For optimism in games, look at Brazil | The DeanBeat

It’s not easy to find good news in the game industry these days. But on my trip to see the Gamescom Latam event in Sao Paolo, Brazil, it was plentiful.

At the expected record-setting game expo this week — the first supported by Germany’s Gamescom event in South America, organizers estimated more than 100,000 game fans would show for the Gamescom Latam event that is now combined with the traditional BIG Festival.

I witnessed a lot of the optimism first hand at the show, where lots of exhibitors showed off games in a cavernous expo hall. Lots of young people were lined up to play global games like Elden Ring: Shadow of the Erdtree to smaller local titles like Gixer’s Changer Seven.

While I was at Gamescom Latam, lots of entrepreneurs asked why I was there. I said it’s because I like covering startups, meeting new people and writing about emerging markets around the world. One of the people I met at a GamesBeat dinner with Xsolla was Jande Saavedra Farias, lead artist at Double Dash Studios in Rio de Janeiro. His team of 15 has been working on a fantasy extraction shooter for 8.5 months. It looked pretty solid, and it enabled them to get a government loan of $120,000.

The Brazilian game companies are gearing up for a new era of prosperity in games, as they managed to convince politicians to pass a bipartisan law recognizing the full industry status of the Brazilian game industry. This recognition comes with official designations of game developers, game companies and cultural identities that could enable the government to provide support in the form of future tax breaks.

With the passage of this landmark law, Brazilians feel like they are on a competitive par with other aggressively pro-game governments around the world in Canada, the United Kingdom, Finland, Australia, New Zealand and some of the U.S. states. This is the state of the competition in the world on the subject of national game competition that I’ve been thinking about since 2017.

Carolina Caravana, vice president of Abra Games (the Brazilian Game Association) said it’s like 2024 is the start of a new era in gaming for Brazil. It was the dividing line between a years-long monumental legislative effort to gain recognition in the country from the government and new efforts to further grow gaming.

Over the course of 20 years, Abra Games has advocated for support and tracked the growth of the game economy, said Rodrigo Terra, president of Abra Games, in an early talk at the event. It now estimates there are 105 million gamers in Brazil. There are 13,225 game developers at 1,042 game studios which generated more than $251.6 million last year.

Tim Morten, CEO of Frost Giant Studios from Southern California, told me he spoke at Gamescom Latam out of a need for alternative marketing. While his game Stormgate might not stand out at a bigger show, he felt it grabbed a lot of attention as he unveiled a new trailer for the game in front of the Gamescom Latam audience.

“I have not been to Brazil ever, and it’s actually a really nice event. It’s more manageable. Cutting through the noise is what any studio needs, and I feel like I can get the word out about the game here,” Morten said.

Jason Della Rocca, former head of the International Game Developers Association and founder of Execution Labs, said in a talk that the new Brazilian law sets up the industry for support in cultural, innovation and business efforts — a coordination that you can’t find in many of the other pro-game countries.

“With this coordination, Brazil has the opportunity to not just compete but to leapfrog more established jurisdictions,” said Kristian Roberts, CEO of Nordicity, in a talk with Della Rocca at Gamescom Latam.

Adding momentum to this growing ecosystem, the law recognizes the value of game intellectual property at a time when Brazilian game companies are moving up the food chain from external development to creating their own indie games and building long-term franchises that could have lasting value. But Della Rocca noted it can take five years or more to make money on a new IP investment, and that requires patience.

Della Rocca has exhibited some of that patience. He has been coming to Brazil and advising the government. He started back in 2009. So has Carlos Martin, owner of game agency Seat7 Entertainment. He said about 40% of his game studio clients are in Latin America. He has been traveling from California to Latin America for more than 10 years hunting for good studios to take to game publishers.

Brazil already has many advantages. It has 215 million people and an economy that is the second largest in the Americas and the eighth largest in the world.

But there are plenty of challenges to overcome. Kadri Harma has run game accelerators in Estonia, Malaysia and Saudi Arabia. She has lobbied the Brazilian government for a decade to do a government-funded incubator but hasn’t succeeded yet. She believes the government and industry should jump on the opportunity to do more for games in the name of creating high-value jobs and diversification.

In Estonia, the game accelerator ran from 2012 to 2014, and the ecosystem took off on its own after that, with developers forming a chapter of the International Game Developers Association and establishing their own conferences, Harma said. That’s the natural evolution of things. Malaysia moved in to do the same thing with a government-funded incubator in 2015, and so did Saudi Arabia in 2022.

When governments invest money in games, good things can happen. The Finnish government’s Tekes group, now Business Finland, gave the mobile game company Supercell a $400,000 loan when they were founded in 2010. Now Supercell pays hundreds of millions in taxes to the government, and CEO Ilkka Paananen is Finland’s biggest taxpayer, Harma said.

Della Rocca agrees that a lot of coaching is needed to take game developers on their journey from fledgling startups to experienced and productive teams. Roberts said he believes the Brazilians have a chance to absorb the learnings of other countries and make a leapfrog over their competitors, the same way that developing countries were able to skip the cost of laying fiber-optic cables and set up massive cellphone networks instead.

But Roberts also believes there are good lessons to pick up from places like Silicon Valley, where entrepreneurs learn from failure. A common misjudgment in places like Brazil is that failure is bad, but Roberts said it’s important to fail quickly and learn quickly.

He thinks that Brazil should take advantage of its cultural richness to create unique games with storytelling angles that no one else would attempt. Della Rocca also said that Brazil’s superpower is its popularity of influencers and celebrity streamers on Twitch and YouTube. Those stars can drive huge audiences to adopt games thanks to their influence and export stories about Brazil globally.

Yet even with those unique traits, it could take a long time for Brazil to solidify and grow its ecosystem through worldwide hits.

Hopefully the funding and acquisition of indie game companies will kick in. Otherwise, the indies have nowhere to grow and eventually become tired. That’s not sustainable, Roberts said.

Harma said that Brazil could certainly use more local funding for game investment, much like the U.S., which has dozens of game venture capital firms. But this week, Brazil’s ecosystem benefited from one transaction that should inspire entrepreneurs: multimedia entertainment company OV Entertainment Group has acquired Brazilian studio Kokku and Argentinian studio 3OGS.

“The timing is good because so much is happening,” Harma said. “They’ve been thinking about this for 10 or 20 years.”