Varshik N, Sourjyo Das, Priyanka Pandit
Gaming phenomenon in India started with the advent of the digital gaming age, when every kid on the block swore by Mario. With technology becoming more accessible, whether in the form of TV, personal computers or the ubiquitous mobile phone, gaming in India cannot be an urban phenomenon for long. The cover story delves deep into this fascinating world of digital gaming to find out ways to harness the hidden potential.The animation and gaming report 2008-2009 by NASSCOM estimates the Indian gaming industry to reach 830 million by 2012 but its awareness in the common man is still questioned.
With increasing importance of India in the global economy and the promise of a young and vibrant population that is staring at the cusp of prosperity has made it impossible for the major players to ignore India. Companies like Microsoft and EA are planning to corner a big market share in the Indian pie. Microsoft recently tied up with Bollywood movie houses to show trailers of Hindi movies in its Xbox live. Sony and Microsoft also plan to drastically cut the prices of their gaming consoles to appeal to a price conscious Indian consumer.
All this is for a greater share of the pie in a market that is said to be growing at a CAGR of almost 30 percent. But the Indian market poses some peculiar challenges for the global majors. The primary challenge to traditional console based gaming could come from mobile games in India. India has one of the largest installed bases of mobiles in the world and Indians are increasingly taking to gaming on the mobile rather than the traditional console based gaming.
Though, the biggest spoiler to the plans of the global players seems to be the homegrown Indian companies. Indian companies have already evolved innovative models for attracting the Indian consumer. For e.g., Zapak follows a subscription based model that aims at generating revenues through a high user base with low revenues per user. Other companies are giving away the games for free and plan to make money from merchandise.
For quite some time now many Indian companies have been heavily involved in the development of major games. The low cost advantage that India presents has
resulted in the development of many major gaming properties being outsourced to India. Indian companies have played a major role in the development of games like Need for Speed and others.
While there is indeed the ability to develop great games, there is no track record to prove that the Indian companies have the capability to produce a major game. Indeed the few standalone Indian games that have been released have been heavily panned by critics for unimaginative game play and shoddy graphics. There is also an excessive reliance on clichéd scripts and rehashed stories.
What the Indian gaming industry needs is one major bonafide Indian game to become a major crossover hit. That might prove to be the tipping point for the nascent Indian gaming industry. Till then, the question of whether the Indian players can stand up to the might of the global giants remains open.
Console Wars: The Next GenerationThe tech-world is known as an unforgiving place, but even by its ruthless standards the gaming console industry has a degree of cruelty that is perhaps unmatched in any industry. Consider this: all the major players of gaming consoles in the 70s and the 80s have practically disappeared from the industry. The list reads like a veritable roll call of the software industry: Atari, Mattel, Nokia, Philips, RCA and the list goes on. Two of the top three players in the industry today are names one would not have dreamt of associating with the gaming world. Nintendo, Sony and Microsoft rule the roost in the console world today and they do not look like giving up their positions any time soon. But the fight to reach the top is intense and the competition is tough so much so that these battles are being called the console wars in a parody of the famous cola wars that took up much of the marketing mind space in the 20th century.
The industry has tended to be dominated by a few leaders but the identity of these leaders has rapidly changed over the years. Nintendo once had a stranglehold over this market with an almost 90 percent share of the market in the early 90s but the arrival of players like Sony has rapidly eroded that share. Microsoft is the latest player on the global stage and has managed to capture a significant market share in a short span of time.
Focus by the big players has been typically on a low pricing strategy in the hope that the revenues would be generated from the royalties on games. This has been adopted with so much fervor that it has been estimated that Microsoft loses almost a hundred dollars on every Xbox that is sold in the market. The console makers have realized that having the largest number of installed machines is more useful for long term gains.
The console makers have always made their biggest profits from revenues generated from games rather than from the actual sales of the consoles themselves. The console industry is a market that is heavily dependent on the sales of hit games, games that are usually provided by third party players. For example the tremendous success of Sony’s Playstation2 is almost entirely attributed to the release of several critically acclaimed games that were based on the platform. This excessive dependence on a third party is a high amount of risk and the players in the industry have been trying to mitigate this risk by several means. Sony has exclusivity contracts with many software developers that give a sole right over the games developed by them. Microsoft is looking to expand into the games software market. Its acquisition of the Halo franchise has given its efforts a major boost in this area.
The gaming console makers however face serious threats from two non traditional sources of competition i.e. the burgeoning mobile gaming and social gaming sectors. These two have huge installed bases that would make them serious competitors to the console giants as standalone gaming consoles are replaced by more integrated devices par
ticularly ones with more mobility. The console industry is going to be an interesting watch over the next few years and it could be one hell of ride for the players.
PC Gaming: The Inside StoryWhenever someone talks about marketing and gaming we imagine PS3s, Xboxes, Wiis, Gameboys and a varied range of other consoles. The reasons are obvious – you can sell consoles, you can sell their accessories and you could sell their games. No one goes on to talk about PC Gaming, because no gaming company can make profit out of selling PCs. In order to figure out the potential of the PC gaming market, we start with the present gainers in the industry, sketch a profile of the average gamer to know how to market to them to make PC Gaming more profitable as an industry.
Who are currently making profits from PC gaming?The logical answer to this would be the people developing the games. However, a large portion of their profit is eaten into by gamers who use pirated copies of the games. Games like the Gas Powered Games’ Demigod force you to play online, leaving very little scope for pirated copies to have an effect on their sales. Unfortunately games like these do not have any substantial fan base because whatever new technologies are used to ensure that piracy is kept in check, it’s just a matter of time until someone finds a way around it. The next logical answer would be PC/accessory manufacturers. This is largely correct. Most computers and laptops nowadays come in personal, professional and gaming models, each of them having superior configurations compared to the previous. “However, the graphics card is something whose applications lie majorly in high-speed on-the-edge gaming. Starting from display cards, to fully fledged graphics processor units, every gamer will agree that this is what eventually drives their entire gaming experience. Hence, graphic card manufacturers are the ones that depend most on games. No wonder one can find companies like Nvidia and ATI sponsoring gaming events.
Next on the list come the cyber cafés and gaming parlors. They provide the convenience of playing on LAN and a high speed internet connection to play games online. Also, they avoid the hassles of setting up of games over LAN.
So what is the average gamer like?According to Deepak Yadav, a software professional and an avid gamer, he spends 6-10 hours weekly on PC games. Akshit Kona, another software professional-gamer spends somewhere between 12-16 hours on PC Games. Around 90% of the games are pirated, the rest are purchased. They visit the Zapak gaming parlor every third week. Deepak changes his headphones, keyboard and mouse every 3 years. About the types of games they play, they both prefer FPS and real-time strategy (RTS) games over massively multiplayer online role playing games (MMORPG). To them, MMORPG games are a severe waste of time and effort, without any real ‘action’. These sentiments are reflected by most gamers. Their favorites include Age Of Empires-II (AOE-II, RTS), Warcraft III: The Frozen Throne (W3: TFT, RTS), Defense of the Ancients (DotA, RPG+RTS), Heroes of Newert (HoNE, RPG+RTS) which is a mod on W3: TFT, FIFA 2008 (Sports) and Counter Strike (FPS).
Analysis of the choice of games reveals that they prefer games which are free or have a worldwide support (and acceptance) of pirated versions of the same. The typical game can last between two minutes to one hour, much less than what your typical MMORPG World of Warcraft (WoW) lasts.
With time and cost being separated out as the two main factors, it is obvious to see why games like Demigod do not succeed. Demigod provides hardly any innovation over games like DotA, yet they charge a lot and make game play a hassle by forcing players to register online.
The average consumer of PC Games needs to have a supply of money and time, but they only spend on games to the extent that they feel that they’re getting back more than what they’re investing in terms of enjoyment and time well spent.
Who have the potential to make profits from PC gaming?Companies could possibly look at in-game branding. But the thought of renaming Guinsoo’s Scythe of Vyse to KFC’s Chicken Converter is something that will scratch the blackboard of every gamer’s heart. However, less conspicuous in-game branding could be possible for role playing games (RPG) and first-person shooters (FPS).
Malls/Supermarkets could open gaming parlors. These would attract a totally different market segment to the malls and there could be a lot of retailing for the gamers. Retailing and merchandising can be undertaken on a large scale in metro cities. T shirts, coffee cups etc. with logos, slogans and quotes for the gamers have a huge potential. An avid generally plays online the whole night and therefore need their regular dose of caffeine!
More global competitions could be held. Whether a team is n00b (newbie) or 1337(elite), the exposure of playing with such teams should be a good learning experience. Gaming is an urban activity, and gaining more exposure would only be beneficial for the fledgling sport.
All of these factors look good on paper, but there is something without which gaming will not survive. Acceptance. Parents look at gaming as an unhealthy habit, a dangerous distraction. Even the government doesn’t promote gaming. The only team playing DotA to represent India in the WCG (World Cyber Games) is Team eRRoR. A relevant piece of information: The national sport of Singapore is ‘cyber-gaming’.
Urban India would drive the growth in PC gaming for India. The right strategy would involve increasing the awareness and acceptance among the target group and their peers also first. The gamers’ need to express his imagination can very well be captured through retail and merchandise; an almost untapped market in India. It is high time that the industry wakes up to the psyche of the Indian gamer.
The Rise and Rise of Social GamingA games developer called Zynga engages in a direct confrontation with the Goliath social network Facebook over revenue sharing, and wins. It’s no longer the proverbial David; it beats several big players when it comes to numbers: it has over 230 million monthly active users, research analysts say it would be worth $5bn if it were publicly traded. From revenue estimates, they expect the group to hit $1bn in revenues by 2012. No wonder, from Apple to ESPN, everyone seems to be eager to jump onto the social gaming bandwagon.
But the industry is highly risk-prone: it has a dominant player (Facebook & its ally Zynga) which takes in more than 2/3 rd of the market, recoveries are not through the user in one-time, heavy subscription fees; it is an industry for only the patient players. Then there is the threat of established game developers consolidating through acquisitions, for e.g., EA acquiring Playfish.
The challenges lie beyond too: innovation in the games is a must, as is the speed and cost of development. This is where India with its vast pool of programming talent and reputation as the One-stop destination for game development can score high. The reputed firms dabbling in game development for the big names should not miss this bus.
But none of this bothers the social gamers; they play Farmville and Bejeweled even after filling up innumerable surveys to play yet another round and often spending hard cash too. This game has only just begun.
Gaming in the Indian Mainstream MediaThe common man’s exposure to gaming came when the very first mobile phone games were introduced. Although Snake cannot be compared to Counterstrike, it did start the gaming revolution. Dedicated gaming phones were not far away and soon there were hundreds of games available for them.
There have always been tech magazines running reviews on gaming consoles and new games, but with the advent of the 24-hr news channel, these reviews became much more accessible to the layman. Also came along channels catering to niche audiences like UTV Bindass which promoted gaming in a much favorable light.
The next big appearances for gaming were the advertisements on TV. The badly-panned commercial for Micromax Gamolution phones used cinestar Akshay Kumar to create a brand connect. Earlier, he had promoted Xbox 360 with cricketer Yuvraj Singh.
But the most recent and talked about gaming ads have been the ones for Godrej GoJiyo, which is a virtual world modeled on the immensely successful Second Life. It asked viewers to log on to the portal and make their avatars; possibly a new way of engagement being tried by Godrej.
What remains to be seen is whether gaming in India gains acceptance as a mainstream form of entertainment or remains a tool to engage the niche audiences alone.
