Cover Story

The new face of Indian gaming

After languishing in the dumps on account of rampant piracy, gaming in India is finally picking up with a little help from cellular users. Meanwhile, game development is benefitting from the outsourcing phenomenon, finds Megha Banduni.

There was a time when the global gaming market was dominated by the ubiquitous PC games. But with the advent of newer options such as mobile, console, and Net games, the gaming market and its dynamics have undergone a major change all over the world. PC gaming is no more the clear winner as mobile gaming has come to be known as the fastest-growing segment because of its rising popularity. These two segments are closely followed by the console and online gaming segments.

The market data illustrates these facts clearly. The global gaming market was estimated at $19 billion in 2005, and was expected to grow to $36 billion by 2009. (Source: Nasscom).

As for India, the 2005 market figures for gaming development show a teensy $30 million. However, Nasscom projects this market growing at a CAGR of 78 percent to reach $300 million by 2009. Most of the gaming development being undertaken in India is on mobile platforms and that’s expected to become more prominent as the share of mobile gaming rises from 53 percent in 2005 to 68 percent in 2009.

Though poised for a mega growth in the near future, right now the domestic gaming scene seems to be dismal, at least if you look at the legal market. The console / PC market is riddled with piracy. Viren Popli, Senior Vice-president, STAR Interactive says, “Gaming in India is at a nascent stage. India has not yet adopted the gaming culture. Gaming as a concept is largely driven by console and PC gaming and we are still lagging in these two areas.”

The market for pirated games in India is estimated to be $40 million as per Nasscom estimates.

According to Sunil Mehta, VP, Nasscom: “Mobile gaming is doing better than PC gaming simply because of the penetration levels of the respective platforms. India has more than 116 million mobile users as compared to 3.6 million desktop and notebook users.” The mobile gaming development market was worth $16 million in 2005, and is expected to grow at a CAGR of 89.1 percent, reaching 209 million by 2009.

PC gaming in India is expected to rise from $5 million in 2005 to $35 million by 2009. However this figure doesn’t include the figures for pirated software both for PCs and consoles.

Meanwhile, online gaming is picking up. The Internet and Mobile Association of India (IAMAI) and IMRB International did a study as per which the Indian Internet user base reached 37 million in September 2006, up from 33 million in March.

According to Preeti Desai, COO, Digital Business, Hungama, “The number of online gamers regularly accessing free gaming sites is more than 24 percent of the youth population online. Of this, approximately 7 million play single player games. Only a fraction of them participate in multi-player games and that too only on international sites.”

Gaming can be further categorised into three genres namely casual, strategy and action. Casual games are your basic chess and card games.

Vishal Gondal, Founder and Director, Indiagames says, “According to our database, out of the total usage of games last month, 39 percent was of casual games, 31 percent of strategy games, and 15 percent of action games.”

Mobile gaming

Considering the superlative performance of the Indian mobile market in terms of the subscriber base as well as in terms of the services that are available, it is no surprise that mobile gaming is the most popular option with Indian gamers.

Mahesh Prasad, President, Application Solution and Content Group, Reliance Infocomm explains, “There are approximately 120 million mobile subscribers in India of which, 25 percent use CDMA phones with the majority on GSM. Of the CDMA user base, only 20 percent have gone for data-enabled phones that support gaming and even among them only a fifth have actually subscribed for games. Thus the market is small but has the potential to grow in the coming years.”

Gondal concurs, “On GSM, there are about a million downloads every month, while on CDMA there are about three million downloads a month. That is because of the fact that a game download on a GSM handset costs anything from Rs 50 to 100 but on a CDMA phone you can play a game for Rs 5. Overall about four million people pay for mobile games every month. We believe these numbers will rise by about eight to 12 percent in the near term.”

The mobile gaming market is growing as service providers are offering interesting packages to their customers. For instance, Reliance’s pricing strategy is based on per session usage. The user ends up paying anywhere between Rs 3 and 10. “This particular scheme has been in demand because players now pay for the number of times they play and also have an option to change or upgrade to another game. We also have a concept called buy and keep where they charge the customer Rs 49 and Rs 99 per game,” says Prasad.

Adds Desai, “The mobile gaming industry that is worth over Rs 45 crore is growing rapidly and with the penetration of GPRS-enabled phones rising it’s likely to grow substantially over the next four years.”

Vishal Gupta, Director, Product Technologies, Qualcomm, India and SAARC observes, “Indian gaming has got off to a good start, but things are still at a nascent stage. Technologies such as 3G are yet to come in. They will enable game downloads at speeds up to 1 MB in a few minutes.” With 3G, providers can roll out better games. That said, 3G hasn’t done too well in other markets.

PC and console gaming

Rising PC penetration is helping sales of PC games. Console games have their dedicated followers. The console gaming development market in India is expected to witness a CAGR of 73.3 percent over the period 2005-2009 and is expected to be worth $54 million by 2009 for both offshoring and domestic markets.

A relatively new segment is the multi-player on-line game (MMOG), which has been successful in Asia.

The PC and console gaming market got a leg up recently with Microsoft’s announcement of the availability of Xbox 360, which is to make its debut in the Indian market before Diwali 2006. While the product’s features have been lauded, it’s pricing could place it out of reach for many.

“The Indian gaming community is currently at an inflection point and is poised to grow exponentially in the coming years. The Xbox 360 will serve as a catalyst to fuel this growth and expose Indian gamers to a next-generation gaming experience,” says Mohit Anand, Country Manager, Microsoft Entertainment and Devices Division, India. The Xbox 360 Core System and 1 Leading Game title will be available at an estimated retail price of Rs 19,990 and Xbox 360 System at Rs 23,990. It will compete against Sony’s PlayStation 3 and Nintendo’s Wii.

The success of these consoles will hinge on their pricing to a large extent and, perhaps even more so, on the pricing of the games.

The Nasscom report also predicts that the marketshare of PC and console gaming in India is expected to decline during 2005-2009 as mobile gaming outpaces PC and console sales.

Internet games

Online gaming shows promise. The IAMAI and IMRB study estimates that the Internet user base is likely to cross the 40 million mark by March 2007. Of this, the active user base is likely to hit 28 million. By March 2008, this active base will reach a staggering 43 million.

Of course, rise of online gaming is irrespective of PC sales as cyber cafés also offer online gaming. The other spur for growth is innovative pricing by game portals. For instance, Indiagames has come out with a concept called Games-on-demand—a subscription-based service.

“This is one concept that can fight piracy because we are providing a monthly subscription of Rs 199 and Rs 300 for Airtel and MTNL broadband subscribers respectively. And we are planning on launching it soon with other leading broadband players in India,” elaborates Gondal.

However, there are a few kinks to be worked out in this segment. “The biggest deterrent is collecting micro payments. 42 percent of online gamers have credit cards or debit cards but it is unlikely that these users will use their cards for a transaction of less than Rs 50 to 80,” adds Desai.

C D’Silva, Creative Director, Hungama says, “MMOG is played by a niche set of people whom we call hard-core gamers or power gamers. Today the most popular MMOG game is World of Warcraft. Though MMOG is picking up in India, there are challenges to tackle such as the requirement for huge bandwidth and high costs. Today casual games are in demand in India accounting for 80 percent of the gaming market, both developer and user.”

Destination India

The offshore gaming development market is growing. Developing a game entails coming up with concepts, scripting, programming, designing characters, animation and testing.

India is becoming a favoured destination for developing games. Benefits such as reduced costs, and improved quality, associated with outsourcing business processes have built confidence among global gaming production houses to outsource their work in India.

Says Venkat Mallik, MD, Level Up, “India is looked at as an outsourcing destination by other countries as the cost of labour and content development is low. For example, 30 minutes animation for a 3D episode on television costs about $220,000-$250,000 abroad, whereas in India the same costs between $100,000-$120,000, that’s half the cost. India has a good talent pool in animation and content creation.”

Mehta of Nasscom also points out that the cost of porting a game onto multiple platforms (making a game compatible with a mobile handset which may have a different screen size, resolution, etc) is also leading to outsourcing of game development to India. “Porting costs are around two to three times the costs of basic mobile game development (graphic designing). This is because porting is a labour-intensive job. The cost involved in making a game compatible with a specific mobile handset costs $1,200 to 1,500 in the US. However, the same task can be performed in India at a cost of cost $500-1,200. Further, for a game to succeed it has to be playable on at least 60 or 70 phones and it costs around $100,000 in the US to make a game compatible with that many handsets. If similar work is outsourced to India, the costs can be reduced by as much as 50 percent,” adds Mehta.

Things are changing. “In 2000-2002 many gaming vendors were outsourcing the content development and software development and porting from India. There was not much done by India for its domestic market. Today, developers are doing work for the domestic market, especially in mobile gaming”, says Prasad.

“In 2003, Reliance held the Reliance Development Programme where around 19,000 registrations were done. Developers from across the globe participated in it,” adds Prasad.

Building a game developer community

Analysts and game developers feel that there is high growth expected in the coming years. Gaming companies are also these days seen setting up training institutes and providing in-house training to their employees to hone their skills and to help meet the increasing industry demands.

According to the Nasscom report, while in 2005, there were around 600 people employed in this industry, given the present circumstances, demand for gaming professionals can increase to 2,000 professionals by 2007.

“Gaming is best poised to attract the multi-tasking media generation. Gamers will experience real-world sports along with a game play. For instance, an integrated gaming interface with a TV channel would allow a gamer to indulge in online multi-player games,” explains Desai.

According to Popli, “Today gaming is restricted to the metro or urban culture, which is not enough to fuel the market. In the next 12 to 18 months we will see more interesting games, and better mobile phones coming up and more organised gaming happening.”

Tackling game pirates

Piracy remains a big challenge for the industry.

Raman Madan, Regional Manager, Animation and Desktop Video, South East Asia and India, Autodesk, Media and Entertainment Division says, “The challenges associated with gaming are that India still lacks talent pool, and the demand is huge but supply can’t keep up. Awareness has to be generated among people to encourage them to opt for gaming as a career option and not just entertainment.”

Gaming in India is picking up but it isn’t a mass phenomenon yet. In fact, taken as a percentage of the global market, it’s just a drop in the ocean—all of 1/6th of a percent today and it’ll be less than 1 percent even as per the 2009 forecast. As the mobile revolution continues and entry-level phones become more sophisticated, the market for mobile gaming will flourish. One can only hope that Indian cellular subscribers will prove the forecasters wrong and get the Indian market to, say, five to 10 percent of the global figures by 2009. Otherwise it’s going to be a sad tableau for Indian gaming and game developers.