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There’s money in Indian gaming, provided there’s a cultural and infrastructural shift

Updated : November 29, 2019 08:32 PM IST

A significant portion of start-up funding is expected to go towards high-traffic genres like E-Sports and Skill Games For Real Money.

The larger problem is the habit of the Indian consumer to not pay for gaming, says Nazara Technologies CEO.

The mobile gaming industry in India could be valued at a whopping $405 million by 2022, according to a report by research firm Statista. On the face of it, this is not surprising. The rapid spread of smartphone usage and the exponential rise in funding being pumped into gaming start-ups have contributed to this estimate, which accounts for nearly half of the overall gaming industry’s present valuation of $862 million, according to the study. A large chunk of these millions was made in the last couple of years. There is every indication that there’s more in store for the market, especially given the rising popularity of online gaming.

A large part of this newfound popularity can be attributed to the rapid rise in smartphone penetration. This has, in turn, sparked major investment in game development — with companies like Nazara pledging a total of $70 million in investment, across gaming start-ups in Africa, Asia and the Middle East, in the last couple of years.

"In 2020, anywhere from 100 to 200 million dollars can go into several gaming companies, which are all mature and ready,” said Rajesh Rao, Chairman, Indian Game Developer Conference. “I expect that number to keep growing."

E-sports and skill games: Hot favourites

According to a study conducted by KPMG and the Indian Federation of Sports Gaming, the Indian online gaming industry is registering a compounded annual growth rate of 22 percent. This means that come 2023, this industry could be sitting on a market worth Rs 11,900 crore. It’s little wonder then that the number of game development companies in India rose from just 25 in 2010 to around 250 last year, according to the study.

A significant portion of start-up funding is expected to go towards high-traffic genres like E-Sports and Skill Games For Real Money. Gaming start-up Mobile Premier League, for instance, says engagement on its skilled-games platform has allowed each of its game developers to net Rs 1 crore in revenue every year. "We have clocked close to 30 million registered users in our platform. We do close to 5 billion games till now in the last year. So, there is a lot of engagement," said Shubh Malhotra, Co-Founder of Mobile Premier League (MPL).

Can bandwidth and wallets match up?

While these numbers sound surreal, there are challenges. There is one bottleneck that stands in the way of Indian online gaming going one level up: Bandwidth. A little over a week ago, Google launched its much-awaited cloud-streaming gaming platform, Google Stadia, in 14 countries. India was not on the list, and with good reason. A platform that streams games at 14k resolution at 60 frames per second will require close to 20GB bandwidth per hour. Most mobile phone operators in India hand out 1GB per day.

CEOs of gaming platforms are in agreement "There are infrastructure hurdles — we need to increase bandwidths, we need to decrease latency,” said Tim Fields, CEO, Kabam.

The other problem is the Indian habit of freeloading on freemium gaming. “The larger problem is the habit of the Indian consumer to (not) pay for gaming,” said Manish Agarwal, CEO, Nazara Technologies, “Correcting that will take more time — I think we are nine or ten years behind China."

To make matters worse, gaming companies are well aware of the consumption slowdown plaguing the Indian economy, which could quite naturally push expenditure on gaming down the list of priorities for the average, wannabe gamer. “India’s per-capita income is still one-third of China’s or lesser — on an average,” points out Manish, “Gaming is a discretionary spend, which needs someone to set aside a portion of their wallet. This requires some semblance of financial security. Coupled with the infrastructural hurdles in India, this could mean that our gaming market could take about seven more years to be on par with that of China’s.”

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