Online Gaming industry in India – is it really a goldmine ?

In a latest podcast for PodTech, Kamla Bhatt interviews Alok Kejriwal, Founder Games2Win. Alok talks about the online gaming industry in India, the strategy for Games2Win going forward (including competition from Zapak) and their foray in Massively Multiplayer Online Game (MMOG) segment.

In and earlier interview, Rajesh Sawhney, Head Reliance Entertainment, describes how online gaming industry in India is still in its nascent stage and the monetization is sub-par as compared to international standards. He also talks about the strategy for Zapak going forward – localization of games for the Indian market. For example, he mentions about a yet to be launched game revolving around Bipasha Basu.

So is online gaming the next big thing in India ? As per a recent IAMAI report, the online gaming industry industry is pegged at 21 crores. As per this report, it is expected to reach an estimated 200$ million by 2010. Heck, even big timers like EA are mulling over a local acquisition.

Hmm..Ok. So the online gaming industry in India is in for some exciting times ahead. Point taken – I’m sold.

But that leads me to wonder – is the Indian online gaming industry really worth 21 crores today ?

Note that the 21 crores figure includes only online gaming – defined as follows by IAMAI:

“Gaming that requires the use of a PC and internet connectivity, either played online or downloaded and played online later, capable of supporting either single or multiple players, where the player(s) is in India”

As per the IAMAI report, the revenue from the online gaming industry comes from three main sources:

1) Advertising – includes Advergames (deep advertiser integration within game), in game placements and on-site advertising. Based on the current state of the gaming industry, it is safe to assume that on-site advertising forms the bulk of this category of revenue

2) Subscriptions – monthly subscriptions for MMORPG’s like Sify’s A3 and monthly subscriptions for Games on Demand (IndiaGames)

3) Organized Cyber Cafe – revenue accruing to Reliance and Sify from online gaming activities at Web Worlds and Game Dromes

It is this 3rd revenue source that doesnt fit too well with me. You may think that my reasoning is flawed but none the less, I dont think that the revenue generated from the usage of GameDromes and Web Worlds should be added into the total market size.

The way I see it – GameDromes and Web Worlds are mere infrastructure enablers. The sole reason they’re thriving is because of the miserable broadband penetration. If broadband becomes common place, the usage of GameDromes and Web Worlds would trickle down – and so would the revenues. If one were to include in the revenues brought in from GameDromes and Web Worlds, why not include the revenues contributed by Sify and Reliance broadband as well ? Its highly probable that a fair number of Sify & Reliance broadband customers would be gamers too. Coincidentally, the organized cyber cafe is also the biggest revenue contributor (58%) to the entire pie.

Additionally, the report estimates that 11% of the revenue was from advertising. That’s about Rs 2 crores from on-site advertising (as stated earlier, I’m going to discount advergames and in-game placement).

2 crores ?

Are there any additional gaming portals that I missed out ? Zapak launched 2nd half last year, Games2Win mid 2005. IndiaGames revenue stream is based on subscription and so is Sify A3’s. So, the revenue for the only two known gaming portals is 2 crores ? Please enlighten me if there are other Indian gaming portals I’ve missed out. If I havent, I would be interested to know how IAMAI came up with this figure. To me, it seems to be a very high figure considering both of these portals are still relatively new.

What do you have to say ? I’d like to hear from you if you find my reasoning above incorrect.

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Comments

3 Responses to “Online Gaming industry in India – is it really a goldmine ?”

1. HatoriHanso says:

   April 25, 2007 at 2:11 am

   Hey,
   I’m with you on your skepticism about the numbers.. 21 crores.. Where? Whom?
   Couple of things though -
   Online Gaming companies in India – Level Up Games..
   They’ve been around for a while now and probably have the largest MMOG community around. Though I don’t know how successful they’ve been in monitizing the whole thing.

   Organized Cafes- The number would probably be much higher if un-organized cafes are counted.. but.. whatever..
   Yeh, about org. cafes.. and this is where I believe you’re quite wrong
   Online gaming isn’t necessarily like surfing or watching TV. It’s more like a Sport. People like playing or watching sports with other people.. and thats where cyber cafes’, especially Organized Chains really have the growth potential.
   You must look at it differently. Online Gaming is a different form of media altogether and comes with it’s own quirks (varying from culture to culture)
   Asian cultures have shown an affinity to the Cafe Model. Check out the scene in China, the Philippines, Malaysia etc.; gaming cafe’s are the locations of choice.
   Small homes and large families are common across all these markets..and if you’re in India, add high PC costs to the list too.
   For the same reasons, Cafe’s aren’t just enablers. They’re way more than just infrastructure, just like Coffee shops are to Coffee sale. Both channels, yet so much more.

   Anyway.. great article.
   -HH
2. pranav says:

   April 25, 2007 at 11:17 am

   Hatori,

   I dont think the cafe model has anything to do with Indian culture (I’ll stick to indian market since I am not well informed about China and the filipino market).

   I still believe the only reason the cafes thrive is because of
   (1) PCs are still expensive
   (2) Broadband woes

   Give me one good reason why people would use cafes if the above two obstacles are overcome.

   But this issue aside, do you think its fair game to include the revenues from organized cafes into the online gaming market size ?

   Btw – To this date my laptop wallpaper is set to HatoriHanzo’s sword