MoComment: Brazil And The Mythology Of BRIC

MoComment: Brazil And The Mythology Of BRIC
Michael J. SchultzEd: Our “MoComment” section has guest essays and commentary from industry players. If you’re interested in writing about an issue related to mobile content industry, send us an e-mail. Previous essays are here.
Michael J. Schultz is the VP for Business Development at Brazilian company Gold Comunicacoes, and has 25 years experience in the industry around the world.
In this article he argues that Brazil is not placed to be a burgeoning mobile content market, as proponents of the BRIC paradigm claim. They like the content but can’t afford it…the spirit is willing but the wallet is weak. Nevertheless, he suggests the country is good as a proving ground for mobile content.

Much has been made of BRIC (Brazil, Russian, India and China) and the potential for growth in subscribers, revenues and content services growth. For the most part the pundits have it dead on as Russia has a large population that pays good money for content and services while India and China pay very little but with billion plus populations the sheer magnitude of users make them enormous growth targets.

That brings us to Brazil. At the end of 2005 Brazil had 85 million mobile subscribers who pay the overwhelming share of their monthly usage for voice followed by SMS, and then a sharp drop to any other content or service. In a country where prepaid accounts are more than 80% of the total number of subscribers and the average is less than US$20 per month one has to wonder – is there really a Brazilian content market?

The answer is both No and Yes. No because companies seeking to enter the Brazilian market will find a walled garden, entrenched local competition as well as some of the highest taxes and fees imposed in the world. Yes, because Brazilian subscribers are hungry for content — but most are unable to pay for it.

It is an interesting paradox: Brazilians want, in fact crave, mobile music, images, games and video but they cannot afford it. The fourth largest carrier in Brazil, Oi, has gone from offering 10 video-enabled phones in 2005 to over 50 today. Yet most of these phones are bought by people with pre-paid accounts, who want the handset as a status symbol but cannot afford to buy the videos the handsets were designed for.

As the majority of Brazilian subscribers cannot afford these services, is Brazil really a growth market in terms of VAS? The answer lies in finding alternate ways to pay for that content, and to that end we have developed sponsored content services for brands. By integrating a mobile segment to their traditional marketing campaigns brand marketers can expand their reach and at costs much less than other media. The added potential is that someone who accesses and downloads sponsored content becomes a walking billboard for the product, a new twist on WOM (Word Of Mouth) marketing.

There are also a number of Brazilian mobile content companies seeking profits overseas. These include Meantime (which focuses on multiplayer games), Tmidia (which created security systems that use real-time video), and Gold Comunica

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