Four Square Gaming Date:   Thursday , December 04, 2008 By the time you read this, chances are that you would have already seen trailers of the new Aamir Khan starer Ghajini. The film is set to hit theatres on December 25, and so is its gaming counterpart. A PC game based on the film Ghajini, going by the same name, will be released along with the film. The game, incidentally, is the first one that my company FXLabs has created exclusively for the Indian market. Considering the star power in the film, and also its extensive promotion, we expect the Ghajini game to do well. Moreover, the 10-15 million PCs that are equipped to run the game across the country constitutes our potential market. I have often faced a question as to why we chose to base our first game for the Indian market on a film, rather than on cricket, or some other theme. It is simply because marketing a game based on a Bollywood blockbuster would be much easier. The game gets promoted along with the film, and does not require the company creating the game to allocate huge amounts of money to market it. Also, as a game based on a film is voiced by the stars of the film, as in the case of Ghajini that is voiced by Aamir and others, it helps increase the appeal. However, if you look at the top PC games the world over, you will realise they are not related to any film. Games based on Spiderman and Godfather are, of course, exceptions. But, for a small company addressing a small market like India; it makes sense to piggyback the game on a Bollywood blockbuster. Categories in Gaming Gaming constitutes part of the larger animation and gaming industry. But, gaming itself can be divided into four categories, rather sub-industries: mobile games, online gaming, PC games, and games for consoles. Let me talk about each of them briefly. Mobile Games: The mobile boom in India spawned many mobile gaming companies as well. All of us thought that with the steep increase in mobile penetration, mobile gaming would take off in a big way. Players invested a lot of money trying to create games for the still developing market. Now, five years down the line, most of these players have shut shop and gone elsewhere. The industry has not moved ahead the way it was anticipated to. Apart from the fact that advanced handsets, required for playing mobile games, did not quite attain a mass market here, the distribution models of mobile games has sounded the death knell for the erstwhile companies. In India, mobile games are sold by the service providers, like Airtel, Vodafone, and Tata Indicom. The service providers keep 70 percent of the revenue and give only 30 percent to the creators of the game. Many companies shut shop because they could not make money following this model. Only a few companies like Indiagames and Jump Games were exceptions to this. They continue to thrive today, having adapted to the market. Perhaps a new distribution model will give a fillip to this sub-industry. Online Games: Korea and China have been the pioneers, as far as online games are concerned. Developers there figured out that since piracy was a rampant issue, they could only earn money if they got players online to play the game. Online gaming, basically, is divided into two categories; casual gaming and MMOG, or multi-player gaming. In the casual gaming space in India, firms like Zapak and Games2win have taken the lead. These players basically create or license small flash games and let users play them free of cost on their website, and make money from ads in the games. On the multi-player front, Sify was the first company to bring the concept to India. But I reckon it was too early. The games could only be played in designated gaming cafés, and the absence of sufficient bandwidth that could let users play the games at any cyber café proved an impediment. Today, there are a few players who are targeting this space, like Kreeda, which has a dance game called Dance Mela, and it has customised it by using popular Bollywood songs. In the years to come, online gaming could be a segment to watch out for. First because there’s the precedent of immense success of this format in neighbouring China. Second, as the infrastructure improves and Internet speeds increase, the games will be playable from more and more locations. Also, the fact that companies like Zapak are moving into the multi-player arena and are setting up gaming cafés makes the space even more interesting. Console gaming: This represents a rather small market in the country. Altogether, there are around one million gaming consoles in India, and given the high cost of gaming consoles, their penetration hasn’t increased much. Sony’s PS2 has around 500,000 units in India, making them the largest console player in India. The first company to build a console game entirely out of India is Aurona Technologies. The company is now building a game based on Hanuman for Sony, which wants to push its PS2 console with the help of local games and identifiable chracters. All console games in the market today are just imported from the U.S. and elsewhere. PC Gaming: By and large, this is the market with the most potential in gaming in India. It is sizeable because the PC penetration (PCs equipped with graphics cards and sound cards) in the country is presently 10-15 million, as I said earlier. It is also volatile, because the PC gaming market is subject to a lot of piracy. Fighting piracy and selling original versions of a game is a big issue for developers. That is why we have decided on pricing the Ghajini game below the Rs 300 mark. That way, at least, we are looking at making the cost of procuring the game less of a barrier. We don’t expect to make profits from selling the game. If we could sell one lakh units, it would help us break even, and that’s a big thing. In a broader sense, we are looking to push the practice of playing games on a PC through this. Hopefully, if the Ghajini game or some other game succeeds, there will be plenty of players that will follow with their games. And the users, on finding situations and characters they can relate to and are familiar with in the games, would perhaps start playing more. Even then, piracy will remain an issue. And developers in this segment must look at making money from in-game placements. Power of Partnering In the U.S., and most other countries where gaming is a big draw, the development of the four segments mentioned above was sequential. First, it was PC games that appeared, then console, then mobile games, and finally online games. So, the same developer could branch out to each segment, as and when it appeared on the horizon. The Indian market, on the other hand, is quite different. We have all the four segments taking off simultaneously. And the industry does not have a company that could be called a veteran and could address all the segments at the same time. Hence, the need for partnerships. For instance, at FXLabs, we are doing the PC version of Ghajini, whereas Indiagames is doing a mobile version of the game. It’s not that we as a company cannot do it, but that the market is very competitive and it doesn’t make sense to devote our resources in an area we do not possess expertise in, especially when there are other good companies in such areas. The Indian gaming market is, by any standard, relatively small. There is no point, therefore, in fighting over peanuts. All players from all the four segments must work together to increase the volume of the market. Target Market Given the nascent stage of the gaming market in India, developers often face a dilemma as to whether they should develop games for the domestic sphere or for the larger global arena. The answer to this differs for each of the four segments I mentioned earlier. For the mobile game developers for instance, it makes sense to focus on the international market at present. Experience tells us that many players had started off with a focus on the domestic market, but could not sustain themselves. Some of them were creative and enterprising enough to partner with over a dozen telecom service providers in different countries. Indiagames and Jump Games, for instance, took this route and were able to sell their games around the world. Domestically, I feel, developers will be able to make money from mobile gaming at some point in the near future. Companies like Telebrahma are already breaking the conventional distribution model by providing bluetooth access in metros. This means that games could be distributed using Telebrahma’s network rather than using a telecom operator, thereby getting a bigger portion of the game revenue. That said, telecom operators will continue to be a dominant distribution model for the forseeable future. In the online gaming arena, and specifically in the casual players segment, the last two months have witnessed some companies trying to woo global audiences, rather than focussig on India alone. Some of them, like 7 Seas Technologies, build games and sell them in other countries, and I think that’s the way to go at present. Games2win and Zapak too are focusing more on the global arena now. Things will change here for the better once the connectivity issues are worked out. In the MMOG segment however, there is no expertise available in India. Companies here just license the games developed by overseas companies and distribute them. But with the government initiatives towards providing broadband connectivity, things might change and MMOG could pick up. In the console gaming arena too, there’s hardly any Indian developer. Apart from the Hanuman game being developed by Aurona, with the backing of Sony, no other player is building games for the domestic or international market. Console games are meant for big-budget Western studios; companies here must focus on other segments. Interestingly, the arrival of the cheaper Nintendo console some time in the near future could change this situation. The console gaming market might then open up. But even in that case, the games that would be developed would be more of the family entertainer kind, rather than hardcore ones, since the Nintendo console supports the former. The PC gaming market is quite different. The capability, budget, market, and everything is present here. We have to try out the option of making games both for the Indian and international markets. For instance, FXLabs is now introducing Ghajini for the domestic market, and we already have a game called Inferno for the global market. It is priced at $30 and we’ll never be able to sell a game for that price here. The maximum price for India could be Rs 600-700. Having said all this, let me also add that there exists a huge opportunity to work on outsourced games. Outsourcing in the 3D animation space has already taken off and there are 20-30 companies doing good work there. There are some companies doing small bits of outsourced work — RZ2Games, Gameshastra, and Dhruva being a few — but they are small, less than 100 people companies. There exists an opportunity to replicate the 3D model and build 1000-1200 people outsourcing companies in the gaming sphere in the next 3-5 years. Companies could hedge the risk of the domestic market by building games for other bigger overseas players. Talent and IP There are two kinds of talent required for the gaming industry: artwork and programming. Thanks to the success of the 3D animation space, there is enough number of capable artists who are equipped to prepare artworks for the gaming industry. According to some estimates, there are 200,000 arts students coming out from colleges across the country every year, who could be employed by the industry after a couple of months of training. And the gaming industry needs only 30 to 40,000 people! The talent crunch lies in the programming side. All the smart guys want to work for a software company, because, well, they think working for a game company is not a real career. However, Nasscom is taking many initiatives to dispel this notion, and with standardized course content, things will hopefully look better in the near future. On the IP side, I feel, the gaming industry is 3-4 years behind the animation industry. And considering that the latter, after all its high-end work experience, is registering IPs only now, it’ll be another 3-5 years before the same happens in gaming. There are 30-35 feature films that are taking shape presently, so we could soon have an India produced IP that makes it to the global stage. Lacking in Leadership The lack of an industry forum earlier was hampering the growth of the gaming industry. Good things have started happening now, and Nasscom, as well as companies like Intel, are offering a helping hand. But there is no clear leader which can inspire others. Unlike the software industry, where Wipro and Infosys have provided the leadership, in the gaming arena, there is just no one. This is actually a problem I have faced personally with my 5-year-old son, there are no games for kids. All games are targeted at teens, and at the least at ten year old kids. That’s why I had no option but to allow my son to play the Kung Fu panda game meant for 10 year olds. Since he is growing up with games, he will be a better player than I am. After all, I played my first computer game when I was doing my graduation. The author is CEO, FXLabs