FEB. 23, 2009 • There’s been plenty of investment in Latin America market during the last few years by the big three video game console makers. With many similarities to the gamer demographic in Europe, the Latin countries in the Americas are an emerging market that also seems very familiar to established players in the industry. Microsoft Ent. proved to be extremely aggressive in the region at the beginning of the current generation, but Nintendo Co. Ltd. and Sony Computer Ent. have not been far behind.
Latin America is a region where video game systems and games are traditionally expensive, and there are already well-established gray markets to circumvent official dealers. Sony, therefore, benefits greatly from the now very affordable PlayStation 2, and its enormous catalog, as a calling card in Latin America. As bad economic times continue to roil consumer pocketbooks, the PS2 has a huge advantage that the PlayStation 3. Especially when the latter is compare to less-expensive Wiis and Xbox 360s.
Despite the recessionary distemper sweeping the world, Sony has now seeded the PlayStation brand in the following Latin American nations: Argentina, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, and Venezuela. To get a better understanding of how Sony is expanding in Latin America; with 2009 launches scheduled in Brazil, Paraguay and Uruguay; DFC went to SCEA’s director of Latin America, Mark Stanley.
DFC: What do you see as the major opportunity in Latin and South America? Obviously these are markets that have been under served but how much growth potential do you foresee?
Mark: We have seen a strong demand for our products in Latin America (which includes Mexico, Central America and South America). The PlayStation began its expansion into the region in 2003 when we opened distribution in Mexico. Since then our business has experienced double digit yearly growth. In 2008, PlayStation was launched in additional countries in the rest of the region, and we have experienced very positive sales results to date.
DFC: Can you educate us a little on the current state of the game market in Latin and South America? What are the current hot products and where do you see the market going over the next five years?
Mark: We expect the game market in Latin America to be one of the fastest growing in the world. Many Latin American countries have experienced a recent boom in their economies and as a result we see more consumers with disposable income to spend on in-home gaming entertainment. With the current global economic crisis, we expect a slowdown in this region into this year, but expect very positive growth nonetheless in the next five years.
DFC: On the high-end you see game systems like the PlayStation 3 (PS3) and Xbox 360 focusing on an elite consumer looking for a high-definition experience. On the other hand you see a growing push towards casual games and products that are less expensive to the end-user and can be consumed in smaller chunks. How does this spectrum play out in Latin America? Are there enough high-end consumers to support platforms like the PS3 or Xbox 360, or is it more about having affordable products for the mass market consumer?
Mark: In Latin America, the majority of consumers are looking for a high-quality, low-cost gaming system to meet their entertainment needs. For this reason, PlayStation 2 is a top selling platform in the Latin American region. PlayStation 2 is outselling every other gaming platform because of the breadth of software titles, quality of graphics and universal family appeal. However, we also see a growing base of consumers looking for leading technology systems like PS3 and PSP (PlayStation Portable), and expect a big shift in demand to those systems in the coming years.
DFC: Can you inform us a little on the current position of the PlayStation brand in Latin America? What have you done in these markets and what is your plan going forward? How and why did you set on your phased roll-out in different countries?
Mark: PlayStation is the top-selling gaming brand in Latin America, led by the success of our PlayStation 2 computer entertainment system in the region. We plan to continue our expansion into the region in the coming years, making the necessary investments to ensure consumers across the region have access to the entire line of PlayStation products. Our phased roll-out has allowed for better focus and customization of our launch programs on a country-specific basis, which will in turn ensure the long-term success of our brand in the region.
DFC: A major success story for the PlayStation brand has been its ability to pioneer emerging markets, especially near the end of a system’s life cycle. Does this strategy apply to Latin and South America with the PlayStation 2? What about the PSP? Do you have plans for the PS3 in those regions?
Mark: Our company’s goal is to provide accessibility to the entire line of PlayStation platforms. Each platform has its price point and technology differentiations, and there is a specific demand for each regardless of the market or region.
DFC: What has Sony learned in India about consumers, marketing and distribution that you could adapt well for use in Latin America? How similar or dissimilar are these emerging markets?
Mark: India’s market has recently gone through a high-tech economic boom, and the resulting investment into the country’s aging infrastructure has nurtured a spike in new disposable income among groups within the Indian population. Certain Latin American countries have experienced a similar economic boom, which has also resulted in the emergence of new disposable income among consumers who are potential video game system adopters.
DFC: One obvious issue is high price points for console systems in Latin America. Obviously this encourages an illegal and/or gray market. What are your thoughts on those issues and what price points are you targeting?
Mark: Every region in the world has various price sensitivities. PlayStation platforms have always focused on bringing the best entertainment value to consumers worldwide, and our goal for Latin America is no different. We offer three different gaming systems at various price points, and each offers a varying degree of technology and functionality, which ultimately speaks to more consumers in a region such as Latin America, which has many segmented economic classes.
DFC: Compared to the rest of the world, what is different about Latin American retailers and consumers? What is the same?
Mark: Latin American retailers are extremely excited about developing this category. We are making significant efforts to help more retailers become video game destinations, and consumers are elated. There are millions of PlayStation fans in the region, and we intend to nurture each and every one with unmatched breath of content to choose.
DFC: Obviously Latin America is made up of many very different countries. What challenges does this present? How much of a difference do you see among the different countries in terms of 1) consumer tastes, 2) distribution channels, and 3) pricing strategy?
Mark: Each country within the region poses its own set of unique challenges, from logistics to pricing to political situations. We are looking at each and every consumer segment within each country and ensuring that we are delivering products and content which speaks to each.
DFC: How does the global PlayStation brand fit in the Latin American market? What do you to adapt in your marketing approach to release a product like PlayStation in, for example, the Brazilian market? How would it be different for say Argentina or Costa Rica?
Mark: Although we have not entered Brazilian market officially, we consider that, on some levels, one approach will be effective for the entire region, whereas on other levels we need to customize our communications for each country. Every country has different cultural differences as they relate to gaming, and we will continue to speak to each in its own culturally-relevant language.
DFC: Nintendo is clearly putting a major focus on Latin and South America. Do you feel they may have an advantage, especially with a system like the Wii?
Mark: Wii is a very different platform than PlayStation 2 or PS3. Although there are consumers who clearly enjoy what Wii has to offer, there are many consumers looking for the latest technology, amazing graphics, broad library of game titles, and family entertainment features like Blu-ray and online community access to movies, shows, and gamers on a global scale. The PlayStation brand is able to deliver this today.
DFC: Many international markets are pioneering new forms of gaming and new business models including online games, mobile games, digital distribution, virtual item sales and so on? What are some of the new business models and products that you see appearing in Latin and South America. Can PlayStation Network be used to take advantage of emerging trends in those regions or is it still too early?
Mark: Many countries within Latin America have very good online penetration, and as a result we believe that PlayStation and PSN have the potential to be a great vehicle for these consumers to have access to various forms of entertainment.
