Eduardo Henrique is co-founder and head of U.S. operations for Movile, a provider of mobile entertainment services in Latin America.
We all know about “The Girl from Ipanema” and the world-famous supermodels like Gisele Bundchen. But Brazil is now on the world map in another way, this time for its explosive mobile consumer market and the business opportunities for investors and digital content developers alike.
Latin America’s once quiet tech growth is now entering its heyday, with global tech giants and investors flocking to its temperate climes. According to the recent Global Venture Capital Confidence Survey, investors see Brazil as the country with the most potential for rewarding investments in today’s uncertain global economy. Latin America, and Brazil specifically, has emerged as the next major opportunity in mobile, with 620 million mobile users in all of Latin America, and Brazil singlehandedly contributing 256 million mobile users to the region.
Here are four reasons why investors and entrepreneurs alike should be keeping an eye on Brazil – the sixth-largest economy in the world – and its hot mobile scene:
- Making friends, and fast.
Brazil now has 50 million users on Facebook, with an astounding growth rate of 144 percent per year, making it the second biggest country on Facebook after the U.S., according social media analyst company Socialbakers. Brazil has by far the fastest growth in the region, with Haiti coming in second place at 91 percent annual growth and Mexico failing to make the top five.
As a whole, Latin America sees 1.6 new Facebook registrations every minute. Both developers and brands have a huge opportunity awaiting them on Facebook in Brazil, as this audience grows at a rapid rate and continues generating more page likes and becoming more deeply engaged with brands on Facebook.
Big consumer brands like L’Oreal, Nike and Smirnoff have already put a stake in the Brazilian Facebook competition, and all rank in the country’s top 10 brands on Facebook. They’re getting millions of Facebook fans from Brazil’s rapidly growing user base, indicating a huge marketing opportunity for non-Latin American brands to tap into Brazil’s Facebook audience.
After Facebook’s recent push toward expanding on mobile, the social network is now drawing 425 million mobile users. Mobile is already winning time over computers in the U.S., with smartphone users spending an average of 441 minutes per month on Facebook and computer users spending 391 minutes on the social network, according to data collected by comScore in March. And with Facebook’s recent introduction of the App Center in Brazil, there’s a chance for apps to make a big splash in Brazil’s mobile market.
The Brazilian mobile market is eager to play games, and to consume apps in general. The Apple App Store in Brazil just started offering games in April 2012, and according to a recent report by analyst firm Distimo, Not only is Brazil now the biggest app market in Latin America, but its year-on-year revenue also far outpaced the U.S. App Store revenue growth, with Brazilian app sales growing 83 percent in the last year, compared to 44 percent growth in the U.S. Brazil ranks sixth in the world for App Store revenue growth according to Distimo, and its ranking will only rise over the next few years as mobile growth slows in booming countries like Japan and Russia.
- Smartphone economics are changing.
Unlike the still-brutally-high data costs in the U.S., prices are actually dropping in Brazil as carriers offer competitive pricing plans. With prepaid plans the most popular model, the major carriers are offering data plans from 20 to 25 cents per day. Some carriers are even offering no-charge access to data-heavy services like mobile video streaming. Not only are cheaper data plans attracting more mobile users, but Apple manufacturer Foxconn has the potential to spur mobile growth by bumping up iPhone production in Brazil.
Foxconn has already set up shop with a plant in Brazil and has plans to ramp up its iPhone production, which to date has not been on a mass scale. Thus far, Apple has been bringing Chinese-manufactured parts and products into Brazil, and due to high import taxes, the iPhone 4S hit the Brazilian market with a nearly $1,500 price tag. Mass domestic production of the iPhone should cut prices dramatically.
In addition to the upswing in iPhone sales, Android devices are expected to hit the Latin American market in a big way this Christmas season. Unlike markets in the U.S. and Europe, less expensive Android phones are the top-selling devices on carriers’ app stores. At Movile, we’re expecting that more than 20 million Android phones will be sold in Brazil over the next 12 months.
Thanks to government support in the form of auctions that encourage telecom carriers to purchase 4G bandwidth at competitive prices, Brazil is laying the groundwork for widespread 4G access. Even George Soros threw his hat into the 4G bidding, with his recent purchase of Brazilian telecom Sunrise Telecomunicacoes signaling high expectations for mobile investments in Brazil.
All four of Brazil’s major telecom companies obtained licenses for 4G high-speed Internet capabilities in the recent auction, and have pledged to ready their 4G networks by April 2013 in time for Brazil to host the soccer World Cup. And looking at the long-term picture, the big telecoms are expected to offer 4G in all Brazilian cities with a population of 100,000 or more by the end of 2016.
Brazil has the building blocks in place to create a dominant mobile market: a supportive government, manufacturing resources and an eager consumer base. As its place in the global mobile market shapes up over the next few years, developers, entrepreneurs and investors would be wise to grab a stake in this promising mobile frontier before the competition gets too fierce.