Riding Out the Digital Tsunami
Why Latin America's mobile gamers are ready to play ball with the West
There's an unspoken rule within modern day mobile that, unless you're a major player with a Clash of Clans level of hit under your belt, you don't attempt to make a move on any territories outside of the West.
Leagues of talks and presentations at games conferences in the world lay out the opportunities provided by massive markets like China, Latin America et al, but still the majority shy away from launching games in any regions outside North America and Europe because the barriers to entry - localisation, distribution, monetisation, possible cultural differences, etc - seem too numerous, too insurmountable to even contemplate taking on.
One of these apparent hurdles, however, is about to be cleared from the path according to Naranya. The Mexico-based mobile internet specialist has spent the last decade expanding its hand in emerging markets, helping to (in its own words) "connect the communications, entertainment, and mobile commerce ecosystem in the emerging markets". Both its business, however, and those of all other mobile entertainment firms operating in said regions are about to ramp up.
As CEO Arturo Galván told GamesIndustry.biz, there's a wave of new opportunities heading the way of developers in the West if they embrace emerging markets in Latin America - something they'll now be able to do thanks to fundamental changes in the way consumers in the region will be able to pay for their purchases in the months and years ahead. "In the next three to five years, 80 percent of the population in emerging markets will have access to the internet, growing from 30 percent now," he told us, laying the foundations for what he claimed will be a "digital tsunami" that developers won't be able to ignore.
"The challenge now will be enabling the consumer to have access to digital content and services in a region where credit card penetration is below 15 percent"
"In Latin America alone, 300 million people will become online citizens thanks to the arrival of low cost smartphones. In all emerging markets, this number will top 3 billion new digital consumers," he continued. "The challenge now will be enabling the consumer to have access to digital content and services in a region where credit card penetration is below 15 percent. The traditional US App Stores, Apple and Google, have not been successful in the emerging markets because they only accept credit cards as a payment method."
Naranya's solution has been to develop a mobile commerce platform that it claims enables 550 million consumers in Latin America to both discover and pay for digital goods, which the company believes will "establish the underpinnings of a huge digital market in the region including consumers, brands, app developers and content providers." All wrapped up together, the platform combines an Android app store, Naranya Market, with the firm's carrier based mobile payment network Naranya Pay.
It's all about making Latin America a more palatable prospect for overseas developers; if you make it easier for consumers in the region to find games, and then also make it possible to pay for them too, then the developers will come. It's a strategy Naranya thinks makes Latin America as appealing a prospect for studios in the West as China currently is.
"The Chinese and Latin America markets are extremely similar," continued Galván, advocating western developers making a move on both regions. "First, both markets will boost their Android smartphone base exponentially over the following years. In addition, carrier billing is the most effective monetisation solution, since financial services are not yet massively adopted. In comparison, Europe and the USA have already reached a smartphone saturation point that will keep growing a very low rate and since the financial services penetration is high, credit card has become the most popular payment system."
"While in China there is a large and solid developer community generating thousands of apps per year, in Latin America is at an early development stage"
There are differences between China and Latin America for developers looking to make their mark in both parts of the globe, however, but they may actually make the region a more compelling prospect for foreign developers: "While in China there is a large and solid developer community generating thousands of apps per year, in Latin America is at an early development stage," noted Galván. "Where as in China the top downloaded apps are from Chinese developers, in Latin America the entire top app downloads come from other regions. It means Latin America represents today a great opportunity for outside developers to explore."
That appears to be the essence of Naranya's vision for mobile. While there's been a lot of talk in recent years of mobile opening up new markets to Western developers, only now are the platforms that studios will rely on to make the leap from Europe or North America to regions like Latin America actually falling into place. Mobile in the years ahead, Galván asserted, is going to be a far more connected industry. "The Latin American mobile market is huge," he added. "It's half of the size of the Chinese market - both are a massive opportunity."
Nevertheless, whatever your hand in mobile games, the nature of how revenue is generated from users has changed in recent years. Naranya's platform may be designed to help consumers in emerging markets pay for games in an easier manner than before, but one other staple of free games - advertising - is perceived to have fallen away a touch since free-to-play games began to build their design with in-app purchases in mind. For Galván, the movement away from advertising as the sole revenue raiser for free games represents less of a challenge and more of a "huge opportunity". Indeed, Galván welcomes the notion that in-app revenue in mobile gaming is on the rise, likely to reach $30.3 billion in 2015.
"Latin America should have close to 10 percent share of that, and we are at a 2 percent share now. A huge growth opportunity in the next three years," he continued. "Thanks to new distribution and monetisation platforms, the mobile gaming experience is becoming more accessible for users in the emerging markets. We are embracing this fact with Naranya Market." Most importantly for developers, it's Galván's belief that its games are already "the leading content" in Latin America. "Naranya has been distributing mobile content in Latin America for more than 12 years and during this time mobile gaming has been always at the top of the list. The opportunity now is to take advantage of the growing new mobile consumer using their phone as the device to connect to the Internet for the first time.
"This is what is so exciting - we have a 300 million strong mobile market ready to use and pay for mobile games. This is why we developed the first app store that any consumer can access to buy mobile games in Latin America." Mobile, Galván claims, is an especially important device in emerging markets such as those in Latin America because, for many gamers in these countries, it represents the first time they've been able to play video games.
"Mobile gaming is a trend that's here to stay - it's all part of the digital tsunami that we're currently living through, especially in Latin America. This is why Naranya is taking advantage of its presence in 17 countries in Latin America and its payment platform connected to more than 30 mobile operators in the region, and its marketplace to connect the digital consumer of the region to the game developers of the world, especially those from China, who has developed expertise in creating and distributing games to the emerging market consumer."
"This is what is so exciting - we have a 300 million strong mobile market ready to use and pay for mobile games. This is why we developed the first app store that any consumer can access to buy mobile games in Latin America"
Studios looking to move on either region require two things in Galván's view; massive distribution to the aforementioned gamers in these emerging markets and, just as importantly, an effective monetisation solution. "Massive distribution with a non-effective monetisation solution will result in obtaining users but no money," said Galván. "On the other hand, having an effective monetisation solution in a game that's not widely distributed will result in few money since there are only few users." For its part, Naranya has partnered its app store with what it claims are the "largest mobile operator groups" in Latin America, while "million of phones are now pre-loaded with our platform" according to Galván.
"Our payment platform is integrated with over 30 mobile operators, connecting hundreds of millions of consumers, most of whom have no credit or debit card. We are the only marketplace that can offer massive distribution as well as a payment platform that reaches 100 percent of the population. In addition to this, we also have integrated an advertising platform, Naranya Ads, that will enable app and game developers not only to increase their downloads, but also to monetise its audiences with advertising from our platform."
But what about China? Given Naranya's background is in Latin America, how is it looking to expand the influence of western mobile developers in China - a market it admits is twice the size of Latin America - or is the company in fact more interested in helping Chinese developers make their mark outside the country's expansive borders? "The Chinese market is a crucial market for us. In the short term, our interest in the Chinese mobile game ecosystem mainly consists of reaching local developers and publishers that are looking new revenue channels from overseas regions and to persuade them about the impressive potential of the Latin America," Galván concluded.
"Latin America has not been a huge market until now, mainly because of the lack of local marketplaces reaching the masses, but that has changed now with the availability of Naranya Market. Latin America is the next frontier for the Chinese game developer - it's a huge market to conquer."