Fourth Industrial Revolution

Latin America's video game industry is booming. Here's why this is good for the region

A man uses a Sony PlayStation controller during the Gamescom 2015 fair in Cologne, Germany August 6, 2015. The Gamescom convention, Europe's largest video games trade fair, runs from August 5 to August 9. REUTERS/Kai Pfaffenbach - RTX1NAIK

Image: REUTERS/Kai Pfaffenbach

Michael Barclay
Co-Founder, Leap Game Studios
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Latin America

Recently the Inter-American Development Bank opened the Intalent competition for technology-based talent in the orange economy (the cultural and creative industries) in Latin America. Their aim is to showcase projects with the potential to generate wealth and contribute to Latin-American’s lives.

Among these industries you can find video games, belonging to two industries, creative and technology. This overlap allows video games to support complementary industries like animation, sound design, music and writing, while maintaining the business upside potential of a technology company.

Video games as a technology industry

As a technology industry it experiences the benefits also seen in software development, of digital distribution and global markets. With lower cost of software tools, and increasingly easy access to distribution channels, video game development has lower entry barriers than ever. Both Sony PlayStation and Microsoft´s Xbox have programs for their console markets in Latin America open for independent developers and small studios. Mobile distribution has even less hurdles and some days you can find several hundred new games uploaded to the iOS App Store. However, easier distribution is contrasted by significant competition and an increasing marketing cost for “user acquisition”.

The video games industry relies on big hits. The most popular games can earn as much as dozens or hundreds of other games. As is common for tech companies, the profits from a hit can be very large. For example, at the top of the mobile market is Finnish company, Supercell, which has built two games that in March made over $100 million, according to SuperData Research. Because of that potential, the search for hit games and hit companies also exists in Latin America.

Public sector involvement

Governments in Latin America have recognized the industry and it is identified as an important part of industry promotion agencies and their business events. Video games are one of six industries of the MICSUR, the Southern Cultural Industries Market, an event that joins 10 Latin-american countries cultural industries. In the 2016 Lab4 Pacific Alliance Entrepreneurship and Innovation Forum you can find speakers talking about video games, and the industry has a category of its own in the business matchmaking rounds. It is also common to see booths from Peru, Mexico or Chile in the GDC, the largest industry event, in San Francisco. As the industry grows around the world, we see it gaining more relevance in the public agenda.

Video games as a creative industry

Video games are not only a tech industry, but also a creative one. Gonzalo Frasca a game developer and scholar from Uruguay has made a game called “September 12”. The game presents a vision of our responses to terrorism that functions as a kind of protest against violence. Vander Caballero, a game developer from Colombia, now based in Canada, made a game called “Papo y Yo” that performed as a metaphor for his childhood next to an alcoholic parent. Games can become, for some, a way of expression that takes advantage of technology to create engagement or empathy, while at the same time reaching larger audiences through digital distribution. New technologies like virtual reality will continue to empower new experiences that were not available before.

The succeses

In Latin America companies have been making progress in the industry. In Uruguay a highly successful studio called Ironhide built Kingdom Rush which, on its iOS version, was downloaded over 100 million times. In Chile a studio called Wanaco Games was purchased by a large Canadian Game developer called Behaviour, and recently developed Fallout Shelter for a larger company called Bethesda. Fallout Shelter earned $5 million in revenue in its first week. Almost all countries have game development studios' associations: the CVA in Peru, ADVA in Argentina, VGChile in Chile, etc. By looking at the educational sector, you can see more careers, specializations and research oriented towards game development in the region.

The potential

As a culturally rich region, Latin America has the potential to use its resources in the development of the video game industry. It is also a region of gamers, growing in numbers, with 60% year-on-year growth for the mobile market, the largest of any region according to Newzoo, a market intelligence company. For Latin America video games are becoming a form of expression, a good investment for our cultural assets and an important aspect of the tech industry. As new successful games appear, a larger community of developers, musicians, illustrators and animators will find a place to put their skills to use, while a huge number of gamers will find entertainment, knowledge and sometimes inspiration.

The World Economic Forum on Latin America is taking place in Medellin, Colombia from 16 to 17 June.

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