Mobile gaming, another way to invest in innovation

Con el creciente uso de smartphones, juegos como Pokémon Go robaron la atención de los usuarios. Fue natural escuchar historias de partidas que se llevaban a cabo en parques a altas horas de la noche. Con la intención de capturar a los pokemones  legendarios y convertirse en  los mejores entrenadores. Este fenómeno es tan solo una muestra de cómo mobile gaming is revolutionizing the industry. 

In recent years, this industry is one of the fastest growing, due to new technologies and the growing access to mobile devices. This enhances the video game experience. Expectations are high for this segment. Estimating a growth of 25% globally by 2025, according to TMT 2023 Predictions Deloitte 's

Otra consecuencia que se puede observar de este continuo desarrollo, es la transformación en  el  perfil gamer. By 2020, 49.7% of users in Latin America were women according to a study conducted by Mediacom. Even greater interest in those segments of the population in which it usually did not exist. 

¿Qué es  mobile gaming y por qué es importante?

The gaming industry is emerging as one of the most attractive for investment globally. Its constant growth is due to the versatility and experience of the users. 

Additionally, the incursion of technologies such as artificial intelligence makes players feel part of the game. The experience transcends or is part of real life. 

An example is FIFA 23, one of the most successful video games that has managed to succeed with its latest release. It allows players to make more real changes. What happens in real time is reflected on the users' screen. For example, the injury of a player must be considered in the strategy.  

Otro factor ha sido el incremento de opciones móviles que permiten al gamer tener una partida en cualquier lugar. Con el smartphone y la tecnología 5G es posible jugar títulos como Call of Duty, Pokémon Go y Candy Crush, en donde sea que el jugador lo decida.  Este fácil acceso ha aumentado la demanda y promueve la  inversión en esta alternativa conocida como mobile gaming. 

The transformation of this market from new devices and new technologies encourage investment in markets such as Latin America, therefore, in the last year creció  702% compared to 2021, according to Endeavor in the estudio Venture Capital and Growth Equity study in Latin America. 

Why invest in the gaming industry?

The video game industry becomes increasingly attractive to investors. The interest in promoting this sector denotes a growth of 20% in less than 5 years, according to a study carried out by Google.

The dynamism in video games and their different variants in the short term has meant that interested parties are no longer just investors, but also brands such as Burger King, Pepsi, Movistar, Noblex, Globant, Coca-Cola, Toyota, Gillette, Red Bull, T -Mobile, Monster and Audi, who buscan  invertir en posicionar sus productos dentro de este mercado.  

Just as the fintech industry came to revolutionize investment in venture capital, and the gaming industry is following in its footsteps. Matthias Kroener, director of Tradelite Solutions, which creates games for financial institutions, in a recent conference mentions “video games are the new fintech”. 

This is not surprising, since both contain technology and innovation as main ingredients, characteristics that attract consumers and investors. Proof of this is that the investment in the gaming industry is 4 billion dollars, with a special focus on live streaming, eSports and cloud gaming.

The outlook for the mobile gaming industry is encouraging for investors as technological innovation continues to surprise users. 

Technological impacts on the industry

La innovación tecnológica es un aliado clave en el desarrollo de este mercado. Debido a que la implementación de estas llevan al usuario a la inmersión total.  Estas son las main technological innovations that are most important for the industry:

  1. Augmented reality: detonante del  incremento en el uso de dispositivos móviles, y a su vez, de videojuegos en este formato. Haciéndolos sentir que el juego pasa de la pantalla a la vida real.
  2. Virtual reality: provides an immersive experience, where it is difficult for them to distinguish what is fictional from what is real, feeling that they are on the screen living the experience.
  3. eSports and streaming games: they have changed the perception that existed in this sector, since it is now possible to generate income on these platforms, as well as connect with people from all over the world.
  4. 5G technology: directly impacts the user experience, since the quality and versatility of the connection define everything. Its impact is being positive, and the consumption of mobile gaming is increasing.
  5. Artificial intelligence: key to video games focused on single player games, it gives users a challenge to overcome. Making the game more attractive and reducing the probability of them leaving the game.

Who is looking to invest in gaming?

Since the pandemic, the preference for living a digital experience like the metaverse and the gaming industry has increased. This situation caused existing funds to bet on the sector and new funds focused on the industry to emerge. 

An example is Quiena Inversiones, a fintech that allows small and medium investors to obtain higher returns on their investments in the United States and in the world. The fund opened a new space in its portfolio for the metaverse and video game industry. 

The video game industry in the United States is one of the largest in the world, with more than 214 million, it positioned itself as the country with the most players in the world, becoming the most important market for the industry, only after Japan, from according to Statista. Its main funds are: 

  1. dune ventures: Founded in 2020, it focuses on sectors such as Media, Entertainment, and Gaming. It has an investment of $50,000 to $3 million dollars.
  2. BITKRAFT Ventures: Founded in 2015, it focuses on sectors such as media, Entertainment, Gaming and Sports. It has an investment of $500 thousand to $10 million dollars.
  3. Galaxy Interactive: Venture capital firm founded in 2018, which focuses on the technology, video game and entertainment sectors. With an investment of $325 million dollars.
  4. The Games Fund: Founded in 2020, it invests in game developers, game technologies and services. The size of the fund is $67 million.

The video game industry in Latin America

The Latin American region has 12 million players, led by Mexico with 5.8 million. With this, the country is positioned as the second most important market in the region ..

The boost of this market in Mexico represented revenues of 1.2 billion dollars in 2022, of which, 52% comes from mobile gaming, according to data from Statista and estimates from the online gaming platform Yandex Games. 

Another country that has gained relevance in the industry is Argentina with a 74% investment in mobile gaming, according to a study Google. This represents the potential that more and more private equity investors see in the region. Below we list the main private equity funds in Latin America:

  1. Altered Ventures: Venture capital fund that focuses on sectors such as video games, eSports, virtual reality and augmented reality. Founded in Mexico, but currently established in the United States. It has captured $300 thousand dollars of investment.
  2. Clever Video Games & eSports: Primer fondo gamer en Chile, lanzado como de sus fondos temáticos por inversiones Clever. Con una inversión de  100.721 mil pesos.
  3. Alaya Capital: Venture capital fund located in Argentina that has begun its investment in video games. With an investment size of $300 thousand to $2 million dollars.
  4. Indie Games Fund (Google's fund for Latin America): $2 million dollar fund created by Google to increase its Google Play market in Latin America, supports small studios with cash for the creation of previously selected video games.

With multiple alternatives to invest in the industry, the most innovative investors add this alternative to their portfolios. The exponential growth added to the versatility of the sector increases the attractiveness. 

Various private equity funds have begun their rounds of investment in the sector, encouraging the growth of the economy. At WORTEV CAPITAL we promote the creation of an ecosystem that has a positive impact on investors and entrepreneurs, which is why we support Mexican ventures that transform the country and its economy.