Magalu’s bet on the billionaire gaming market

Gone are the days when the consumer dream of video game-crazed children, youth and adults was a high-end console. With the evolution of mobile networks, games have conquered mobile phones and computers, and game formats have multiplied – to the extent that this sector has become one of the most promising today.

In 2021, the global video game market was worth around $180 billion, according to consultancy Newzoo. In Brazil, it was 2.3 billion USD, almost 13 billion R$. The huge potential for synergy between this market and e-commerce made Magala come to this world.

One of the company’s big moves came in late August, when the company released three smartphone games: Orbits Conqueror, Speed ​​Box and Death Trap Nite. Three are part of the hypercasual category (hobby type, with quick download) and were developed by small Brazilian studios, which won the public call that Magalu opened in partnership with BIG Festival in November 2021. For now, the games are only available in app stores for iOS and Android.

But the aim is to explore its connections with different areas of the company’s operations. “We can take advantage of games to, for example, bring more audiences to SuperApp, as well as explore their advertising potential,” said Thiago Catoto, director of Luizalabs, Magalu’s technology arm.

One of the next steps in the strategy is to include the gaming space in its SuperApp, in addition to deploying its advertising platform, Magalu Ads, within games. In 2021, Magalu Ads generated revenue of BRL 100 million.

About 93 million people in Brazil use cell phones, computers or video games to play games. According to research institute Kantar Ibope, Brazilian players have the sixth highest average daily playing time in the world. On average, they spend two and a half hours a day playing games, 16 minutes more than the global daily average.

“Brazil has enormous potential not only as a consumer, but also as a hub for game developers,” Catoto said. According to him, the hypercasual games released in August are part of the first phase of Magalu’s more ambitious plan. The idea is to create complex games that are played on computers and consoles. This is why the company started structuring its own studio at Magalu Games, located within Luizalabs.

tentacular business

Games are a business with tentacles. The habit of gambling leads to the consumption of virtual (lives, weapons, money) and real (special chairs, computers, furniture, headphones, events) resources – products and services. The acquisition of KaBuM! in July last year was a move that was already part of the company’s strategy. In addition to being the country’s leading e-store for tech equipment and accessories, KaBuM! is a kind of Disneyland for video game fans and professionals.

By purchasing Jovem Nerd – the main Brazilian producer of content for the geek audience – Magalu also acquired items of intellectual property that should become an electronic game, which should be published by 2023. In 2005, the duo Alexandre Ottoni (Jovem Nerd) and Deiva Pazos (Azhagal) , the founder of Jovem Nerd, has already managed to get a character – Ozob, inspired by Bozo the clown – in a game by the Polish producer CD Projekt Red, one of the most famous in the world in the category of role-playing games. .

At the other end of the market, Magalu has become a force in eSports, which is no longer niche and has become popular as an element of pop culture. E-Sports practically imitate traditional sports championships, such as football or basketball. They have teams of professional players, national and world championships that pay millions in prizes to the best placed teams.

The last DotA (Defense of the Ancients) world, for example, paid out US$40 million in prizes. The winning team received almost half of that amount, equivalent to R$100 million.

Where did that much money come from? From corporate sponsorship, ticket sales (since players from all over the world can play) and advertising, because the audience is also global. In the United States, more than 26 million people watch at least one eSports game per month. In 2021, Netshoes, the sports e-commerce of the Magalu Group, entered the world of eSports with the sponsorship of Netshoes Miners, which has teams from FIFA, Freefire and Wild Rift. Magalu is also currently the owner of the eSports team KaBuM!, the four-time champion of the Brazilian LoL league, CBLOL.

In the future, Fintech Magalu should also be used to mediate game payments. “The growth of the game industry is a consequence of the digitization of society. It is only natural that Magalu, the company leading the digitalization of Brazilian retail, also operates in this area. And then the sky is the limit,” says Catoto.

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