamer in Brazil is strikingly similar to the Indian gamer in a few ways.
“A lot of the target audience is the same. In both markets, casual audiences are those who are fond of or used to playing free games. This is unlike say those in Canada and the US where gamers would like to purchase a game right out,” says Chopra.
Monetisation in Brazil happens through microtransactions within games to unlock special benefits–just like it happens in India.
According to a survey conducted in India by gaming and interactive media firm Lumikai, about 58% of respondents said they made in-app purchases like guns in the Battle Royale game or power gems in casual games, the price of which ranges from $5 dollars to even hundreds of dollars.
Similarly, in Brazil, gamers reported that their primary motivation to purchase something in a game was to unlock exclusive benefits, such as early access to certain features, according to a report by PagBrazil, a Brazilian payment solution firm.
“In India, [through Winzo] users can play games for as low as Rs 2 and then you can increase it to Rs 10-15, or even Rs 100 (via in-app purchases). In Brazil, it’s a similar phenomenon where people are not going to straight up spend a lot of money on games,” says Nanda.
Where Brazil differs from India is in its greater inclination to spend on in-app purchases, thus driving the average revenue per user (ARPU).
According to data shared by an India-based venture capital firm, the ARPU for video games in India is about $2 whereas in Brazil it is about $27 dollars. In-game spend per user is higher in Brazil, contributing to higher ARPU.
Manish Agarwal, CEO of Bengaluru-based Kratos Studios, which operates under the IndiGG label in Brazil, told CXOToday that ARPU in Brazil is five times higher than in India. This is because gamers in Brazil spend 6-7 times more on games and in-app purchases compared to Indian gamers, he said.
Aiding this growth is Brazil Pix, a payment method devised by the Government of Brazil, which is an increasingly popular option for gamers to make purchases with, says a report by PagBrazil. It is a peer-to-peer payment system similar to UPI in India.
However, microtransactions seem to be popular only in casual games and real-money games where in-app purchases power up one’s skills/ability to play the game.
Whereas, in games in the mid- and hard-core segments (games like Clash of Clans), featuring long sessions or battles that cannot be paused, breaking into the market is challenging. Some games in this category also need to be purchased at a fixed price, ranging from Rs 500 to Rs 700.
In general, casual games are free or cost less than hardcore games in a bid to acquire as many players as possible. A casual game is targeted at the mass audience, as opposed to a hardcore game, which is targeted at hobbyist gamers. Casual games involve simpler rules, shorter sessions, and require lesser skills.
Mid- and hard-core games continue to be an area dominated by the likes of the United States and monetising them is particularly difficult in a new market, says Himanshu Manwani, Founder of Xigma Games, an indie game studio based in Bengaluru.
According to him, this is because the category requires players to engage with the game for longer periods of time, unlike casual games where the format is quick and snappy, allowing users to make quick purchases and complete games.
Creating a cultural connect
In the long run, gaming firms plan to use games as a cultural bridge across gaming communities around the world. This means taking Indian games to Brazil and popularising games from Brazil among Indian users, creating a win-win situation for both gamers and game developers.
“We could work with Brazil developers and work on making their local games more popular elsewhere … It is a great way to build a cultural exchange,” sums up Nanda.
Edited by Swetha Kannan