The game is on for a pure-play esports in LATAM
While investors are focused on the booming gaming industry in North America and gaze at the thriving gaming markets in China, the Latin American market is rapidly advancing in their shadow. The LATAM gaming industry is projected to have revenues of US$5.6 billion in 2019, displaying a rise of 11.1% according to Newzoo. We are seeing even stronger growth rates when it comes to esports revenue (different from gaming revenue), which have totalled US$32 million so far this year, up 19.5% from the previous year.
A “Mobile” Industry
Being an emerging economy, many people still lack household internet, a crucial component in the gaming world. The solution? Mobile internet, which is much cheaper and more accessible in the region. In 2018, mobile gaming captured 41% of the digital gaming revenues in Latin America.
As smartphone penetration is predicted to reach 235 million by 2021, mobile gaming is expected to continue its quest for dominance by acquiring more than 50% of the market share. Add the increased data speeds of 5G networks to the equation, and mobile gaming is set to explode.
MIBR (Made in Brazil) Esports team
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Leading the Charge
Mexico and Brazil emerge as frontrunners, accounting for 60% of gaming revenue this year. Mexico leads the race with the highest gaming revenues of the region (US$1.8 billion), with Brazil following closely behind (US$1.6 billion). For the esports industry, Brazil is heaven, nurturing 9.2 million esports enthusiast, the third most in the world. The mobile gaming market also shows healthy growth in both countries, rising 17% and 18% in Brazil and Mexico respectively. Essentially, the exposure provided by these nations will help bolster the gaming industry in all Latin America for the years to come.
Currently, there isn’t really a pure-play for esports in LATAM, but below is a list of companies with significant exposure to the industry.
América Movil (NYSE: AMX | BMV: AMXL)
América Movil, a Forbes Global 2000 company, is one of the largest telecommunications organizations in the world. Headquartered in Mexico City, the company recently tapped into the gaming market by opening subsidiaries branded Claro Gaming in Brazil, Argentina and Peru. Claro Gaming will help provide gamers with stable internet connections and pings as well as in and out of game services. Claro will also be responsible for setting up the first professional League of Legends tournament in Peru.
TV Azteca SA de CV (BMV: AZTECACPO)
TV Azteca, the 2nd largest multimedia conglomerate in Mexico, has recently announced an equity investment in Black Ridge Acquisition Corp (NASDAQ: BRAC) to become a shareholder of Allied Esports Entertainment (NASDAQ: AESE). As part of the collaboration, TV Azteca will create a 24-hour channel dedicated to esports as well as help develop a network of esports talent in Latin America. TV Azteca also has a deal with Riot Games and Cinemex, a Mexican cinema chain, to relocate the LLA (the premier Latin American League of Legends event) to Mexico and set up a venue with a live audience, to provide physical exposure.
Grupo Televisa (NYSE: TV)
Grupo Televisa is a Mexican multimedia and entertainment company that also wants to capitalize on the esports opportunities. In 2019, following TV Azteca footsteps, Televisa launched a channel called BitMe, marketed to gamers, esports enthusiast and individuals who enjoy technology and anime. The channel broadcasts in 17 Latin American countries.
With September being a rather choppy month for North American esports equities, investors should be taking a more global approach to building an esports portfolio. LATAM provides a unique opportunity to invest in established media and telecommunication companies that that are devouring some of the top esports assets and verticals in the industry.
Ben Feferman is an esports analyst and CEO of Amuka Esports. Since the age of 5, Ben has been an avid gamer and has fused ... <Read more about Ben Feferman>