Mexico's Game Development Ecosystem

Introduction

Digital games are an important issue in Mexico. Local consumers are the second most active games market in Latin America and take the fourteenth place worldwide, according to Newzoo. The influence of the games in the mexican population has been such that in 2000 triggered a boom in interest in creating these products and has remained in force until today.

This publication is an analysis of the current state of the mexican digital games ecosystem and aims to provide relevant information to those interested in learning more about this economic sector in Mexico.

To carry out this analysis, was necessary a digital survey focused on business and economically active people inside the industry. Data collection occurred between November and December of 2015. The data obtained allowed to identify and delineate the size of the mexican digital games industry, its contribution to the economic scene of the country and its location in front of the international scene. Also, it has been possible to identify the main problems of the sector and finally proposing solutions.

Ecosystem

The ecosystem surrounding the mexican games industry is clearly still at an early stage. The conditions exist to promote growth, but not uniformly and not in a way that expands the entire national territory. While it is remarkable that there is activity in development and production of games throughout the country, growth only will be more immediate in those regions with a community of active and participatory developers, academic institutions that promote education and provide spaces for collaboration and experimentation, and finally a representative of the public and/or private initiative with genuine interest in the growth of industry in that particular region.

Mostly the local developers, have as their main motivation to create large and successful products, but ignore what is necessary to achieve that objective. Well-prepared entrepreneurs, with quality and experience are less prevalent. Those individuals and/or companies that see opportunities and build new markets for digital games and their many applications, and can create a stable and sustainable business are the ones who quickly become the leaders of the young mexican industry. Their achievements should be considered as benchmarks and their strategies as case studies for all others.

There is a favorable diversity among mexican game companies; the country is home to many indie developers, applied games developers and some larger digital game developers trying to compete in high-end platforms like consoles and PC. Mexico has very few publishers. Because of this, local developers have had less opportunity to connect with the traditional publishing schemes. Therefore, domestic production focuses on casual games for the mobile market and the PC, the development of serious games, advergaming and educational games.

There are about 150 companies involved in game development in the country and which together could represent an estimated 800 jobs. The turnover of the industry is an estimated mnx$54.9M - mxn$79.3M in the first half of 2015 (usd$3M - usd$4.3M). These figures show a growth compared to the previous year, during 2014 the approximate annual turnover was mxn$33.2M - mxn$52.5M (usd$1.8M - usd$2.8M), an average increase of 37%.

Consumer market

According to Newzoo: "In 2015, it is expected that the market for Mexican games can generate usd$1.2 billion in revenue. This represents an increase of +18% in 2014, making Mexico the 14th largest gaming market in the world."

The results of the analysis generated by The CIU conclude: "It is expected that by the end of 2015 the video game market in Mexico amounts to a total of $20.167 billion pesos, equivalent to an increase of 12.5% in the comparison with income generated in 2014."

"An increase of more than five times in the number of mexican gamers over the past 15 years to reach a figure of 64.8 million users at the end of 2015. That is, more than half of the population (53%) will be a game user at the end of the year”. "It is identified that 74% of children and teens to 20 years used video games, like 29% of adults between 31 and 40 years and even 7% of those who overcome the barrier of 50 years”. 

"73% of children and adolescents use prepaid cards to purchase either complete sets or additional features for f2p applications. Adults over 30 who have a direct source of income have a higher preference to use credit cards and debit cards when buying video games. 7 out of 10 users play through mobile, while consoles reach a preference of 35%, computers 19%, tablets 13% and portable consoles just a proportion of 5% of all users."

Currently (and for several years now) key players in the games industry worldwide have placed strategically commercial offices in our country, in order to maintain a more direct contact with Mexican consumers and to utilize their commercial benefits.

Some of the international companies with a presence in Mexico:

If a number of international companies have placed sales offices in our territory and kept in constant operation, they are not doing this for sympathy or altruism towards our country, their motives are completely and absolutely economical. These companies see potential in the mexican market, potential that many local developers are ignoring, or have not yet found the best way to take advantage of its value.

Education

In the regions of greater industry activity in the country, there are close links between gaming companies and educational institutions. Students are an important link between the two entities (schools and studios). Many companies and independent entrepreneurs also offer courses and are invited to give lectures at this institutions, in order to make academic programs match the reality of the sector.

While the academic offer has increased and improved in recent years, two major obstacles to be overcome by the educational scene remain. The first is the lack of teachers with extensive experience not only in the areas of development and production of games (we have some of this type), but also in the areas of publishing and marketing (this are the ones we need the most). The second obstacle corresponds to lack of education infrastructure. In some institutions, these obstacles have been minimized, but not overcome and the vast majority of schools are still far from that possibility.

Thanks to the proliferation of academic programs and their constant updating of content, the number of students and interns has reached a point where companies can choose only the best. However, the supply of jobs is small - only 150 companies across the country - is imperative for an increase in the absorption capacity of graduates, an increase in number of companies in the country and strengthening the existing ones.

Government

The various support programs by the Ministry of Economy for creative and IT industries are one of its main tools to help Mexican entrepreneurs the opportunity to have access to resources to strengthen their businesses. Unfortunately, they handled a very traditionalist and bureaucratic scheme more difficult in a way that such support can benefit a greater number of stakeholders.

An example of the gap between developers and the Mexican government's economic policies is the complexity to form a new company. Currently, the process to form a company in Mexico consists of a period of approximately 20 to 35 days and cost about $15K to $30K pesos (usd$820 to usd$1641).

The most immediate needs of the vast majority of developers are paying services, rent and wages. Unfortunately, none of the existing funds offered by government programs, allow to allocate resources to cover a part or all of the above requirements. This is another case that exposes the lack of harmony between developers and government economic policies.

Yet despite these situations, the Mexican government is one of the most support programs provide to entrepreneurs and businesses at all levels. While the existing offer does not solve the most immediate business development needs, there are many other areas in which can benefit: training, infrastructure acquisition, improvement and expansion of working facilities, relationship with foreign companies and more. The responsibility to know how to take advantage of all the resources offered by the government falls exclusively in the hands of developers. Likewise, it is the responsibility of the mexican digital games industry, to approach the government and let them know the particular needs and propose initiatives to strengthen the sector's growth.

Regulation

Unlike film, publishing (books and magazines) and television industries, where the content is regulated and classified according to the audience, to date there is no official regulation to digital games by the mexican government. Efforts to try to create a classification law have failed to bear fruit.

Some specialists in legal matters and representatives of the commercial sector of the industry believe that a local law regulating the content of digital games could jeopardize retail sales and complicate the situation for consumers. They consider the classification exposed by the ESRB is a better alternative.

Parallel to the issue of classification, the existence of a Mexican regulation of video games, may favor in other ways. If the government creates such classification law, means that recognize the existence and importance of digital games, for this reason is given guideline to promote other laws that benefit directly and exclusively to the industry. An example of the possibilities that can be aspirated can be seen in the mexican film industry which has a fiscal stimulus equivalent to the amount of their investment.

Promoters

In Mexico there are several organizations that have in their agenta promoting activities and initiatives that include the software industry and IT, which also considers the development and production of video games as one of the complementary activities. Among the highlights there is ProMEXICO, whose main objective is to bring mexican entrepreneurs with potential partners and international allies. Another of the most active promoters for the sector is the National Chamber of the Electronics, Telecommunications and Information Technology (CANIETI) who have maintained a steady lobbying between the government and the various sectors who represents (among which is considered the development of digital games).

During 2015, the ESA in cooperation with the Mexican Institute of Industrial Property (IMPI) and the participation of various branches of the social and educational sector, conducted the “Concurso Nacional Videojuegos MX” (national game development contest), whose objectives are focused on stimulating the creation local video games, promoting national industry talent and spread the achievements of entrepreneurs and mexican companies.

One issue of concern is the absence of a true association representing the local development industry. As mentioned above, various promoters include only the sector as a complementary activity; therefore, the existence of an agency that serves exclusively to the game development industry is a priority need. On more than one occasion and managed by different developers, have tried to create local IGDA chapters, these actions have contributed to some extent to the communities where chapters operate, but are far from being an association legally constituted. Other attempts to create more associations have not been effective, or eventually include other entertainment and media industries.

Communities

The boom in the mexican game development industry has led to initiatives emerging to support this growing sector. Specialized events and communities of enthusiasts and professionals have firmly established themselves in recent years. The industry will have a high esteem and generally are seen as necessary for continued growth.

Collaborative networks are vital to the success of any game developer company. While most companies in the sector are still reluctant to collaborate more open and recurring basis, developer communities have proven to be more cooperative. These communities grow, thanks to universities, events, seminars, job change and collaborations.

The communities are in charge of linking human capital that conforms the industry, and it is thanks to this that the community members get jobs or form new game companies.

Of all the activities broadcast by the community, it is the Global Game Jam, which has proven to be the most effective way to promote direct game development in the country. In January 2016, 158 games were made. Participated 20 locations spread across 13 states, with a record of 1,374 jammers. This represented an increase of 54.2% compared to 2015 - 13 locations and 891 jammers - But when compared with 2014 -14 locations and 473 jammers - the growth reached 190.5%.

The main events that encourage, promote and define the domestic industry are:
•    Global Game Jam (Mexico's Locations)
•    DEVHR – International Video Game Forum (our must important development conference)
•    Mexico City Game Week
•    Jalisco Campus Party
•    Concurso Nacional de Videojuegos MX
•    Electronic Game Show / EGS Developers

Conclusion

The ecosystem is at a crucial stage of its development. The mexican sector has the potential to grow, mature and develop companies that can be successful both nationally and internationally. For the next step we have identified a number of tasks that all who consider themselves part of mexican industry must collaborate for implementation in the short and medium term:

1. Increasing the interest in the areas of business, legal and commerce, among mexican developers.
2. Promote the legal formalization of enterprises.
3. A legally constituted association that truly represents the Mexican industry and perform functions for growth of it and the benefit of its members.
4. Raise awareness of the importance of building development companies that are stable, self-sufficient and capable of growth.
5. Increased participation of experienced developers in the academic scene.
 

If you want to know more about Mexican game development industry, we invite you to read our annual digital publication (spanish only) you can find it at MNTOR Creativo.