video gaming

KEY FACTS payment

the changing
landscape
AND INSIGHTS in latam
Payments, Intelligence and Trends
on cross-screen monetization of
games in Europe
GlobalCollect and
Video Gaming the Knowledge
Payments: US Series

Featuring market overview of growth

markets Poland and Turkey
August 2014

August 2012

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WELCOME
In this new installment of the GlobalCollect video gaming payments

knowledge series, we take a close look at the fast-growing Latin America

region. This report provides gaming companies with valuable, data-driven

insights such as the top gaming markets in the region, key payment trends,

preferred payment methods, and a special focus on gaming in Brazil during

the World Cup.

Exclusive transaction-based data from GlobalCollect and market data

from the International Games Market Research Firm Newzoo is bundled to

produce unique insights into the rapidly evolving games industry and the

associated payment trends in Latin America.

Matias Fainbrum
General Manager, Latin America
Matias.fainbrum@globalcollectlatam.com
TABLE OF CONTENTS

The Global Games Market in 2014 4

1.1 The Global Market per Region

LATAM Games Market in 2014 5
2.1 LATAM Market Per Segment & Screen
2.2 Towards the Future

Top LATAM Gaming Countries 6

3.1 Top LATAM Countries by Game Revenues

Current Payment Landscape 7

4.1 Overview of LATAM’s Payment Landscape

Local Insights 8
5.1 Preferred Payment Methods
5.2 Top Countries by ATV

Local Insights 9
6.1 Highest Fraud Ratios in LATAM Countries

Brazil Specific Insights 10

7.1 World Cup Specific Transactional Data
7.2 Top Genres PC & Console Games

3
THE 2014 GLOBAL GAMES MARKET

With a CAGR (compound annual growth rate) of 8.1%, the Global Games
Market is on track to be valued at $81.5BN by end 2014. APAC is the largest
region, accounting for 45% ($36.8BN) of global revenues, followed by NAM (27%,
$22.2BN) and EMEA (24%, $19.1BN). The more mature NAM and EMEA markets,
facing increasing saturation and declining growth potential, have continued to
lose market share to the APAC market since 2013. The estimated 8% year-on-year
global growth rate is being driven overwhelming by APAC with a YoY growth
rate of 15%, follwed by LATAM which will see a 14% increase in revenues to reach
an estimated $3.3BN by the end of 2014.

Global Games Market Per Region

Newzoo | 2014E

* Excl hardware, tax, consumer-to-consumer trade but including retail margin

LATAM GAMES MARKET
LATAM Games Market Per Segment & Screen
Newzoo | 2014E

* Excl hardware, tax, consumer-to-consumer trade but including retail margin

LATAM has an estimated 185M gamers, of which

104.5M are paying gamers that spend on average latin
of $2.67 monthly on games. It is a growth region america
whose 14% year-on-year growth dwarfs both EMEA
(12%) and NA (1%). cagr: +14.2%
2014
In terms of revenue share, TV console games are
the largest segment, accounting for 33% or $1.1Bn $3.3bn
of total revenue, followed by MMO Games (22%, 185m gamers
$718M) and (Mid)-Core PC/Mac Games (16%,
$536M). Tablet and Mobile Games account for the
most impressive year-on-year growth rates for 2014, 2017
each yielding values of 75% and 50% YoY growth
respectively.
$5.0bn
229m gamers 5
TOP LATAM COUNTRIES BY
GAME REVENUES
Top LATAM Country Rankings Based on Game Revenues
Newzoo | 2014E

country population internet total global

population revenue in revenue
Us dollars rank

brazil 202,033,670 118,593,764 1,339,375,000 11

mexico 123,799,215 56,130,564 1,006,072,000 14
argentina 41,803,125 27,004,819 243,946,000 24
colombia 48,929,706 31,589,018 209,041,000 28
chile 17,772,871 13,789,971 132,225,000 36
Venezuela 30,851,343 15,953,229 89,000,000 42
peru 30,769,077 13,107,627 88,903,000 43
ecuador 15,982,551 6,806,968 40,869,000 59
dominican republic 10,528,954 6,089,947 33,063,000 60
panama 3,926,017 1,970,861 20,980,000 69
costa rica 4,937,755 2,876,736 20,216,000 72
Uruguay 3,418,694 2,137,709 19,473,000 73
puerto rico 3,683,601 2,144,961 14,535,000 82
bolivia 10,847,664 4,617,851 13,622,000 84
cuba 11,258,597 3,429,369 13,208,000 87
guatemala 15,859,714 3,711,173 12,433,000 91
paraguay 6,917,579 2,313,238 10,200,000 95
el salvador 6,383,752 2,470,512 10,043,000 96
Jamaica 2,798,837 1,749,553 9,327,000 98

* Excl hardware, tax, consumer-to-consumer trade but including retail margin

With the largest total population numbers, Brazil (+202M) and Mexico
(+123M) account for the biggest slice of total LATAM revenues, each with
revenues of $1.3BN and $1.0BN respectively. In terms of global revenue
rank, they are at numbers 11 and 14 respectively. A higher total population
number doesn’t always equate to larger revenues however: Argentina
(with a total population of +41M) generates more revenue ($243M) than
Colombia, whose population is larger (+48M) but accounts for less revenue
($209M).

The same applies to Chile (+17M population), who has almost half the
population of Venezuela (+30M), but generated $132M (compared to
Venezuela’s $89M). El Salvador and Jamaica currently rank the lowest in
total LATAM revenues, each generating $10M and $9M respectively.
CURRENT PAYMENT LANDSCAPE
Gaming companies looking to enter into LATAM must understand that
LATAM is not a single, unified market. Brazil, Argentina and Mexico are the
leading markets, with Colombia, Chile, Peru, and several others emerging
but still relatively immature.

20%
increase in revenues

international/ local processor

gateway processor

But besides being the biggest markets in LATAM, Brazil and Argentina are also
the most challenging markets from a payments point of view. Local laws and
regulations mean merchants must carefully consider their strategy.

The key to this strategy is the determination whether to establish a local

presence, or to proceed with cross-border transactions.

Local acquiring has higher initial cost and overhead, associated with the
establishment of a local presence, hiring staff etc. Furthermore, merchants
will have to consider how to get the money out of the country, as both Brazil
and Argentina in particular have strict rules about repatriation of funds.

By opting for a cross-border model, merchants can mitigate these concerns,

but at a cost: authorization rates for cross-border commerce are historically
much lower than for local acquiring. This impacts the user experience and
satisfaction. Furthermore, cross-border rates are typically higher, because
of taxation. For instance, Argentina applied a tax of 35% to cross border
transactions.

Based on expected volumes per country, merchants can calculate an

optimal approach between local acquiring and gateway/cross-border. A
specialized regional payments partner such as GlobalCollect can advise on
the optimal LATAM payments strategy.

7
LOCAL INSIGHTS
Preffered Payment Methods & ATV
Preferred Payment Method | LATAM Countries
GC Portfolio | 2014

* Based on transactions processed by GlobalCollect between January - June 2014

Preferred payment products in LATAM include credit cards as well as a host

of localized alternative payment products, including cash, wallets and bank
transfers. While alternatives can drive reach in markets with lower credit card
penetration, gaming companies that depend on recurring payments should
consider which alternatives fit that model.

Some companies prefer to attract users with alternatives payment

methods to try their games and once they become recurrent, they push
them to adopt credit cards for impulsive in-app purchases or membership
subscriptions.

Top LATAM Countries | By Average Transaction Value

GC Portfolio | 2014

May: June:
1. 4. 1. 4.

2. 5. 2. 5.

3. 3.

* Based on transactions processed by GlobalCollect in May & June 2014

LOCAL INSIGHTS
FRAUD RATIOS
Purchases of goods and services at merchants generated by credit, debit and
prepaid general purpose cards issued in LATAM with the Visa, MasterCard,
American Express and Diners Club Brands increased 20.9% to 612.17 billion
Dollars last year (2013, the Nilson Report).

Among all markets in LATAM, Brazil, Mexico and Argentina contribute the
biggest portion of online game transactions, especially in the massively-
multiplayer online role-playing game (MMORPG) category.

Highest Fraud Ratios | LATAM Countries

GC Portfolio | 2014
1. Ecuador 6. Argentina

2. Venezuela 7. Chile Having access to

global video gaming
fraud data gives
3. Peru 8. Colombia GlobalCollect’s clients
a distinct advantage
when setting up fraud
4. Brazil 9. Guatemala rules for their games.

5. Mexico 10. Uruguay

* Based on transactions processed by GlobalCollect in 2014

As Peru, Chile and Colombia are also growing in transaction volumes and
joining the developing market of online gaming in LATAM, fraud is also
increasingly emerging from these countries. To date however, it is countries
like Ecuador and Venezuela, with relatively low transaction numbers, that
appear on the top of the list of countries with the highest fraud ratios in the
region.

The GlobalCollect Fraud Risk Team has succeeded in effectively

combating and preventing fraud from emerging from this region by using
a combination of specialist knowledge, gaming experience, and industry
leading tools. What makes the GlobalCollect Fraud Risk team particularly
successful in combating fraud in LATAM is the domestic knowledge of online
transactions in this region. MMORPG merchants that seek to expand into
LATAM can benefit from complex, industry-specific fraud rules to target in-
game currency buying behavior, in addition to best-in-class tools, databases
and reports developed based on GlobalCollect’s industry-leading gaming
merchant portfolio. 9
THE BRAZIL WORLD CUP
INFLUENCES ON PAYMENT TRENDS
During the 2014 FIFA World Number of Transactions Authorised in Brazil
Cup in Brazil, GlobalCollect GC Portfolio | Brazil vs Chile June 28th
investigated the influence of
the home country’s matches
on the behavior of Brazilian
gamers. In order to more
accurately interpret the
data, the number of gaming
transactions were contrasted
with non-gaming transactions,
and with behavior on
comparable days a month
earlier.

The data shows that Brazil

games had a measurable * Based on transactions processed by GlobalCollect on June 28
th

and direct impact on both

the non-gaming as well as gaming transactions, indicating that consumers
stopped their online activities to watch the home team’s matches. There
is however a clear gap between gaming and non-gaming transactions,
indicating that Brazilian gamers on average had less interest in football
than non-gaming consumers. For both gamers and non-gaming consumers,
transactions peaked in the immediate aftermath of football matches, as
viewers lifted their nerves with online activity.

Top PC & Console Genres|Brazil

Newzoo | 2014
Computer and Entertainment Screens account for the lions share (49% and
33% respectively) of the 2014 LATAM games market. The top 3 genres for PC
and Console Games for Brazil are Action / Adventure (50%), Strategy (48%)
and Racing (45%).

It is interesting to
note that while Sports
games (39%) are
actually less popular
than Shooter Games
(43%), they are slightly
more attractive than
Fighting Games (38%).

* Newzoo Data Explorer 2014

THANK YOU
We hope you enjoyed this edition of GlobalCollect’s video gaming
payments knowledge series. This report provides a snapshot of the gaming
and payments data for 2014 available to our clients via our Elevate business
intelligence solutions and professional services.

Presenting accurate and visually appealing data allows our gaming clients
to clearly identify trends and outliers in their own payments performance
and ultimately take action on the insights provided. Make informed business
decisions, increase your global payments performance and boost revenues
with GlobalCollect

Matias Fainbrum

General Manager, Latin America

Matias.fainbrum@globalcollectlatam.com

11
 video gaming

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globalcollect.com/gaming
Payments. Knowledge. Growth

GlobalCollect is the world’s premier Newzoo is an international market research

Payment Service Provider of card pro-
cessing and local e-payment solutions
for the online Video Gaming industry.
While most providers limit their services
to a technical link with payment acquir-
ers, GlobalCollect is a full service part-
ner providing you with advanced back
office services as well as online game
business intelligence, best practices
and benchmarks based on years of
experience with international online
gaming leaders.
company focused purely on the games indus-
try. Newzoo provides the best independent
consumer market data across all game plat-
forms and business models. Our combination
of activities gives us a deep understanding of
the global games industry and ensures we are
always ahead of traditional market research
companies. Newzoo’s clients include Nvidia,
Blizzard, EA, Microsoft, GlobalCollect, Logitech
and Wizards of the Coast.

GlobalCollect has offices in Argentina and Brazil, and offers deep regional and gam-
ing-specific payments expertise across Latin America. GlobalCollect’s Sub1 is the region’s
leading payments gateway, providing access to more than 50 local payment methods
and more than12 local acquirers across the region.

Contact GlobalCollect today to learn how we can help you grow

your business in the exciting Latin American gaming market.

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