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Indian Gaming Startups Are They Really in the Game?
Eureka Bharali
Wednesday, March 2, 2011
The Ferrari whooshed across the Lamborghini and there comes the hit point – it’s the Jackpot - Oh yes, it’s the undying NFS, the car racing game. For some the virtual adventure is the perfect idea of gaining nirvana, and even a 10 year old’s combat skills can reign supreme in the game world. Today, gamers constitute 41.2 percent of the total Active Internet users in India, a whopping 89 percent increase from the 2007, as per a report by IAMAI. The growth has been lucrative enough to build up the confidence of the newbies, who have just entered the quasi-penetrated market.

Younger people are growing up with the Internet and online games. As they enter the workforce and continue to have greater purchasing power, the market for gaming in India will expand dramatically. “Virtual gaming is definitely big now after 2010. It is about $1 billion market in U.S. and about $8 billion worldwide. It’s huge in Asia Pacific mainly in China, Japan, S. Korea, while India is yet to gain the same speed,” says Sumit Gupta, CEO of BitRhymes. The company’s recent title called Salon Street grew to one million users in just two weeks. The Indian masters Zapak or IndiaGames are playing the game well in India. A lot of Internet users began to go beyond the regulars like Orkut, Facebook, iBiBo and BigAdda. The Virtual Worlds also known as Metaverses or Massively Multiplayer Universes have attracted a lot of attention. The most popular ones - the World of Warcraft and Second Life accounted for more than 20 million worldwide “residents”. The numbers from India, however, have not been that high, but all the same, Internet users are sitting up and noticing these. The country’s share is less than 10 percent in global animation and gaming market, which highlights immense potential of growth.

The Staggering Growth
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 and Flash based virtual games. Further, Gaming requires a player to pay attention, minimizing multitasking and hence the clutter, which has been bane of the traditional media for quite long. However, somewhere along the way, the companies were not able to capitalize. So, what holds Indian gamers back? There is a sheer lack of awareness about gaming and its positive aspects such as improving reflexes, mental agility and hand-eye coordination. And all, but parents still think that gaming is just a “waste of time”. Adding on to it is the low penetration of computer and broadband.

Currently, with the advent and mass adoption of Facebook in India, we see a huge surge in Indian users playing social games. But it has yet to fully mature into paying user base. “Low credit card and online banking usage makes it difficult for online companies to easily collect payments from users,” says Abhijeet Vijayakar, Founder and CEO, Nunook Interactive. The company’s product BrainNook has been designed and developed in India, and it is actively used by kids, parents and teachers in over 95 countries around the world. Over 50 schools internationally are using BrainNook to enhance their in-class teaching.

VCs’ No-buying Attitude
The 12 million subscribers of Blizzard’s World of Warcraft - once the giant of gaming - now seems small compared to the 80 million Farmville players. Infact, as per recent rumors Farmville’s maker, Zynga is raising cash with a valuation of $10 billion - a valuation that appears to bode well for investors and for startups. However, in reality, the case is not quite true for the Indian players. The capital holders in India or the VCs do not seem to have a fetish for the gaming firms. As the gaming industry Consultant Nicholas Lovell says in his blog, “Game developers are good at creating and even at pitching projects, but that VCs don’t necessarily care what makes a good project - in other words, what makes a good game. Investors care about businesses while developers show them projects.”

Another issue that the startups face while attracting the funds is the right talent. Businesses can be formed with a talented bunch. Especially games require constant innovation and iterations, however, there is a big dearth of game designers. It is not an enviable post as in game studios around the world of game designers and developers need to be able to dream big and be creative to tap world market. Hence, considering this dearth, the business execution model becomes doubtful and the domestic opportunity too remains bleak. In a typical ecosystem, local opportunities groom local developers who then take on global markets like DeNA of Japan, tencent from China and EA / Zynga in U.S. However in India, the local talent is forced to develop for international markets to start with.

The Next Phase
“There are several other channels for game distribution - Facebook games, iPhone games, as well as PC games. Many of these channels are relatively new and can be used by small game companies without needing a lot of capital,” says Vijayakar. More awareness about gaming in India within few years can be expected, as India is generating a good amount of interest amongst the global players. The Playstation 2, which is now available in India at a relatively affordable price point of Rs. 5000, is the best example of it. Social game too, is playing its part. There are over 50 million Indian Internet users on Facebook, where they are exposed to games like Farmville, increasing their awareness about gaming.

Along with the awareness, the recent 3G take off in India and smartphones like iPhones and Android based phones on the verge of being more affordable, the market for mobile games in India will also expand rapidly. It is very likely that the share of gaming in the VAS pie would increase at higher rate in the next few years considering the types of interactive and touch mobile devices that are available. The share of gaming in mobile would get a further boost by the launch of 3D and MMOG mobile games. The final step, quite obvious, would have to come from the government side. The industry needs government support through tax rebates and grants. Weak Intellectual property regulation discourages animation and gaming companies to produce their own works though Indian laws.

It’s not so important who starts the game but who finishes it. In India’s case, it was the global players who started it but the Indian newbies are gearing up to finish the same.
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