Hive Digital: Brazilian Games and Digital Marketing Platforms Developer

Interview with Mitikazu Koga Lisboa, President of Hive Digital

Can you give us your assessment of the games and social media sector here in Brazil?

The social media sector in Brazil is one of the most promising in the world and particularly in Latin America. Brazilians are some of the heaviest users of social media both in terms of the time they spend using social media and the penetration of social media throughout the country. As respect to the games sector, Brazil has the 5th or 6th biggest gaming industry in the world. Therefore both of these industries are doing well in Brazil even if they are a little premature in terms of the necessary professionalism or years of experience. We are seeing continuous growth in both sectors. Brazil is one of the key markets for social media and games in Latin America.

Can you give us an overview of your company?

Hive was founded in 2007. It started as a small production studio but then we realized we had the opportunity to become more of a global development company that doesn’t only deal with the production side but also with planning and management. We quickly evolved into a company that develops mobile and digital platforms. We also developed a game area and two years ago we became the biggest game developer in Brazil. Now the company has about 55 employees working in our offices here and we also recently opened an office in San Francisco with two more employees. We are now heavily focused on developing digital platforms that are targeted both at consumers and brands that want to be part of the consumer experience.

Could you give us some examples of success cases in terms of social media?

We have some very successful cases for social media in Brazil. This is a country that uses a lot of marketing and promotion to sell to its customers and we were one of the first companies to perceive that customers were moving towards social media but that the brands were not. Therefore we brought it to the attention of these brands that they should be using Facebook, Twitter or a few years ago Orkut. Most of our success cases are advertising campaigns that the brands were already doing in Brazil but without using social media. We were the company that put them on Facebook, created apps for them as well as mobile and digital platforms. If you look at the biggest promotion in the country: the “Avião do Faustão” promotion by P&G which is now on its 7th instalment, we have been working on that project from the very beginning. We have the biggest TV host in Brazil and the best creative agents to create the campaign. P&G relied on us to create the digital platforms that make it all possible. It is the biggest promotion in Brazil with millions of dollars in prizes being given away. The campaign is multiplatform and social so you can participate through Facebook, give feedback through Twitter, send SMS, go to the mobile site and watch the TV show to see the prize winners, etc. Hence it is a really social and multiplatform brand experience.

What about the games segment?

Originally when we started as a production company the first area we entered was the games segment. I myself am a gaming industry professional; that is my background prior to opening the company. The current project that we are working on is called Candypot: a puzzle game for mobile phones. Within the game you can purchase power apps and in-game items that can help you progress throughout the game. We also have some brands that are sponsoring the games and we currently have about 150,000 people playing the games every month across the games platform.

What would you say are the main differentials between your company and your competition?

One of the key differentials is that we are not a marketing company that has suddenly learnt about technology, instead we are a technology company that understands marketing. That makes a lot of difference because here in Brazil most marketing companies are not free to deliver digital platforms because they do not have technology or digital background. We are a company that was created to produce games, platforms, mobile apps, etc., and then we approached the marketing industry. That is why our cases are a huge success from an IT stand point. For example, the advertising games that we do for big brands like Gillette are not only good for the brands but also for the consumers who enjoy playing these games and making them go viral. It is similar in terms of social media platforms; we have done a website for Skol, one of the biggest brands of beer in Brazil, which is connected to all of the social networks and that is far beyond what any other standard digital agents can do because it demands extensive technology and knowledge. We fuse technology and marketing expertise to deliver incredible digital experiences.

What are the challenges that your company faces?

The main challenge that we had at the beginning and is still somewhat of a challenge today is educating our clients. Brazil has a huge market for social media and games but people still have a kind of traditional way of thinking about marketing and so need to learn how powerful it can be to use social media. For example, we need to highlight the importance of being on someone´s mobile phone and not necessarily just on a TV advert during a soap opera. Therefore one of our main challenges is increasing the awareness of the importance of digital platforms. However this is getting easier over time.

What is getting more difficult on the other hand is dealing with the complicated economic scenario in Brazil. As several foreign companies who have tried to enter the Brazilian market have learnt the hard way, it is not easy to do business in Brazil. First of all we have taxes that most companies think are outrageous. I even have clients who think that I am stealing from them when I tell them about the taxes that I have to pay because they simply don’t believe how much tax need to be paid. You need to know exactly how you are going to optimize your revenue and not let your income be lost in taxes and bureaucracy.

Another challenge is the uncertain economic scenario for Brazil in 2015. I wouldn’t say that it is a bad scenario, but I would say that it demands caution because we want to ensure steady growth. We have been growing at a rate of 20% a year for the last 7 years since we were established. We need to look at the economic scenario for next year as some things may not be as good as they are today and so we want to look at opportunities not only in the local market but in the international market also.

You also have foreign clients, right?

Yes, around 20% of our revenue is from our foreign clients. That has happened naturally and was not a strategy that we created. When people began to see our work, the phone started ringing with clients asking us to work for them. We started by developing new platforms for the Brazilian companies that we work for but then we approached their international offices who also really liked what we do and wanted to replicate our services outside of Brazil. For this reason we have opened our San Francisco branch which is exclusively focused on business development where the goal is to market our client´s companies all over the world but particularly in the US just as we do now here in our Brazilian offices. Our foreign branch is starting to pick up momentum and we think that the foreign markets could be a very good card to play in regard to the challenges present here as I mentioned because of the economic year to come.

Would you be interested in any kind of investment deals with foreign investors for example in terms of a technology partnership, etc.?

When we started the company we had a revenue of about half a million dollars in our first year which was a rather small revenue. We had a foreign investor at that time but since then we haven’t had any further foreign investment rounds. Now our revenue is closing at about 5 or 6 million dollars a year so I think that maybe it is a good time to look for foreign investors again. We haven’t yet made any deals but we are definitely looking for good opportunities.

In general, now is a good time for investment in Brazil because the economy is getting stronger. The scenario is uncertain but it is much better than it was 5 or 6 years ago when it was basically dominated by commodity markets. Brazil now has the ability to host companies that are more mature than just the commodity exporting companies and that includes gaming and social media companies. We are also trying to change the way things are done in Brazil, not only from a business point of view but from a governmental point of view. We are trying to create an environment in which companies can thrive, based on creativity and performance and not only on how much oil a company can extract. I think it is a good moment to invest, not only in Hive but in Brazil as a whole.

What is your vision for the future of this sector? Do you think the boom in social media is going to last forever?

Yes, it is permanent. Social media is here to stay. It has changed everything that we do in our lives. There is nothing that you do today that does not demand or cannot be improved by a social media platform. It is not just something to do with the internet, it has to do with humanity. We have been sending social messages from the very beginning, only now it is much easy with our smartphones than when we had to use smoke signals many years ago. It is important to understand that social media is not only a result of technology, however technology does make it easier.

What is your vision for the company in two or three years´ time?

When we started the production company which developed games, we wanted to be the biggest game developer in Brazil and we achieved that. Then we started to move beyond gaming into social, digital and mobile platforms. In this area we haven’t set ourselves a particular target of what kind of company we would like to become because as I said the market is not mature yet. There are a lot of companies out there but not one of them is a role model for us. I would say that we want to be the single, best digital platform creators in Latin America. We want to be the company that first comes to a client´s mind when they need a digital marketing platform.

What would be your message to an international investor that is interested in coming to Brazil to invest in your sector or even perhaps in your company?

I would say not to simply read the reports before making a decision, rather read the reports, come to the country to see it for yourself, and get to understand the rules and regulations here before making the best choice. I don’t want them to be just another foreign company that comes to Brazil and fails, I want them to be a company that comes to Brazil and whose operations here help them to sustain their global operations.

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