BitMe: The Mexican Gaming and E-Sports Market
Introduction
The rise and potential of the gaming and e-sports sector in the Mexican M&E market can be analyzed through BitMe, a Latin American subscription television channel of Mexican origin, created by parent company Grupo Televisa. Released in July 2019, BitMe targets Geek Culture (with video game, e-sports and anime programming) and will replace Televisa’s Tiin, a children and young adult programming channel. The release of BitMe by Televisa is a gambit for the media group to enter an ever-expanding market that has emerged with a changing Mexican M&E landscape, brought on by growing accessibility to the internet and gaming in the country.
This paper will first analyze the presence and growth of gaming and e-sports in Mexico, and key factors that can explain why the gaming and e-sports sector has taken dominance in the Mexican M&E market. Next, this paper will discuss how BitMe fits into the Mexican M&E market and how replacing Tiin with BitMe is a smart business venture for expanding into a fast-growing sector. It should be considered throughout this case study that because BitMe has only been on air for half a year, the actual success or failures of the channel cannot yet be accurately evaluated. Still, to understand why Televisa created BitMe can inform the kind of content that is being popularly consumed by the Mexican population and indicate where the Mexican M&E market is headed towards.
Part 1. Macro Analysis: Gaming and E-Sports in Mexico
This section will analyze data on the users/user penetration and the growth of gaming in Mexico. This will help inform on why Televisa is entering the gaming market with the creation of the BitMe channel.
A key factor that can explain the popularity and growth of the gaming and e-sports sector in Mexico is the country’s rise in internet usage. Though previously not everyone in Mexico had access or could afford internet usage, an amendment to the Mexican national constitution in 2013 made internet accessibility a right for every Mexican citizen. This government interference positively impacted digital habits in Mexico, as by 2019 the internet user penetration in Mexico reached 68%, compared to a penetration of 64% just two years earlier. Increased internet usage is reflected in trends in the Mexican M&E market, where non-traditional, internet-based digital entertainment sectors have gained more popularity amongst consumers. Thus, it comes as no surprise that the video game and e-sports sector is the second fastest growing sector in Mexico, only following internet advertising. User penetration of the gaming industry currently reaches 35.5% of the population in 2019 and is expected to hit 45.5% in 2023, indicating a growing population of gamers in Mexico.
There is great potential in gaming and e-sports, with the competitive gaming audience surpassing over 380 million people worldwide. Mexico alone has 49.2 million gamers, making it the 12th largest games market in the world and the largest game market in Latin America, constituting 81% of the market. A breakdown of the user population will show that Mexican gamers are a younger-skewing demographic spread evenly through all socioeconomic classes. These factors make the video game sector an attractive and sustainable industry for entertainment and media ventures. The 25-34 year old age group makes up the highest percentage of gamers in Mexico at 34.1%. Not too far off from this age group is the 18-24 year old age group of Mexican gamers, which makes up 26.6% of the gaming population in Mexico. The 35-44 year old age group makes up 28.5% of the user population, and those 45 years old or higher only make up 10.7%. This younger-skewing audience of gamers is the target demographic that M&E companies look for. Further, game consumers are spread relatively evenly across all socioeconomic levels, with 37.8% of gamers coming from low income households, 33% of gamers being medium income, and 29.2% of gamers being high income. This indicates the accessibility of gaming for all socioeconomic classes, reaching a broader range of people.
According to a Statistica report regarding gaming in Mexico, “While all other Digital Media market segments have already gone through small revolutions caused by new business models like subscription-based services, the Video Games market is only at the beginning of this development.” Although the video game market is still niche, there is already a large community for video games and e-sports in Mexico, and data shows promising industry growth and potential for companies to revolutionize how users consume video game content. It is estimated that there is an annual compound growth rate of 11.3% for the gaming and e-sports sector. Revenue for gaming in Mexico is expected to show an annual growth rate of 5.7%, factoring in fee-based video games distributed over the internet, downloads of full version games for gaming consoles or PCs, mobile games, free-to-play online/browser games (both subscription-based or including in-game purchases), and gaming networks. Under this expected growth rate, the Mexican game market is expected to reach a market volume of $1,465 million by 2023, compared to $1,000 million in 2017.
According to a case study of Mexico’s M&E market highlighting the gaming industry by the International Trade Administration, the increase in gaming consumers can be explained by “the widespread popularity and ease of access... There are good growth prospects for brands seeking to collaborate with game licensing.” Mexico is already establishing itself in the M&E industry as a hub for the gaming sector, with three large global geek culture/gaming industry events hosted in the country. First, there is Pixelal: an International festival for producers of animation, video games, and comics, with attendance from companies such as Pixar, Disney, Cartoon Network, Nickelodeon, Amazon, and Netflix. There is also El Festival de Animación, Videojuegos y Comics, an animation, video game and comics conference for Mexican production companies, and BajaWebFest, a festival focused on digital content productions in drama, comedy, action and adventure, science fiction, fantasy, and documentary. With the multitude of opportunities and incentives to produce gaming content in Mexico, there is an entire market in the country to acquire content for a dedicated fanbase.
The popularity of e-sports in Mexico can also be credited in part to Mexican legislation. An article written by Mexicanist states that “In some states of the Latin American region, legislation already indicates that eSports are a sport like any other, because it has the minimum indispensable factors that any traditional sport has: athletes, cash prizes, public, and competitions.” Legislative support of eSports for their multiple streams of revenue helps the industry garner popularity and recognition throughout Latin America. Even the International Olympic Committee wrote in a statement that e-sports “could be considered as a sports activity”. With support from the Mexican government and interest in the entertainment consumer market for digital content and gaming, gaming in Mexico has all the factors to continue growing and gaining massive popularity in the country’s M&E sector.
Part 2. BitMe
Even before the release of BitMe, Televisa had other stakes in the gaming sector. According to the Televisa Annual Report (2018), Televisa already owns 17 gaming sites and a mobile app with over 7,700 electronic gaming machines and online sports. The report disclosed that for these divisions of Televisa, “2018 marked the 9th consecutive year of growth in profitability despite increasing competition. During 2019, we plan to continue adding new products to our portfolio and following up with our expansion plan.” With the industry’s growth and the success of their general gaming ventures, expanding gaming and e-sports into their Pay TV business made sense. As addressed by BitMe General Director Luis Luisillo, “It is the first time in many years that Televisa has decided to launch a TV channel. In its constant search, it found an opportunity in an emerging niche, which is the geek universe. Then, BitMe came up.”
In July 2019, BitMe replaced Televisa’s Tiin network, which had been producing children and young adult programming since 2011. The content on Tiin -- consisting of telenovelas, anime, talk/reality shows, and animated series -- was traditional programming for Pay TV and could not distinguish itself from similar content on newer digital platforms. With consumers gravitating more towards digital media, Pay TV viewership has decreased substantially within the past year with “... the number of total pay TV subscribers in Mexico decreased from 19.2 million in December 2018 to 18.7 million by the end of March 2019. Despite this, Mexico is still Latin America’s biggest pay TV market, according to calculations based on data from local government agencies.” Mexico’s Televisa controls 59.9% of the Mexican Pay TV market, and reported 46 million Pay TV subscribers in 2018. With a large stake of their business in the Pay TV sector, Televisa must find ways to retain their Pay TV audiences and bring in more viewers. Televisa moves towards this by replacing Tiin, a channel of more traditional programming, with BitMe-- a channel that targets a more relevant market.
By creating the BitMe channel, Televisa can capitalize off of Mexican viewers’ growing digital habits, providing content to a growing audience of gamers. According to a study on the Mexican gamer by analytics firm Newzoo, 71% of people who watch video game content look for supplementary gaming content such as tips and tricks for games. By putting all things gaming and e-sports into one platform, BitMe is able to create appointment-to-view programming that gaming and e-sports fans cannot find elsewhere. As announced by NexTV News,
BitMe’s programming will exclusively present all the videogame industry launches. Monthly, the TV channel will develop 80 own-productions hours, of which 40 will be live, and the remaining 40 recorded. Some of its confirmed titles are Zero Control (newscast with information about the gamer universe), Shesports (program that will emphasize on women role and their growth in the videogame industry and the geek universe) and GameVolution (which will show the videogame’s world evolution and analyze the most relevant titles in the industry’s history).
Though content for gaming and e-sports is already widely available and popular, as one of the largest networks in Mexico, Televisa has the resources and opportunity to acquire and curate all gaming releases, news, and other content to their network, distinguishing itself from the digital content on the web that covers video gaming.
Part 3. Competitor Analysis
Aside from the general competition of the existing digital gaming content online (such as Youtube and other gaming sites), one of BitMe’s most prominent competitors is Azteca Sports, a similar channel with Mexican origins that focuses on gaming and e-sports. Azteca Sports comes from TV Azteca -- Televisa’s biggest competitor in the Mexican telecommunications market, in a strategic partnership with Allied Esports. The groups came together to create a 24-hour digital e-sports channel in Mexico to be broadcasted weekly starting in October 2019, with the aim to “help promote gaming across the region -- initiatives aimed at an elusive younger demographic.”
Allied Sports, an e-sports entertainment company, produces gaming and e-sports shows and competitions. Working with Azteca, the companies released the first “Nation V” e-sports tournament broadcasted in March 2019. The broadcast of the Nation V tournament showcased Mexican players against American players and received over 2 million viewers. With Allied Sports’ properties spanning North America, Europe, China and Australia, and including the world-renowned HyperX Esports Arena in Las Vegas, Azteca’s partnership with the company was not cheap. With $5 million in shares of Allied Sports, this partnership will help Azteca Sports expand into a growing global market.
TV Azteca announced the launch of Azteca Sports in June 2019, and Televisa announced the launch of BitMe only days after. While the timing of the launch indicates Televisa’s awareness of the impending competition to dominate this growing global M&E market, BitMe is able to distinguish itself from TV Azteca by offering content that also includes technology, anime and ‘geek culture’ in more general terms. Since Azteca Sports and BitMe were both launched in 2019, it is still too early to accurately compare in depth both companies and make predictions for which company will dominate the coveted Mexican gaming and e-sports sector. Nonetheless, it is important to note that the top two telecommunication companies in Mexico investing in the gaming and e-sports sector indicates a strong future for the gaming and e-sports industry in the Mexican M&E market, and perhaps globally as well.
Conclusion
Increasing digital habits in Mexican media and entertainment has helped the gaming and e-sports sector grow substantially and establish an early dominance in the Mexican M&E field. This year’s release of BitMe by Televisa -- one of Mexico’s most prominent telecommunications companies -- is indicative of the potential in this sector, and especially in Mexico, where the gaming population is one of the highest in the world.
Trends indicate for this sector to continue growing, and though it is still too early in BitMe’s existence to assess how their business operations will impact the future of their company, the launch of BitMe shows Televisa’s recognition of the potential in the gaming and e-sports industry. While Televisa’s traditional Pay TV business is at risk due to competition with more accessible digital media, through BitMe, Televisa takes advantage of the growing population of internet users/digital consumers to bolster their traditional media business, creating content based off of these popular trends. By offering immediate and exclusive gaming and geek culture content, BitMe stands out from their digital competitors as they are able to put high-demand, appointment-to-view gaming content all in one place.
Future analysis of BitMe and the gaming/e-sports sector in Mexican entertainment should consider BitMe’s competition with TV Azteca, and whether Televisa’s attempt to revive their Pay TV business with digitally-based content increased viewership.
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