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© Getty Images 11 Many Mexicans love boxing and betting at sports events. But the Mexican market has a lot more to offer for merchants. © Getty Images

Mexico’s Moment

Media coverage of Mexico is too often dominated by reports on gang violence or their ongoing border disputes with the US. But reality isn’t that grim at all in this economy on the rise. The games sector especially can expect boom years ahead. A paysafecard country profile.

There were thousands of kids screaming and cheering on their teams. I couldn’t believe it the first time I went – it was crazy! But the event grew even bigger next year!” Octavio Flores’ enthusiasm for the growing e-sports scene in Mexico is contagious, even through a long ­distance ­­phone line. Flores is paysafecard’s consultant in ­Mexico, a country where the games market's annual growth of 19.6% beats even the market leaders in total ­revenue in Asia, North America and Europe. 1.1 billion dollars are spent on games per year in this Latin American country. Flores is confident that these numbers will keep rising: “Mexico has a very interesting demography. Nearly half of the population is 25, or under. This means there’s huge ­business potential. Especially when you know that back in 2009, only 31% of the roughly 128 million ­Mexicans had access to the internet. Today this number has grown to an internet penetration of 52%. I’m sure that in five years from now it will be around 80%.” 

ADVENT OF THE MAQUILA-INDUSTRY

GDP GROWTH RATES OF 5%?
A young population with easy and affordable ­access to the internet is a perfect environment for game-developers, publishers and e-commerce merchants. But will ­Mexicans ­have enough money to spend on their digital pastimes? The basic economic data and outlook is quite good, says Friedrich Steinecker, ­economic expert and representative for the ­Austrian Economic Chamber, located in Mexico City. “Right now there are some dark clouds on the horizon, due to the low oil prize, the weak Peso and the US ­presidential elections. But in the coming years I see excellent ­prospects for Mexico’s future. If the global economy starts to pick up again, the next five years may indeed become Mexico’s moment and we may see GDP growth rates of 3, 4, or even 5%.”

THE ADVENT OF THE MAQUILA INDUSTRY
One reason for that is that Mexico has established a maquila industry. Especially the big automotive ­corporations from all over the world have invested big time in Mexican car manufacturing plants. Audi, VW, BMW and Continental are just a few. “What we are see­ing right now is a re-industrialization of the Americas. Many manufacturers start investing in Mexico instead of China, because labor costs are on the same low level here, but the huge American market is right next door,” Steinecker explains. Especially the young and able are profiting from this development. In Volkswagen’s plant in Silao, for example, in which the average age of an employee is an astonishing 20 years.

»What we are seeing is a re-industriali­zation. Many manufacturers start investing in Mexico instead of China.«

YOUNG AND WELL-EDUCATED
In the near future, managers will not only be looking for low-paid assembly-line workers, Steinecker is also certain: ­“Cisco has told the public, for example, that it will be spending four billion dollars over the next two years for new Mexican plants,” Steinecker says. Their ­investment is just one example for the trend towards high-tech ­production methods at the moment, which puts quality training of the work force high on many managers’ wish lists. Hence, the Mexican government ­under ­president Peña Nieto is very keen to start ­reforming the ­education system and ­providing young ­Mexicans with the knowledge to adapt to the ever-changing situation.

49 MILLION GAMERS
Education is not the only sector undergoing reform, however. The Peña administration is also doing a lot in terms of ­digital infrastructure. It has deregulated the telecommunications market and is now looking for new ways to get the internet to the more remote areas of this vast country. No wonder that the games scene, with its young and internet-savvy target group, has exploded in recent years. “There are more than 90 game developer studios in Mexico and about 49 ­million ­gam­ers,” says Alejandro Bertoldi, director of ­“gaming partners,” a marketing agency specializing in the games market: “The studios are creating games for all devices, but mostly for smartphones. Certain ­studios like Game Coder or Kokonut have great ­content that has been pub­lished by international brands like Bandai Namco or Chillingo,” says Bertoldi, proud of the ­growing ­scene’s achievements. 

CONSOLE VS. PC
Mexico is still a heavy console gaming market, accord­ing to Bertoldi. “XBOX 360 is the gaming device with the biggest installed base over here. In the newer ­generation of consoles both XBOX ONE and PS4 are growing at almost the same rate.” But there’s also an explosion of PC gaming, says the Marketing Manager: “The most ­popular titles in the country are League of ­Legends, Halo, FIFA, Call of Duty and Gears of War. We are reaching a tipping point here, where PC gaming will return to dominate the gaming community. ­Games like League of Legends or Clash Royale are making the ­traditional video­­game industry look into creating new and attractive content to stay ­relevant.”

Discovering the digital lifestyle

SMARTPHONE ­GAMING GROWS BY OVER 58%
Bertoldi’s observations are backed by the figures published in this year’s Newzoo global games market report on Mexico. Console and PC games have an equal share of 33% of the total amount of money spent, ­while smart phone games account for only 24% of the total revenue. But what’s equally interesting are the year on year growth rates of these gaming segments. Smartphone games are growing the ­fastest at a 58.3% rate, while PC games have earned 11.8% more over 2015 and console games can only manage a mere 4.3% growth on last year. For Bertoldi, ­these numbers are reason enough to see the games market prosper during the next few years: “The market has doubled in 5 years and there are many ­indicators that this trend will continue. Since there are more ­devices and video games are ­becoming more and more a part of people’s lives in Mexico.“ ­According to the Newzoo report, currently 48.3 million gamers live in Mexico, of which 30.4 million are paying ­gamers. A ­quite high ­ratio of 63% compared to the global ­average. Anyone of these players spends an annual average of $36.97 on games. 

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And they dislike using credit cards, says paysafecard’s country consultant Flores: “Only around 23% of Mexicans own a credit card.  A number every online ­merch­ant in the Mexican market should keep in mind,” he says, laughing. This is one of the reasons why ­paysafecard is working with young bloggers to make its alternative payment method better known. One of them is 31-year-old Eduardo Lavin, who calls himself “Beaner” and regularly uploads videos on YouTube and Twitch. 204,000 ­people have subscribed to his ­channel and 70,000 follow him on Twitch. “In Mexico, many parents think it’s unsafe to pay with a debit or credit card on the net. So paysafecard is the perfect solution for young gamers,” he is convinced. He made a video ­tutorial on how to use it in one of his blogs for that ­reason. “Even some ­gamers from my channel didn’t know about ­paysafecard ­before. But I’ve changed that,” he says, smiling. 

paysafecard perspective

»Only 23% of Mexicans own a credit card.«

Octavio Flores Country consultant Mexico, paysafecard

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paysafecard’s country consultant, Octavio Flores, shares his insights on a rather unusual distribution network, a favorable demography and a wide- spread aversion to credit cards in Mexico.

How long have you been working for paysafecard in Mexico, Octavio?
Since 2009, I actually prepared the market entry along with Udo Müller, who helped a lot to win over Bwin, our first merchant partner, which wasn’t an easy feat. But once we had them, many others followed only three months after ­paysafecard’s launch.


Was setting up the distribution network an easier task?
I wouldn’t say it was easy. But here in Mexico the stationary retail business is organised a little different than in most other countries. We have about 15 big chains in Mexico, which represent 25,000 points of sale. So rather than launching paysafecard among independent points of sale, we took a different approach by going after large national and regional chains. The head of ­marketing of 7/11 was one of the first we could convince. After that, a whole new range of ­possibilities opened up.

What do you mean by that exactly?
Organised retailers like Oxxo or 7/11 have provided access to marketing ­departments making the relationship more efficient to run and promote our payment method building a bridge in-between the end user, the point of sale, ­paysafecard and the merchant. For example, we came up with the idea of co-branded ­store material. Recently, we had one such campaign with the French streaming ­service Deezer, which worked really well for all sides.

As you are mentioning music streaming, which is mostly used by young people – who is the typical Mexican paysafecard customer?
Well, generally paysafecard is getting stronger in all age groups as only 23% of Mexicans own a credit card. A number every online merchant in the Mexican market should keep in mind. But Mexico has a very interesting demography, as well: Nearly half of the population of 128 million is 25, or under. That means there’s huge business potential.

So in what segments is paysafecard particularly strong right now?
We see that micropayments from € 5 to 20 are most frequent in our whole trans­action volume. That means, we are very strong in gaming and ­entertainment services, like streaming. And we are very well established in ­gambling and in the dating segment for a long time.

What’s your outlook for the next few years?
As we move into the future, we will now look to reach independent points of sale, which in Mexico come to about 500,000. Taking into account the special demography and rapid spread of the internet I’m pretty sure sales will go ­through the roof for us and our merchants in the next few years.

Do you want to get in touch with Octavio Flores? Please write an e-mail to: octavio.flores@paysafe.com

HOW PEOPLE PAY
Beaner’s example proves that Mexico is a market driven by local payment methods. International merchants can only have access to ­credit cards, which represent a mere 28% of the whole ­Mexican ­e-commerce ­market, according to the ­Allpago Cross ­Border E-Commerce ­report. To access the full ­potential of the market, a ­company must go local. ­Diverging from the rest of Latin America, the number of debit cards with 134 million is much higher than ­credit cards, which only amount to 30 million. But debit cards are traditionally used for ATM withdrawals, rather than for online shopping. Most of them are not ­allowed ­either to process online transactions, or to process ­foreign currencies. This would be the main reason why only a few e-commerce purchases are made through this payment ­method. Thus, prepaid solutions like ­paysafecard are an option not only for young gamers in Mexico. “Of ­course we are getting a lot stronger in gaming and entertainment ­services like streaming, which have a huge potential over here”, says country consultant Flores: “But gambling is ­important for us, too. Many Mexicans love to watch the Champions League and Boxing is really big over here. Twice a year, we have big boxing events and during this time we see paysafecard-transactions surge. For me, this is a great indicator that sports betting and gambling will remain an interesting segment for us, as well.” 
So there are many reasons for Octavio Flores to be ­enthusiastic about his market and the Mexican ­economy, in general. And he can transmit his enthusiasm – even ­through a crackling long-distance phone line.


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