Videogames industry: Mexico is the largest gaming market in Latin America

Video games have become one of the most profitable businesses on the planet and Mexico ranks first in the Latin American market.

Videogames industry: Mexico is the largest gaming market in Latin America
Mexico is Latin America's largest gaming market. Image: Pixabay

Jeremy Jackson, an analyst of the sector, says that mobile games will be the fastest-growing segment in Mexico in the coming years. The sector does not have enough support and is a gold mine with all options to be exploited. With the economic forecast in 2020 for Mexico below 2%, this is an investment option that must be addressed and supported by both the public and private sectors.

"Mexico is currently the largest game market in Latin America, with sales of 1.8 billion dollars in 2019, and hosts 63.1 million game enthusiasts. He also added "as technological infrastructure improves in the region, along with the rise of smartphones. Mexico consumes and plays, but more than 80% of income will not stay here," said Luis San Martin, an industry specialist.

There are sales, but no profits

The physical sale and distribution of video games are at risk and account for the largest amount of revenue and jobs generated by the industry. The threat comes from digital downloads, the proliferation of mobile games, and the popularity of free games. "All these models indeed generate a lot of sales and income, whether, from advertising, digital downloads, or purchase of in-game content, but that money will not stay in Mexico, if at all in the form of taxes, and will be minimal," says San Martin.

A real developer industry must be created. "Mexico is a country where there is talent in development and animation, but they are kids who end up making websites, apps, or maquiladoras for other companies," says Diego Villaseñor, who along with Alejandro Flores founded AmexVid. "Usually, you find kids who have already developed their game but lack a business plan. There isn't a serious investor who is willing to bet on a game if they don't have simple data such as target market, estimated return on investment or who will help them in marketing or sales to get it off the ground," says Villaseñor.

Supporting the creation of start-ups

A start-ups model, creating business plans and structures and seeking financing, would be the best solution for the sector. AmexVid develops a digital industry agenda that identifies video game developers and other industry professionals, such as publishers, licensing, intellectual property agencies, venture capital, government, and other entities. In addition, we are continuously looking for success stories in Mexico and the rest of Latin America to create effective frameworks and collaboration for Mexican developers.

As in every video game, the industry has already pressed the start button to begin a new era in the sector. The time has come for Mexico to take control and try to move to the next level. "There is a huge interest from investors from countries like South Korea who hear that Mexico is exploding in the sector, that there is talent. And when they come they can't believe that there are no Mexican publishers. The risk is that they will become the publishers and we will remain just a maquila," warns Villaseñor.

"Today, developing a video game is not easy, but neither is it impossible. There are more platforms and possibilities to create a title that serves specific segments around the world. Development kits used to cost thousands of dollars, and today with a computer you can start programming. Our real challenge is that the industry must move from technical to business training," explains Flores.

The video game industry grows 9.1% in Mexico

The videogame industry showed an annual growth of 9.1% in 2018. According to the consultant The Competitive Intelligence Unit (CIU), the market value of the industry in Mexico was 27 thousand 032 million pesos. Of this amount, 85.9% (23 thousand 220 million pesos) was generated through the sale of traditional consoles, of which 12 thousand 408 million pesos come from the sale of games and 10 thousand 813 million pesos in hardware.

In addition, the consultant noted that 8.2% of revenues are obtained by mobile devices and 5.9% by the sale of computer games. He added that the sale of physical consoles is a key piece of revenue since it generates four out of 10 pesos of the total industry. On the other hand, the firm's experts point out that the increasing use of the internet has modified the industry since 70% of fixed console users connect to the network when playing. Of this percentage, two out of three do so to interact with other people remotely while 17% do so to download free or paid games.

Finally, the CIU highlighted the importance of eSports in Mexico, since they have begun to be relevant. In 2018, 9% of the players competed in a video game tournament while 10.6% saw video game channels on the internet and 4.8% attended tournaments as a spectator.  The constant growth of the video game industry in Mexico, which generates around 32 billion pesos, was reflected in the participation achieved in the fourth edition of the National Video Game Contest, as the number of people registered increased more than four times. going from 143 developers in 2015 to 651 in 2018, from 8-year-old children to university students and professionals in the industry, who competed in different categories.

Video games have become the industry that grows the most in the world, even above sectors such as sports, music, and film, and also more than these three together, said Héctor Guerrero, judge of the contest and director of the Laboratory of Games of the Digital Culture Center, where the award ceremony took place. The international video game market is estimated at 40 billion dollars, but Mexico does not even rank first among the countries of Latin America and the Caribbean, said Kiyoshi Tsuru, a representative in Mexico of entertainment software association (ESA), organizer of the contest together with the Mexican Association of Video Games (AMV).

Paul Lara, the driver of Hacker TV, was the one who argued that this market already has 32 billion pesos in Mexico. He stressed that the videogame contest has developed so much that the participants of this last edition came from 15 states of the country and although men predominate, the participation of women has also grown since it represented 2 percent of all participants in 2015 went up to 15 percent last year and even some of them were awarded in this edition.

Women are the ones who buy the most video games, but for the use of smartphones, and mentioned that there are developers who already earn more than football players in the NFL. He even commented that for the 2020 Olympics, video games will be included as an exhibition. The first place of the contest was developed by the team of professionals called Ennui Estudio with the game Chains of Vallhalla. In addition to 100 thousand pesos, the authors of the project will represent Mexico at E3, an international videogame expo that takes place in Los Angeles in June, one of the most important in the world, together with another one that takes place in Japan.

Juan Lozano Tovar, director of the Mexican Institute of Industrial Property (IMPI), exhorted the children and young contestants to register all their creations that add to their video games, ranging from the same name that they put up and design logos, music, and the program, so that, he said, they can "market them and prevent them from being shot". While he said that there has always been a certain level of misunderstanding since the Atari existed for people who play because it is considered that they waste time, he stressed that "half of the population is 'gamer' or is associated with this industry."

But it is an industry of talent and creativity that has had spectacular growth, which is no longer associated with the maquila or other sectors, and which will be predominant in the future. "My message is that they use intellectual property instruments, especially if they like and want to dedicate themselves to this as a way of life and entrepreneurship," the official said.