COUNTRY PROFILE: Brazil

What makes this $200m mobile content market tick?

Brazil is truly a land of cliché. Think of Brazil and it’s impossible to avoid mental images of football, samba, street parades and – frankly – attractive women. I can’t tell you how hard it was to resist illustrating this feature with a picture of a young female in a too-tight Brazilian football jersey.

But perhaps it’s time to attach another stereotype to the Brazilian national – the mobile content fanatic. Brazil is, of course, the ‘B’ in the BRIC group, that quartet of nations with the largest and most upwardly mobile economies in the world.

Having achieved a degree of political stability in recent years, the Brazilian economy is finally doing justice to the vast potential of a country, that is the world’s fifth largest by area and is home to 195 million people.

This is reflected in its mobile industry. There are currently 144 million subscribers in Brazil, shared almost equally across four highly competitive operators. And never mind the downturn, it’s growing faster than ever.

The Brazilian regulator, Anatel, stated that 4Q 2008 was the country’s best quarter ever, with 9.85 million new connections taking the national total past 150 million.

The four big operators Vivo, TIM, Claro and Oi, together hold about 91 per cent of the market between them. But it wasn’t always so. Until quite recently, the market consisted of many small regional carriers. When consolidation came, it transformed the sector.

Anne Williams, CEO of Brazil’s biggest VAS provider Okto, says: “The market really switched around 18 months ago when there was sudden consolidation among the operators. Mobile stopped being so fragmented and it just became easier to build services that could reach the vast majority of subscribers.”

Okto was well-positioned to benefit, having entered the market in 2003 to provide cross-operator SMS connectivity and services. By 2007, the market started to fly and Okto’s turnover doubled, as content companies surged into Brazil to exploit the new access to content-mad consumers.

Today, pretty much all the usual suspects are present in Brazil, with Southern European companies such as Dada, Buongiorno, Zed and Flycell all locally active.

This has made the market a strong one for the off-portal space. According to Okto numbers, D2C is worth R$300 million of a R$500 million market.

One D2C company enjoying particular success is Portugal’s TIM w.e, which operates in Brazil under the Natta D2C brand. As a Portuguese operation, it shares close linguistic and cultural links with Brazil.

Diogo Salvi, CEO of TIM w.e, says Brazil’s unique and highly localised entertainment tastes have helped content providers.

“Brazilians are passionate about local music, which means the market is controlled by independent labels. They are happier to negotiate with us, and be more flexible about terms, than the major international labels might be,” he says.

Similarly, when the US firm PlayPhone (whose CEO Ron Czerny is Brazilian) entered the market in 2007 it did so by announcing content deals with local artists such as Cachorro Grande, Ivete Sangalo, Pitty and others, and by ranging its ringtones in categories like ‘Brega, ‘Forró and ‘Sertanejo’.

The prevalence of music is overwhelming in Brazil. According to figures from the Netsize Guide, it contributes 175 million euros to a content market worth around 230 million euros.

This has utterly overshadowed the other content areas, although it’s notable that TIM and Vivo have each launched live mobile TV, and this remains an interesting area for a market with a passion for those flamboyant soaps.

Elsewhere, the main growth area is mobile marketing, with local brands quickly adopting the medium as a valuable channel to reach a growing population that has access to mobile but not always to TV and web. Okto is a highly active enabler here, as are other local aggregators such as Takenet and Supportcomm.

Meanwhile, content companies are establishing mobile marketing agencies in Brazil, with TIM w.e. taking its MKTM business into the region and Dada launching Dada Ad, and then winning a contract with the operator Oi.

There’s so much optimism about Brazil that it’s a refreshing counter to the gloom overwhelming so much of the rest of the world. Diogo Salvi is extremely bullish about the future for mobile content here, as much for macro-economic reasons as anything mobile-specific.

He says: “If you go to Sao Paolo, you don’t get that feeling of economic gloom at all. Most of the population don’t have mortgages or debt, so there aren’t the indicators that would make people feel worried about the future as they do in Europe.”

Hurrah para Brasil!

BRAZIL FAST FACTS

General mobile market information
Population: 195m
Mobile subscribers: 150m
Penetration: 79%
3G subs: 1.37m (0.7m EV-DO,0.67m UMTS)
Ave. Monthly ARPU: 12 euros

Mobile data revenues
Segment, Revenue (million of euros)
Mobile internet, 496.5
Music, 175.6
Games, 36.18
TV, 3.56
Video, 17.54
Monthly content ARPU, 0.55

Operator Subs (millions)
Vivo: 43
TIM Brasil: 35.84
Claro: 35.37
Oi: 22.36
Brasil Telecom: 5.4
Nextel: 1.65