SiGMA Insight: Upside of esports in Brazil

Lea Hogg April 14, 2023

With a population of over 212 million, Brazil is Latin America’s most populous country and one of the world’s youngest, with 69 percent of the population being under the age of 30. The Brazilian esports market ranks in the top five globally by the number of players and one of the fastest growing games markets in Latin America.

Esports classification as traditional sport

However there was some controversy which made the headlines in Brazil this week about esports being classified as a sport. Ana Moser, Brazil’s Minister of Sport, stated that esports should not be seen as a sport but a form of entertainment. She added that she was unlikely to invest in the esports market. This was met with disappointment by esports stakeholders who are asking to be given an opportunity to discuss and debate the issue and define whether esports can be classified as a traditional sport.

The Brazilian Sports Law under Bill PLS 68/2017 covers the national sports system in Brazil. It states that a sport is “any form of predominantly physical activity that, in an informal or organized way, has as its objective recreational activities, health promotion or high sporting performance”. The clause refers to ‘reactional activity’ which is what defines esports.

Policy makers and stakeholders are debating the issue further. In particular, they argue, individuals can certainly participate in esports simply by means of a laptop or smart phone but an esports athlete needs similar training and preparation followed by any other athlete and this includes exercise and training, a healthy nutrition regime and preparation for being mentally and physically fit to complete. Esports also generates jobs and income for players and develops their technology skills. In Brazil investment by the government and stakeholders in the right ecosystem and incentives will mean that esports can transition to be part of the mainstream culture.

Brazilian esports revenues ranked No 10 globally

From the addressable population in Brazil, 80 percent are game enthusiasts; half watch video games content and a quarter watch or participate in esports. Brazilian esports revenues place the country at number 10 in the world. Enthusiasts in Brazilian esports are estimated to spend over 20 hours a week playing. A third of them spend money on virtual currency and 35 percent would most likely buy merchandising at some point especially during competitions. Females make up 60 percent of the audience and almost 50 percent of them say that they downloaded a game because it was recommended by an influencer.

Furia esports

Founded in 2017 as a business venture by entrepreneurs Jamia Pádua, Andre Akkari and Cris Guedes, Brazilian esports organisation Furia is today named as the fourth largest esports company in the world. It competes in Counter-Strike: Global Offensive, Rocket League, Leage of Leagues, Valorant, Rainbow Six: Diege, Apex Legends and Super Smash Bros. The team made its first appearance two years ago at IEM Katowice and although the team did not win, it went on to play against Made in Brazil. Furia was the highest seeded team in a number of competitions in 2021 and 2022.

The company then laid down some European roots. It established its Malta-based headquarters earlier this year in an initiative to give more consistency and stability to racing rosters by having a fixed location in Europe. The space exceeds 1000 square meters and provides a location for Furia teams to compete in Europe.

Brazil is most promising esport market

The proliferation of smartphones ensures that mobile games far exceed PC and console variants. Still, PC esports titles are more profitable. Revenue in the esports market is projected to reach US $16.03 million in 2023 and maintain a compound annual growth rate (CAGR) of 7.75 percent up to year 2027. At US $7.5 million, the market’s largest segment is Media Rights followed by brand advertisements and sponsorships with Gillette, Dell and Redbull involved.

In 2023 user penetration is forecast at 8.2 percent and is projected to increase to 11 percent by 2027. The average revenue per user is estimated at US $0.90. The number of esports participants in Brazil is expected to rise to 25 million by 2027. If realised, this will value the market at $22 million by 2027. Esports continues to grow, but this does not mean that it will become mainstream but it will bring more markets into play. .

According to some, Brazil is the world’s most promising market for esports. Several mobile gaming companies have been enticed to set up in Brazil, with Garena and Riot Games having well-established operations in the region. Teams like Furia, LOUD and MIBR are encouraging gaming popularity. There are established leagues in most major esports titles: Rainbow Six, CS: GO, League of Legends, Wild Rift, Free Fire, Mobile Legends: Bang Bang and others.

Brazil’s success in winning biggest titles

With their Valorant Champions 2022 victory, Brazil became the only country to win the biggest titles in all three major tactical shooters: Valorant, CS: GO, and Rainbow Six Siege. In 2022 total prize money earned by 4352 Brazilians was US $47 million from 3,275 tournaments placing the country #7 in world rankings for winnings through esports. Counter-Strike: Global Offensive was the highest awarding game, with US $11 million recorded in winnings.

Gabriel “FalleN” Toledo is the highest-earning Brazilian player with US $1.2 million in prize money. He earned 99.32 percent of the total by winning Counter-Strike: Global Offensive tournaments.

No law referring to esports

There is no federal law in Brazil dedicated to esports. An attempt to introduce legislation was stalled by public pressure in 2019. However, some states introduced legislation categorising video games as skill-based games to differentiate them from gambling. More recently, legislation has been passed by the lower house of Brazil’s legislature and awaits approval from the Senate. Sports betting has also been the subject of debate. It is currently under review, with the Government aiming to formulate sports betting laws this year. The prospect of legalisation has created renewed interest in the market by investors.

Overall, 1 percent of all game publishers on Google Play are from Brazil and Tapps Games is one of Brazil’s largest. The average rating of games from Brazilian publishers on Google Play is 3.98 out of 5 stars. 7 percent of games by Brazilian publishers are paid at a higher rate than the 4 percent of paid games overall. 69 percent of games by Brazilian publishers include ads and 24 percent use in-app payments to monetise.

Offensive (CS:Go) most popular title

Nearly 200 internationally based platforms operate nationwide, offering sports betting services to Brazilian customers. By revenue, the titles that generate the most are Counter-Strike: Global. In order of popularity, the games most purchased and played are: Offensive (CS: GO), League of Legends (LoL), Dota 2, Valorant and Call of Duty. For most betters, CS: GO is unbeatable, with four of the top five events exclusive to the game: Intel Extreme Masters (IEM), ESL Pro League, Blast Premier, and PGL Major.

Intel Extreme Masters returns to Rio

The Jeunesse Arena is hosting a spectacle this month with the biggest CS:GO event, the Intel Extreme Masters 2023 in Rio di Janiero. The tournament will showcase 16 elite teams with a prize pool of US $250,000 prize pool and an Intel Grand Slam contribution to the champions.