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Square Enix seeking "formula that works" for Latin America

Square Enix seeking "formula that works" for Latin America

Tue 26 Nov 2013 4:11pm GMT / 11:11am EST / 8:11am PST
Emerging Markets

Head of publisher's regional start-up says it's time to start targeting the emerging market with homegrown content

It's not uncommon for established publishers to set up development studios in emerging markets to save money on the games they make for the rest of the world. It's more uncommon for those developers to be tasked with making games for their own market instead.

A little over a year ago, Square Enix set up a Latin American subsidiary with a remit to team with Latin American studios to make mobile games for Latin American audiences. Igor Inocima was brought in to be general manager of the fledgling Mexico-based outfit, and judging from comments he made to GamesIndustry International earlier this month, the endeavor is one that carries the potential for lucrative rewards, and similarly significant risks.

"The main goal here was to be the first one to get into the market and understand it because it's actually very hard to get information about Latin America," Inocima said. "Even for us who work here, there's a lack of reliable data. So I think the plan is to come here, understand the market, and try to be in a strong position for when the market will explode. Trying to get the first-mover's advantage would be the strategy."

"[T]he plan is to come here, understand the market, and try to be in a strong position for when the market will explode."

Igor Inocima

The gaming scene has been exploding in Latin America in recent years, Inocima said. There are 400 million people in the region, and the smartphone and tablet penetration rate has been beating projections, now accounting for more than 30 percent of installed devices in some countries. The population of gamers has been expanded steadily in almost every market segment. Smartphones, consoles, PCs, and even once-dead arcades are on the upswing, Inocima said. The only market he hasn't been optimistic about is the dedicated handheld, but even that area has shown signs of life. When Pokemon X and Y went on sale recently, Inocima said the games were widely sold out.

As the demand for games in Latin America has grown, so too has the number of companies looking to supply them.

"Other publishers including us have already realized it is a market we can't be out of," Inocima said. "You just see the number of international publishers or developers operating in the region has increased exponentially in the past few years, and I don't see that trend going down. At the same time, on the development side they have a lot of talent, and the cost of operating in development here are still cheaper than a lot of other regions or countries."

Inocima said he's already seeing Latin American developers starting to expand beyond the work-for-hire gigs they once relied on, making their own IPs and successfully bringing them to overseas markets.

"Development is getting better," Inocima said. "More people are starting to develop games. But most of the games they develop are not aimed at the Latin American market. They're aimed at the global audience. They're not something for this region. So I don't think they see the advantage they have here, or they think it's better to try their luck on the global market or focusing on the regional market."

"[W]e, as a more sizable company, can take a longer approach and try to take some risks that the local developers are not willing to, or can't afford to."

Igor Inocima

The biggest challenge for Inocima has been understanding what's really going on in the Latin American market and using that understanding to shape new games that would have particular appeal for the players already there. RPGs are popular in Japan because there's something about them that speaks specifically to the gamers there, that elevates the genre beyond the niche it occupies in other countries. In Latin America, Inocima said soccer games are huge, but he suspects there are plenty of undiscovered regional preferences to identify.

"Because there hasn't been as much exploration, nobody has tried to find the formula that works specifically for Latin America," Inocima said. "The games that are popular here are mostly the games that are popular in the US and Europe, like shooters or action games. But maybe there's a formula that works specifically for here. That's one of the things we're trying to find. Why for example, are RPGs not that popular here? Is it because they don't identify themselves with the story, or the settings are too far away from them? So we are experimenting with some combinations of things to see if we can find something that hasn't been tried yet, but we have to see how it works."

Part of the reason Latin American gamers' tastes may not seem as uniquely defined is because they have had so little content created with them in mind. Inocima said there have been a few hits based on local IPs in the social game sector, but for the most part, the same games that top the charts in the rest of the world--Clash of Clans and Candy Crush Saga specifically--have been doing the same in Latin America. So he understands that studios looking to build a business would be looking at international appeal as a prerequisite.

"Maybe most of them can't take the risks of having a long-term strategy," Inocima suggested. "They have to survive and pay their bills, whereas we, as a more sizable company, can take a longer approach and try to take some risks that the local developers are not willing to, or can't afford to."

"For the industry to grow here, so far there haven't been the right conditions. But we can't wait until everything is perfect to start. It would take too long."

Igor Inocima

Square Enix Latin America has already partnered with five independent studios in the region to help them take those risks. Those outfits include a pair of Argentinian developers (Okam Studio and ZupCat), two Brazilian outfits (Hoplon and Ilusis), and one Colombian studio (Brainz).

"We are trying to help our partner studios in some ways so they can take risks they wouldn't be able to and develop these new games," Inocima said. "We believe it will work, but we can't assure them. We have to offer them some kind of security margin. So if the project doesn't work, the studio won't fail."

While it has been referred to here as "the Latin American market," Inocima said that it's not nearly as monolithic in practice, with each country presenting its own unique challenges for game developers. For example, the console market in Brazil has been hobbled by staggering taxes on imported goods, which has skewed much of the attention away from those platforms (although Inocima said sales of the PS3 and Xbox 360 have been rising since Sony and Microsoft started assembling those systems locally, making them significantly more affordable). Meanwhile, Argentina has been dealing with economic and political instability over the past decade.

There are still plenty of unanswered questions about the Latin American market, and each country within the region presents its own challenges on top of that, but Inocima and Square Enix Latin America understand that getting that first-mover advantage means working around a less-than-ideal situation.

"For the industry to grow here, so far there haven't been the right conditions," Inocima said. "But we can't wait until everything is perfect to start. It would take too long."

Photo credit: International Press

3 Comments

Santiago Arizti
IT Developer/Engineer

1 1 1.0
Hello from Mexico. I just created my account to comment in this post, because I find it interesting.

I'm left with two questions after reading this post:

1. Are you considering Mexico as part of Latin America? because you say there are "400 million people in the region" but Mexico alone has 120 million and Brasil has over 300 million, so what does the 400 stand for?

2. Secondly, I see the gaming market to be very strong here in Mexico (at least in Guadalajara, which is my hometown) but as you say, there is little to no games tropicalized for our culture. Question is, what is your idea of tropicalization (i.e. aimed for a region), do you mean to have a war game involving our history? or our traditional non-console games?

I like american games (shooters like halo) and also japanese games (rpgs like zelda and platformers like mario) but are those aimed originally for their home regions and suddenly became international, or are thei aimed internationally from the beginning?

Edited 1 times. Last edit by Santiago Arizti on 27th November 2013 10:22pm

Posted:4 months ago

#1

Matheus Zingarelli
Administrative

1 0 0.0
Hello from Brazil!

As Santiago, I also created my account so I could share my thoughts on this post. Here's my humble opinion as a brazilian gamer:

1 - Taxes. As stated in the post, this is a sad reality in Brazil. Even though we have some movements inside the government, it's still early to see any progress on changing the policies to this matter.

2 - "Why for example, are RPGs not that popular here?" -> The word here is: LOCALIZATION. I love RPGs and when I was a kid I had to struggle a lot to understand all those english texts so I could enjoy the story behind the game and perform good strategies during fights. I can assure you that Pokémon meant a lot to the development of my English skills. Problem is, RPGs are lengthy games and rely a lot on story; since English is not our native language, this works as a wall to a lot of gamers. I had friends who got really interested when they saw me playing Final Fantasy XIII and Dragon's Dogma, but got frustrated when they were not able to understand the story or even how to play during the fights (specially Final Fantasy XIII and endless tutorials). I'm really happy to see more and more games being localized to our native language and I think this will welcome more gamers to play RPGs.

3 - We brazilians communicate a lot. And we love social interaction. That means that you could make a better use of twitter and facebook to communicate with us. And by communication I mean REPLY to us, interact, not only advertise. A sad example is the oficial brazilian playstation blog, which has been continuosly abandoned, extremely different to what I see in the european one.

Well, that's it. I don't know how it works in the rest of the Latin America, but that's my vision as a gamer here in Brazil.

Cheers!

Posted:4 months ago

#2

Christophe Danguien
games developer

64 78 1.2
Square Enix seeking "formula that works" for Latin America -> Maybe the same formula they should use for the rest of the world, making good games, which they haven't been doing for 10 years now....(I know I'm trolling, but come on)

Posted:4 months ago

#3

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