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REPORT on GAMING in INDIA December 2009

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REPORT on GAMING in INDIA December 2009 REPORT ON GAMING IN INDIA December 2009 Research conducted by: Research conducted for: Executive Summary We have witnessed a rise in digital forms of gaming in India. This rise is mainly attributed to the growth in digital medium in the country. The ownership and usage of digital devices and applications have been on the rise. For instance, PC-ownership in houselholds has increased to 7.8 Mn, active Internet using population to 36 Mn (Source: I Cube 2008) and mobile subscribers to more than 471 Mn (Source: TRAI Sep. 2009). An involved user of these digital formats is young; belonging to the 18-25 years of age. As a result, services offered on these formats are generally focused towards youth. With the assumption of continued growth in such usage and dissemination of digitized options; digital gaming industry provides a promising future for India. Presently, the gaming genres are primarily derived from various sporting themes – such as cricket, racing, shooting and the like. These genres are immediate markets as Indians seem fanatics of such kinds of sports. Lately, however, there has been a shift in attitude of gamers towards enjoying role-playing games and other online games that provide an option of socialising. There is also a predilection towards platforms that offer “on-the-move” gaming due to which some forms of console and mobile gaming are popular. Based on our research, the ecosystem of the gaming domain, in India, has grown to include certain divergent stakeholders which did not exist in the recent past. Further, there have also been concrete changes in the existing structure. India, with its recognised abilities, is poised to be an important centre for offshore gaming development. Another avenue that could present a fundamental shift is through advertising. Using the model of In-game placement of online advertisements, game developers or publishers can monetize their offerings. Distribution has always been a challenge for digital game providers in India for offline gaming – the bone of contention being the piracy market. To dissuade piracy practices, better distribution and pricing models need to be developed. For online gaming, newer distribution models are emerging: through portals, dedicated gaming sites, or gaming centers. Similar to past trends, there are barriers that continue to present obstacles towards seamless growth in the industry; which include any number of infrastructural impediments, industry limitations as well as cultural issues with consumers. Nonetheless, there are certain factors that could facilitate the growth of the industry. These include monetizing online and offline games through advertisements, innovating gaming content, marketing and distribution as well as differentiating overall appeal so that gamers are hooked on to it. Given the high potential of the market in terms of demand, Indian Gaming Industry is still at its nascent stage. Innovations in various aspects of the ecosystem are required to ensure that it is self-sustaining. The weighing scale remains tilted towards demand side with a growing gaming segment staying underserved. -2- Research Methodology The research team at eTechnology Group with IMRB International adopted a combination of research approaches for this report. Given below is the research methodology used for the report: Quantitative Research Relevant datapoints were extracted from 'I-Cube 2008' reports , an annual syndication of eTechnology Group, IMRB International The syndicated research is based upon primary survey covering 20,000 households, 90,000 individuals, 1000 SMEs and 500 Cyber Cafes Secondary Research Secondary research was done using information from various published and private sources and other research bodies to triangulate our findings -3- Table of Contents 1.0 Introduction to Gaming in India ............................................................. 5 2.0 Internet: Driving the gaming market in India .................................. 8 2.1 Internet and Broadband penetration in India ........................................................ 8 2.2 Internet Users in India .......................................................................................... 9 3.0 Understanding the Indian Gamers ...................................................... 12 3.1 A typical Indian Gamer ...................................................................................... 12 3.2 Gaming Genres played by Indian Gamers ......................................................... 13 3.3 Likes and Dislikes of Gamers ............................................................................ 14 4.0 Gaming Ecosystem and Business Models ...................................... 15 4.1 Defining the Gaming Ecosystem........................................................................ 15 4.2 Distribution Model – reaching the gamers ......................................................... 16 4.3 Gaming Revenue Models ................................................................................... 18 4.4 Type of Gaming Platforms ................................................................................. 19 4.5 Emerging Gaming Formats ................................................................................ 22 5.0 Barriers and Drivers for Gaming in India ......................................... 26 5.1 Barriers for Gaming in India .............................................................................. 26 5.2 Main Drivers of Online Gaming in India ........................................................... 28 6.0 Market Size ...................................................................................................... 30 -4- 1.0 Introduction to Gaming in India Indians are obsessed with entertainment and various media vehicles delivering entertainment are seeing enormous growth in the country. There have been a spate of Television channels like Real, NDTV Imagine, Colours, etc. which are broadcasting content to Indian audience. Several new newspapers and supplements have emerged. Spicy magazines with gloss covers are hounding for attention of the Indian consumers. Not to be outdone, even the Indian Internet industry has embraced entertainment as one of the key offerings. A few years ago, Internet in India was dominated with functional content catering to news updates, reviews, classifieds, etc. However, re-packaging of the content to deliver more entertainment value is clearly visible now. The blogs have employed celebrities to give regular updates from their lives. Movie reviews and discussion related to movies appear much earlier than the actual movie hitting the silver screen. Several Internet companies have been experimenting with gaming in the past, but with little success. Way back during start of the decade, players like Contests2Win, Hungama, etc. began with an excellent business model – of merging brand experience with gaming. And why not! Gaming offers one of the best ways to reach audiences of all ages. With gaming, technological sophistication is not really a factor because games come in a host of forms, ranging from simple casual card and arcade games to sophisticated flight simulations. Further, Gaming requires a player to pay attention, minimizing multitasking and hence the clutter, which has been bane of the traditional media (TV and Print) for quite long. However, somewhere along the way, the companies were not able to capitalize the audience. Or should we say, were going slow on the innovation. Or probably both, and in effect getting caught in the viscous circle of innovation and monetization. As a gaming publisher, if I am not able to monetize, I won‟t have necessary resources and investments to innovate. And, if there is no innovation, monetization would be harder to come by. A couple of years back the circle was shattered by domestic and international companies. These companies identified the right opportunity and put huge investment behind creating content and delivering it to the right audience. These gaming companies did not limit themselves to one or two genres of games and having 5-6 games in each genre. They actually made themselves present across multiple genres, with a plethora of games in each genre – offering an unprecedented choice to gamers. Zapak was one such company which burst into -5- the scene with huge number of games developed in-house and sourced from other publishers. And the Internet community in India responded very well. The percentage of gamers amongst the Active Internet users increased from 25.3% to 41.2% at a massive growth rate of 89%. This was further projected in ranking of applications accessed online by users and Gaming move to a Rank 5 from a Rank 7 last year (see table below). All Applications accessed 2008 2007 Base: Active Internet users in 30 cities 17.94 Mn 15.4 Mn Email 91% 93% General Information Search 76% 58% Educational Information Search 49% 47% Text Chat/ IM 46% 58% Online Gaming 41% 25% Online Jobs 37% 31% Online music/ videos 32% 29% Financial Information Search 21% 19% Source: I-cube 2007 and 2008 In the social scene as well, a lot of Internet users have started to go beyond the regulars like Orkut, Facebook, iBiBo, BigAdda, etc. Virtual worlds have been in the news quite a bit in the last year. The Virtual Worlds also known as Metaverses or Massively Multiplayer Universes are attracting a lot of attention. The most popular ones are the World of Warcraft and Second Life accounting for more than 20 million worldwide “residents”. The numbers from India have not been
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