Brazil is currently the fourth largest consumer of games in the world, what reveals good opportunities for investments in the country. Know more about the size of the national market, the consumers' behavior and the leading companies in the segment.
Overview of the Brazilian gaming market
According to a research made by the consultancy PwC, the gaming market in Brazil had a turnover of BRL 840 million in 2011 and can reach up to BRL 4 billion in 2016, a growth of 7.6% per year. The country is currently the world's fourth largest games consumer, only losing to Mexico and US in America.
Among other cultural and entertaining products, video games are leading, leaving books, movies and others behind. The boom is quite recent and has several reasons: the falling prices of consoles and games, translation of games to Portuguese and the complicated situation of the world market, which passes through financial crisis and saturation, while in Brazil, people are buying like never before.
Leading companies and best-selling games
There's around 3.1 million last generation video games (Xbox, PlayStations and Wii) in Brazil, but still the market leader console is PlayStation 2, from Sony, present in 41.2% of Brazilian households, followed by the Xbox 360 with 40.9%. In third, ranks the PlayStation 3, owned by 40.5% of the Brazilian gamers.
As you can see, the top-selling games and consoles are produced by the foreign companies, Sony and Microsoft, but Nintendo also has great numbers in the country with the Wii console. Below, you can check a list of the top-selling games in 2012, and their respective gaming platforms:
1) World of Warcraft + Burning Crusade (PC)
2) Call of Duty Modern Warfare 3 (PS3)
3) Fifa 12 (PS3)
4) Kinect Sports Segunda Temporada (X360)
5) Mario Kart 7 (3DS)
6) Uncharted 3: Drake’s Deception (PS3)
7) Assasin’s Creed Revelations (X360)
8) Super Mario 3D Land (3DS)
9) Battlefield 3 (PS3)
10) Forza Motorsport 4 (X360)
Consumer’s profile: what do Brazilians like?
Love for competition, passion for adventure and emotion combined with the ability of using reasoning skills are some of the features that define good players. Long before technology made possible the creation of the current sophisticated games, Brazilians were enjoying a round of cards, some bingo on Sundays, and the everyday board games. So playing games has been part of the Brazilians cultural behavior for a long time, what can explain their passion and great interest for video games.
The Ibope institute concluded that around 25% of the Brazilians play some sort of electronic game. Around 65% of the interviewees declared to play games on consoles, 42% play con computers/notebooks, 17% on mobile phones, 7% on mobile consoles and 1% on tablets or similar. As you can see by the percentages, some of the gamers play in more than one platform.
The games that most attract Brazilians are the ones containing lots and lots of adventure and action, followed by soccer games and car races. One interesting thing to add is that Brazilians are showing interest for games with scenarios, storytelling and music that has Brazilian influences, what it is already being studied by game designers from large companies. Currently, companies have added the versions dubbed in Portuguese, what led to an increase of sales.
Another research made by InsideComm reveals that 51.59% of the Brazilians who play video games are 19 years or older and are single. Moreover, more than half of these players are not working, and 30% are students. According to the study, 58% of these users are located in the Southeast region, concentrated in São Paulo state (64%).
Challenges: piracy and high tax burden
Buying original games in Brazil is so expensive that even frightens. To give an idea, a just-launched game can cost up to BRL 250 in the country, almost half of the workers’ minimum salary. That explains why, according to surveys, Brazilians prefer to buy their games on travels abroad or from illegal sellers.
Not to mention that the last generation consoles are a lot more expensive in Brazil than in other countries. PlayStation 3 costs around BRL 2.000 in here while in US the cost goes around BRL 500. Also a lot of people opt to buy their consoles in Paraguay that sell the product cheaper and unblocked, able to load pirate games.
Games and consoles are expensive in here basically because of the high tax burden and also by the fact that most of the products sold in the country are produced abroad and then imported into Brazil. Because of the high taxes, companies like Sony, Nintendo and Microsoft bring consoles that cost on average BRL 200 for over BRL 1,500 in Brazil. When a company brings a game to Brazil, it must pay on the value of the product: 20% on Import Tax, 1.65% on PIS, 7.6% on COFINS, IPI and 50% more 25% ICMS in case the product is from the State of São Paulo - each state has a value of ICMS.
With these rates, a product that costs BRL 100 will end up costing BRL 264 (164% of its value in taxes). According to the Federal Revenue Service, the series of taxes that are charged on imported goods aims to maintain a "healthy competition" between domestic and foreign products. In attempt to diminish prices, Microsoft already produces its Xbox 260 in Brazil, but Sony (the leading company in the gaming market) still didn't come to a decision either establishing a plant in Brazil or continue to market to the country as an exporter.
In this scenario, it’s not difficult to figure out why the games piracy is one of the most profitable in Brazil. In order to end piracy, the Industrial, Commercial and Cultural Games Association (AciGames) has created the “Jogo Justo” (Fair Game) campaign. The idea is to pressure the government to decrease the taxes on games and consoles in the country.