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.

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 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

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 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

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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

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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 that high, but all the same, Internet users are sitting up and noticing these.
Recently, Travian, a browser-based game that enables users to play games with
others has caught Indian gamers‟ interest. With 3 servers (3rd server launched in
29th June 2009), it has a user registered base of nearly 60,000.

The above was coupled with high profile launches of Microsoft Xbox 360 and
Sony‟s PS3 in India. These two brought in a new dimension to gaming altogether.
The jittery gameplay and graphics gave way to movie-like story line with super
cool graphics and animations. The real-life simulation games, looked less like
simulation and more real life, making the game play more engrossing and
captivating. However, the high-priced consoles have still not reached the Indian
masses. Couple of years back Sony had lowered its PS2 prices which have seen
revival since then – maybe a learning that a console needs to be lower than $100
in India.

Encouraged with the above, EA, Zapak and several other game publishers
entered the Indian shores allowing for easier availability of their software. While
the PC gaming industry has been plagued with piracy, there has been a

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tremendous growth nevertheless with correct pricing, better support and easily
availability of games in various branded and non branded outlets.

The other thing going right for the Indian gaming industry is the high growth of
mobile subscriptions in India. India already has more than 300 million mobile
subscribers and still going strong. Most of the mobile users in India are either
teens or in their early twenties, making mobiles that they own a big platform for
proliferating gaming related content.

In the last few years, it has been observed that two biggest entertainment
formats in India – Cricket and Cinema are keen to integrate gaming in their
offering. There is unconfirmed news that IPL would feature in EA Sports‟
Cricket ‟09 version expected to release in late 2009. The movies Hanuman and
Ghajini had a presence in the gaming arena. In fact, with the Ghajini game, Eros
Entertainment, a popular film distribution and marketing house has made a foray
in the gaming industry as well. The gaming industry has experimented with
Bollywood games in the past as well including games based on movies Dhoom,
Shaheed Bhagat Singh and Agni. However, the results of these initiatives have
not really been there.

All the same, the times are great for the Indian gaming industry. It has a mass of
users coming the online and mobile way. The console and offline PC games are
bringing in the hardcore gamers. And then with the new emerging formats
Massively Multiplayer Online Games (MMOG), Social gaming (gaming on social
platforms like Facebook and Orkut) and Bollywood games the gaming industry is
likely to see another good year ahead. Browser-based MMOGs such as Wanted
by Zapak.com are recent introductions in the Indian online gaming market.

In this report we capture details of the current scenario of the Internet and
Gaming industry in India. Further we analyse the entire gaming ecosystem such
as the stakeholders in this industry, types of models being used, indepth analysis
of gaming platforms, types of games being played, attitudes and behaviour of
gamers, etc. Additionally we point out the drivers and issues facing the industry
at the moment and ways to move forward successfully. We try to analyse all the
factors playing a role in this industry, how they shape the future and what makes
India such a strong bet for Gaming glory in the future.

Game on!!

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2.0 Internet: Driving the gaming market in India

Gaming in India got an impetus from Internet. With Internet, international content
was available easily to Indian users. This exposed them to various gaming
formats and the new titles and versions available in the market. This has
definitely increased appetite of gamers in the country.

Thus, to understand the adoption and potential of online gaming it is essential to

assess the overall environment for Internet usage and the penetration of PC
hardware in the country. These variables have a direct impact on gaming in India.
Some of the key variables that need to be understood are the total number of
PCs, Internet connections, size of the Internet user base, affluence levels of
users, enabling infrastructure and trends in adoption of other applications.

2.1 Internet and Broadband penetration in India

To begin with, I-Cube 2008, a syndicated research conducted by IMRB

International estimated the number of PC Owning Households in the country at
7.8 Million (growth of 36% over last year). Out of these households 62% of them
(4.85 Million) have subscribed to Internet. Out of these 76% are broadband
subscribers while 24% are still on the dialup.
Fig: Break up of Broadband and Dial up owning homes in India

Se…
57
Ma… 50

Se… 46
Ma… 42
20… 32
20… 16
20… 12
20… 9
20… 5

Source: I-cube 2008

While the above scenario looks positive especially from the point of view of
downloading heavy applications like gaming, the picture may not be completely
rosy. TRAI defines broadband in India as 256 kbps (much lower than the global
definition of 2 mbps). Further, the Indian ISPs are offering high speed Internet
even at 64 kbps and 128 kbps under the garb of broadband. More so, most of the
Internet connections are actually on a shared platform of DSL and Cable. Hence,
even 256 kbps is the highest browsing speed that is promised. In reality a user
may be getting much lesser, given that the contention ratio of various ISPs
exceeds 70 in most of the cafes.

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 Another worrying issue from the gaming point of view is that the limited data
download packs are very popular in India. Incidentally, they also happen to be
the cheapest. The unlimited data download tariffs are much higher (upwards of
Rs. 1500 p.m. for a 256 kbps connection). The gaming users are thus not
allowed to freely experience true online gaming and in the online formats it is the
simple flash games that are gaining more popularity. Some publishers like
Indiagames are defying this by entering into direct agreements with various ISPs.
However, there is a dire need for the ISPs to look into this issue.

2.2 Internet Users in India

I-Cube 2008 estimates put in that there are around 85 million individuals who
know how to use PC. Out of these 85 million individual around 57 million
individuals have ever accessed Internet (recall having accessed Internet in the
past). From these, there are around 42 million Active internet users as on
September 2008. An Active Internet User is defined as someone who has
Internet at least once in last one month and hence are regular users of Internet.

Computer Literates Claimed Internet Users

Sep-08 Sep-08
85 57
Mar-08 Mar-08 50
72
Sep-07 65 Sep-07 46

Mar-07 62 Mar-07 42

2006 59 2006 32

2004 53 2004 16

2003 42 2003 12

2001 31 2001 9

2000 16 2000 5

Active Internet Users

Sep-08 42

Mar-08 36

Sep-07 32

Mar-07 29

2006 21

2004 11

2003 8

2001 4

2000 2

Source: I-cube 2008

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Currently the penetration of Internet in India is still around 5% of the country‟s
population. However, if we consider the 300 million urban population of India,
then the Internet users are a significant 20% of the population. Thus, the mass is
there on the Internet. Further, the school going kids, College going and Young
Men form 70% of the Internet user population in India.

Further point of interest is that Internet in India has got rather addictive with users
accessing it at least 2-3 times a week. Even the number of hours accessed per
week has increased from less than 7 hours per week in 2007 to almost 9.3 hours
a week in 2008.

Hence the internet user audience today is young, accesses Internet more often
and is spending more time on the Internet ever. This has naturally helped witness
growth in many applications being accessed online, gaming being one of the
frontrunners of this phenomena. The breakup of applications accessed in 2008
by demographics is depicted below:

MAIN APPLICATIONS ACCESSED ONLINE – BY DEMOGRAPHICS

17.9 Mn 2.2 Mn 4.8 Mn 5.4 Mn 2.5 Mn 2.1 Mn 1 Mn
1% Base:
7% 6% 9% 8% 9% 5%
6% 30 cities in 2008
9% 20% 10% 5% 5% 2%
E-Commerce
18% 20% 18%
27%
24% 17.9 Mn 31% 4% Entertainment
7% 5%
7% 39% 5%
9%
Information
8% 65%
61% 62% 56%
53% Chat
44%
31%
E-mail
Working

working
School

students

Young

Older
All 30
cities

Women
Women
going

Men
College

Men
kids

going

Non

Source: I-cube 2008

The above chart depicts the primary application that drives various demographics
to connect to the Internet. While the School Going Kids and College Going
Students continue using Internet for information related content, the proportion of
entertainment as an application is highest among school going kids (20%) and
college going students (10%).

The need of the hour is to capitalize on the above population and derive
applications which are well suited to them. Also given the fact that they are more
into communication and information related applications, some applications need

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to be developed that merge entertainment in the communication or information
platforms.

A case in point here is Facebook which has very effectively integrated several
applications including gaming applications in its stream. Popular ones here
include Mafia Wars, Street racing, Dragon Wars, etc. Even the traditional games
like scrabble, chess, etc. can be found as Facebook applications. Users can use
these applications to play with their friends or connect with other users on
Facebook.

Similarly, QQ a well known communication platform from the Chinese giant

Tencent has quite effectively integrated gaming applications with its messenger
platform. QQGame is a gaming platform that has a wide assortment of games,
including basic games such as chess and poker--which are free--to more
intensive games such as massive multiplayer online role playing games, which
cost money. In game advertising in QQ has contributed significantly to Tencent‟s
revenues. QQ is not available outside China as of now, but still has 250 million
user base. Interestingly, QQ‟s revenues are at least three times that of Baidu, the
largest search engine in China.

With such patterns, it is quite evident that online services such as portals and
social networking websites could be effective avenues in attracting persistent
Internet users. These users are likely to stay on and indulge in engaging
applications such as online gaming. Portals and SNS can actually have a larger
and more attentive audience if they are able to integrate gaming formats that
their audiences are likely to relate with and like. Online gaming is an application
which when integrated well with the offerings can increase the unique visitors
and time spent manifold. However, it is important to understand the gamers first.

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3.0 Understanding the Indian Gamers

3.1 A typical Indian Gamer

A typical India gamer is a Male from the Top 8 metros, has an average age of 26
years and belongs to the affluent SEC A.

Demographics
Age ~ 26 Years
SEC A Houshold
College-Going Student

Typical
Indian
Gamer

Gaming Behaviour
Plays games mainly from home Gaming Orientation
Plays for 1 hour in a session Spends less than Rs. 150 per
Plays 3 times a week month
Playing since last 18 months

Source: I-Cube 2008

The average gamer has been playing on an average since 18 months now. He
plays mainly from home rather than from a cyber café. He pays games 3 times a
week and his usual gaming sessions last an hour in length. He also spends less
than Rs 150 per month on gaming.

Roughly 80% of gamers still come from the Top 8 metros. The top 4 metros
especially account for 59% of these gamers which indicates that availability of
games and reach to target audience is still limited. Gamers from SEC A
household have gone down to 41% from 44% last year at the hands of a
corresponding increase in SEC C households starting gaming.

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 There has been a significant shift in demographics of gamers as shown below.
Proportion of college going students gaming on any platform has increased from
20% to 32%. And now account for almost 50% of the gaming users.
Base- 3.9 Mn (Online Gamers in 30 cities in Base- 3.9 Mn (Online Gamers in 30 cities in
2007) 2008)

School Going kids 4%

5% 8%
9%
College going 18%
10% 26% students
11%
Young men

30% 20% Older men 27% 32%

Working women

Non-working women

Source: I-cube2007 and 2008

Another interesting change has been the decreasing influence of cyber café‟s as
a prime source for gaming. Last year the percentage gamer using unbranded
cyber cafes was as high as 53% while that number has dropped drastically to
35%. To compensate for this decrease the total number of gamers playing from
home has increased from 34% to 47%.

3.2 Gaming Genres played by Indian Gamers

Racing, Sports games and Shooting games make up the Top 3 Genres for
Gaming in India on both Online and Console platforms. Games such as road
rash and NFS are the most popular racing games. All Sports games involving
Cricket are extremely popular in India owing to which sports are second in the list.
The main difference in genres played online and console is the preference for
flash and arcade games online whereas the average gamer prefers fighting
games on the console.

Source: I-Cube 2008

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3.3 Likes and Dislikes of Gamers

The various attitudes of all types of gamers which have been captured through I-
Cube 2008 are shown below.
Base: 9.9 Mn Gamers across 15 cities

95% 5% Enjoy role playing games

89% 12% Online gaming helps explore a game thoroughly
80% 20% Like online games due to the socialising aspect
79% 21% Enjoy playing in teams

73% 27% Like games which allow customisation

69% 31% Enjoy competing with others
69% 31% Enjoy games to break monotony of routine
68% 31% Enjoy games which are complex in gameplay

Agree Disagree

Source: I-Cube 2008

Primarily, the average gamer is extremely keen on role playing games and loves
to explore games thoroughly which suggests the need for a strong storyline along
with the gameplay. Additionally, a significant 80% of active gamers like gaming
for its socializing aspect. The gamer is quite inclined towards team games and
games which allow customization of characters are also strongly liked.

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4.0 Gaming Ecosystem and Business Models
4.1 Defining the Gaming Ecosystem

The Gaming ecosystem consists of the following five main players. Each player
has their own specific role to play in the development of this industry. Some of
these roles and interactions are enlisted below.

Game Developer

Public Access
Points Game Publisher
Gaming
Ecosystem

Hardware and
Component Advertisers
Manufacturers

 Game developers: These individuals actually create the game. They

design the features, program the software and test the game before
actually launching it. These are the technical brains behind the game. It is
these developers who help enhance features such as gameplay, sound,
etc with their valuable modifications. Recently, outsourcing development
work to countries like India, China, Russia and Eastern Europe has been
found to be an emerging phenomenon.

 Game publishers: They are the ones who promote and market online
games, educate users and create awareness. These publishers can be
stand alone or part of the developers as well.

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  Telecom and PC hardware manufacturers: These are the infrastructure
providers for the industry. They design the hardware equipment with which
the game is essentially played. This consists mainly of console
manufacturers, mobile device makers, computer components, etc

 Advertisers: These are one of the prominent revenue sources for this
industry. They look to attract and appeal to the growing urban and tech
savvy gamer

 Cyber café owners: In a country like India with low PC penetration in

homes, they play a vital role in the development of gaming in India. The
cyber café owners are always on the lookout for addictive games which
can attract large number of users to the café and also utilize plenty of
hours making it a great revenue driver.

4.2 Distribution Model – reaching the gamers

Now that we have witnessed the players of the industry, it is time to see how the
games are actually made available. The distribution model adopted plays a major
role in how fast the game actually reaches the gamer. Distribution model chosen
also plays a crucial role in dissuading piracy by making games more affordable
and more conveniently available. The four main models used currently in India
are depicted in the diagram below.

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 Internet
Portals

E- Dedicated
Commerce Distribution Gaming
Websites Models Sites

Retail
Stores /
Branded
Outlets

 Distribution through Gaming Portals: Portals such as Zapak.com,

Indiagames.com and Yahoo! generally provide the greatest possible
distribution, particularly for mass market content, by showcasing the
game on their service. These sites score high on advertising spots and
hits offering the greatest exposure to the game. Additionally, such
portals are capable of handling online technical development issues on
their own.

 Dedicated Online Game Site: Online gaming companies offer

websites that are designed specifically for a particular game. Examples
include WorldofWarcraft.com by Blizzard Entertainment, and
Runescape.com from Jagex Limited. In these sites, gamers are
expected to register, make their avatar or character and play games.
These sites tend to generate substantial traffic, often as a result of their
agreements with portals, ISPs, or other sites. Additionally, dedicated
online game sites provide more targeted marketing. These sites often
deliberately seek professional online users who are more likely to be
interested in games.

 Ecommerce Sites: Certain eCommerce sites sell gaming CDs/DVDs

through their websites. As of now, this is not an effective avenue to
distribute gaming software due to lower adoption of eCommerce
services.

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  Retail Shop: In this method, the game manufacturer simply stocks the
game in regular shops. The gamer purchases the game in the shop
and goes and plays it online using the CD/DVD purchased. This is
method ranks high for convenience factor and is slowly gaining
popularity now. Quite a few branded electronic retail outlets are now
stocking game titles.

 Other Forms of Distribution: There are certain alternative forms of

distribution that are emerging in the gaming market. They have
achieved some measurable success till now. The jury is still out on
arriving at a concrete decision regarding their acceptance.

o In case the game is linked to an event such as movies, music,

etc. the distribution could be largely influenced by the offline
occurrence. For example, the case of “Ghajini” game it made
more sense to distribute CDs outside movie theatres itself and
then expect the buyer to go play the game online. Such kind of
distribution could be simply through promotions or a fee could
also be charged.

4.3 Gaming Revenue Models

Revenue Models

Subscription based Advertising based

models models

Micro transactions In game placement On site advertising

Time based pricing Flat Fee pricing

i) Subscription based pricing model: These are a very common and popular
model where the user generally pay a monthly fee that entitles them to unlimited
usage during that month.

Time based pricing: In this type of subscription model, users pay an hourly/
monthly fee depending totally on the number of hours actually being used

Flat fee pricing: Here the user is charged once for downloading the game, then
is allowed to play the game for free henceforth

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Microtransactions/Item Purchase: Coupled with the above pricing, incremental
revenue for gaming companies is generated in numerous ways. For example,
subscription content may be combined with additional payment for special
services, such as participation in an event or in-game ownership of a specific
object. Also, some providers charge extra for downloading the same game to
play on multiple platforms such as online and mobile.

ii) Advertising based pricing model: These generally rely on some sort of
sponsorship or advertising. Games derive their revenue from the sponsoring
company which pays for the development of the game and generally recognizes
value in messaging provided by the game. Other games may be supported
through general advertising; revenue is generated through sales of banner ads,
interstitial advertisements, rotating sponsorships, or other types of online
advertising. Within the advertising model, developers further build saleable
advertising opportunities through the following:

In game placement: A brand is placed in a game such that it becomes an

integral part of the game and creates many opportunities for the consumer to
interact with it. A good example is the logo of Nike placed on the sidelines of a
football match in FIFA. The advertiser pays a fee for this in-game placement.

On-site advertising: Internationally the most common revenue model, though

not the largest source of revenue. In this model the advertiser‟s pay for placing
their advertisement (usually banner ads) on the website. Games are monetized
by advertising units sold around the game

4.4 Type of Gaming Platforms

Currently there are 4 main Gaming platforms in India namely PC- Offline, PC-
online, Consoles and Mobiles. According to a leading game publisher in the
country, the total PC and console market in India can be estimated to be around
the 20 million dollar mark out of which the breakup in terms of revenues will be
split equally into PC and Console. Hence it comes as no surprise that all the
game developers are vying for the console space which is still very nascent in
India in terms of number of gamers. (see chart below)

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 Base: 9.9 Mn Internet using gamers across 15 Online
cities from SEC A and B (Source: I-cube 2008)
Gaming

7.2 Mn

Offline
9.8 Mn 1.1 Mn
Console
PC Gaming Gaming

6.1 Mn

Mobile
Gaming

If we consider the above, it is the PC gaming and online gaming which has got
maximum number of users. Considering that the PC gaming industry has been
present since the time PCs have been here, it would be interesting to look at the
emerging online gaming industry in more detail.

The various types of games available online are as follows:

Browser based games: These are nothing but your web based games. They
use simple keyboard controls or mouse with hardly any need to even read the
instructions before starting to play. Examples of these are the vast variety of
games found on sites such as Zapak.com, Yahoo! games, miniclip.com, etc.

Downloadable single player games: These games are downloaded onto one‟s
computer and then played by one player alone usually against the computer.
These games have to be small in file size in order to entice the gamer to make
the download and try to play the game. Arcade games and puzzle games are
rather popular for this category.

Downloadable Online Multiplayer Games: These games are usually

downloaded from the Internet either as the full game itself or as client software is
installed the person has to simply log in and play against many players online
itself. Examples include Multiplayer games in Zapak.com, FIFA Online.

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PC CD-ROM Games with Online Components: Such games include hardware
purchases with the game loaded on it. This hardware such as CD/ DVD contains
a product key which when loaded during installation allows the user to play online
after competing a simple registration process. E.g. Battle.net by Blizzard
Entertainment.

Console Games with Online Components: These games enable the gamer to
play via console with many players via an Internet connection at very little extra
cost. This attracts gamers due to the possibility of playing with people who are
available at any moment online and also using their preferred console. Xbox Live
(http://www.xbox.com/hi-IN/live) has created such a community for gamers in
India.

All types of games can be classified into 3 main game playing modes as shown
in a pyramid in the next page. Each level denotes the most likely progression
shown by a gamer during his life. Initially all gamers start at the base of the
pyramid playing alone and independent sessions. As the gamer gets more
confident of his abilities he tends to reach the middle where he interacts with
other gamers and friends while gaming. Finally once a good skill level has been
developed by the gamer he starts with Multiplayer games with persistent worlds.

Currently in India, Single player games dominate the market with 80% of the
active Internet using gamers playing such games. This accounts for 5.8 Million
people who form the base of the pyramid.

The next level of the pyramid are those who play games with other counterparts
but play either on LAN or Online in virtual worlds which cease to exist once the
game finishes. These gamers have grown significantly over the last year to reach
63% of all gamers across the country.

MMOGs form the apex and the ultimate gaming experience for the passionate
gamer as the gamer gets to play with multiple players with different levels,
customizable options and that too in a world which never ceases to exist. These
form 27% of all gamers currently, up significantly from last year‟s 19%, which
does shows the popularity of the MMOGs now.

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 Base: 7.2 Mn Online gamers
across 15 cities from SEC A and
B (Source: I-cube 2008) 27%
MMOG

63%
Multi Player Single Session
Games

80%

Single Player Single Session Games

Single player- single session games: This represents the largest category of
Online games played in India with 80% of gamers playing it and 46% preferring it
the most. Such games emphasize the need for good levels, simplicity of play and
strong addiction in order to keep the gamer playing alone for long periods. Card
games, arcade games are very popular in this category.

Multiple players- single session games: All games which allow two or more
players to play against each other or against the machine falls in this category.
Here there is no continuation between gaming sessions which means every time
it gives both gamers a fresh start unlike persistent worlds which save information
even while not gaming. All genres of games usually have representation in this
type of games with Sports and fighting games being very popular for this
category

Multiple players – persistent session games: These games are relatively

more complex in gameplay and technologically far more advanced. Persistent
gaming worlds have some real benefits like continuation even after disconnecting
from the server, they offer the ultimate global gaming experience and have
maximum interaction within the gamers. Names like World of Warcraft,
EverQuest and Sims Online are synonymous with MMOGs.

4.5 Emerging Gaming Formats

These days, the avid gamer is not easily satisfied with one type of content, one
type of game or any kind of monotony, that‟s why the great attraction to gaming.

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Game developers are always on the look out for the answer to this one question-
What does the hardcore gamer actually want? How to make my content
applicable for all? The answer to these lies in innovation at every step of the
gaming ecosystem- game design, platforms, distribution, marketing, etc. Or
simply newer formats for gaming are required. Some of the most popular
emerging formats have been briefly touched upon below:

Digital Downloads: Is the latest phenomenon to hit the Indian Gaming market
wherein users are allowed to download the games directly using the Internet for a
fee. This technique has its many advantages such as reduced distribution time
from game development to final usage, lesser cost burden on end user, greater
profit margin per game for developers and most importantly tries to tackle the
flourishing grey market for games. Another very popular feature observed in this
format is the global availability of the game for simultaneous launches in different
countries becomes much easier. As per Icube downloads of games from Internet
is already done by 48% of gamers which indicates this methodology has some
promise for the future.

Social Gaming: Social networking and games go hand in hand. Social gaming is
a new genre of gaming which adds the „Social‟ factor to the games. Whether it's
taking advantage of the relationship data in social networks to build novel
gameplay or building community among people who play games, game
developers are discovering clever ways to build real communities around the
games they're developing. Social networking sites such as Orkut and Facebook
have multiple applications and games to play for their registered users,

India too, has its very own social network for casual gamers- Nunook which
allows users to play games without signing up but also provides lot of exclusive
content to those who do sign up and gain sufficient points gaming. Now people
can play and socialize at the same time on their already well established social
networks.

MMOGs: Massively multiplayer online game are simply video games where
thousands of players simultaneously in a virtual world. The last year has seen a
rapid increase in the number of gamers trying out MMOG‟s, up from 19% last
year to 27% this year. (Source: I-cube 2008).

There are a number of factors shared by most MMOGs that make them unique.
Firstly they allow users to play among millions of others thus encouraging
community. Secondly they allow you to continue playing from where you left off
last. Thirdly they let you create a new identity or become someone else which
especially appeals to those users who idolize someone. According to a leading
publisher there are already around 50,000 Indians in such communities and
judging by the growth rate of this format this number could well double over the
next year.

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Conclave Gaming/ Gaming tournaments: This kind of format has already
become very popular in western nations with gaming championships where many
gamers compete to see who is the best gamer for a selected list of games. Such
competitions are recently being carried out in certain institutes across the country
and are bound to increase in popularity in the near future due to the great prizes
being dished out and large number of advertisers already ready to promote such
events.

Fantasy Gaming / Real Life simulations: These games are almost like
simulation games or role playing games, multiplayer in nature and existing in a
persistent virtual world. An example of one such game is stock market or share
simulation games where a person gets to experience the real life scenario in a
stock market. Other popular games among Indians were Cricket super selector
and EPL Fantasy league where the user gets to become a manager of a team
and select his own players and earn points based on their performances in
matches played in real life. Players can form leagues of their own and compete
among each other and against the rest of the world. Such games bring together
large number of followers of the sport itself and also help all demographics play a
part in the gaming experience.

Mixed environment gaming/ Motion sensing games: These games primarily

comprise of video games which include physical activity as part of the gameplay.
These games emphasize listening, repetition and rhythm into gameplay. Such
games make the person perform life like activities to simulate tasks such as
playing a DJ, playing a musical instrument, learning to dance, etc. Some very
popular examples which have succeeded in Japan are Guitar freaks, drum mania,
parappa the rapper and dance dance revolution (DDR) which has also been
praised for its innate ability to help people lose weight while gaming. DDR, the
game, consists of a floor pad controller with four directional arrows, leads players
to dance along with the music, stepping on the floor arrows that correspond with
increasingly rapid onscreen commands. As games continue to develop it is
apparent that gamers will be interested in a variety of different interactive formats,
including those that rely on physical activity. Nintendo‟s Wii is a real life example
of this

Educational Games: are games that have been specifically designed to teach
people about a certain subject, expand concepts, reinforce development,
understand a historical event or culture, or assist them in learning a skill as they
play. They include board and card games, and video games. These games are
also quite often referred as edugames or edutainment due to their intrinsic values.
Math blaster, treasure quest, reader rabbit are some examples of this type of
games.

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Interactive Games: A large number of DTH providers in India have started the
concept of Interactive TV gaming where the user can enjoy extremely easy to
play casual games on television itself with the remote. Word jumbles, hangman,
2D sports games are some of the most popular categories played.

Multiplatform Games: Finally to reach out to the large mobile subscriber base
who is already playing games but is not totally satisfied with these games certain
developers are keen to introduce games which can be downloaded for a fee on
multiple platforms.

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5.0 Barriers and Drivers for Gaming in India

5.1 Barriers for Gaming in India

Although India has huge potential to become a gaming superpower in the future,
several roadblocks exist which may restrain the industry from reaching full
potential. Each of these roadblocks is connected to various aspects of the
consumers, industry and the environment forces. A few stakeholders believe that
the content being developed for the domestic consumption lacks quality and
innovation and most games are copies of famous overseas games. For some,
the major challenges in the online gaming space are issues like PC, Internet and
Broadband penetration; access to right content while others blame the consumer
mentality towards games and their price sensitivity.

Given the situation, all stakeholders need to work together to address each
roadblock and enable the domestic market to grow. These roadblocks have
been clubbed into three heads and elaborated as follows:

Infrastructure Consumer
Barriers related Barriers

Industry related
Barriers

Infrastructure issues:

 Very Low PC Penetration: Only 7.8 Mn households all across India own
at least one PC which accounts for less than 5% of all households in the
country. It is already known that majority of the gamers start of as either
casual offline PC gamers and then move on to Online and console gaming
so not having a PC to start with inhibits the growth of gaming in the
country

 Low Internet and Broadband penetration: The total number of Internet

subscribers comes to a mere 4.8 Mn out of which the number of

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 broadband subscribers is a paltry 3.7 Mn which provides a very low base
for capability to play Online games of any type let alone more complex
MMOGs. Due to this lack of penetration of broadband, Internet speeds are
very low which makes the gameplay experience quite non enjoyable and
causes frustration due to “lag” in screen frames

 Network setting up costs: Cost of setting up a network for Internet and

Broadband connectivity across the nation is very high. This barrier can be
overcome only with the support of all stakeholders in the gaming
ecosystem by means such as sharing of costs through innovative
business models

Consumer related barriers:

 Cultural barrier to games: Many restaurants, cinema theatres and malls

are already hugely popular among the public for entertainment purposes
hence they see no benefit in Gaming and perceive it as fun they can do
without. Long term benefits in terms of wide career options are also not
visible due to lot of expatriates talent being preferred for jobs. This makes
parents strongly discourage their children from such activities especially at
the cost of their studies or even physical activity.

 Price sensitive customers: One major factor which affects the game
developers‟ incentive to make new better games is the consumers‟ price
sensitivity in India. This could be possibly due to affordability problems
faced as well as customers willingness to pay for a game is seen as much
lesser due to it being a luxury/ unnecessary item. After effects of this is
that most developers need to lower their prices at lower profit margins
which in turn stunts the innovations in game designs in the market

 Customer perception of gaming: Another perception of gaming in India

is “meant for kids” which automatically eliminates half the potential
demographic candidates from even trying to do such activities. Thus the
base for gamers becomes very limited.

Industry related issues:

 Piracy issues: Existence of a thriving grey market in the country with

almost 70-80% of games sold being through this channel severely affects
the growth of gaming in India. Further, there is high customs duty on the
gaming consoles (approx. 25%), making the consoles out of reach for the
consumers. The high duty has also encouraged the grey market as they
are able to sell the consoles cheaper after avoiding the duties and taxes

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  Lack of experienced game developers: Most of the game development
is being done through foreign developers being brought to India for work
from other countries which shows there is a dearth of home grown
developers which could act as a barrier to growth in the industry. After
Software and BPOs, India has the potential to emerge as the next gaming
software developing destination. The development of console based video
games is amongst the few areas of software development in which India
still has a long way to go.

5.2 Main Drivers of Online Gaming in India

Many factors are associated with driving the growth of gaming market in India.
They have been broadly classified below:

Heavy advertising: This advertising will be required to achieve two

purposes. One, to increase the awareness of gaming and two, to remove
the anti-gaming perception which exists among Indian culture. This has
been successfully undertaken by Zapak.com. To drive traffic and build
awareness levels, a lot of advertising will be required to generate interest
among the non-playing population. Besides the advertising, developers on
their part will be required to create more sticky applications which would
get these new users hooked to gaming and searching for more.

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Games with relevant content: Currently majority of the developers are
focusing on making games for the global audience while it is evident from
the genres of games played by the Indian public that they prefer playing
games which give them something to identify with. For eg. Having an
Indian Formula One team competing helps enhance the racing genre in
popularity. Similarly cricket being like a religion in India, it is not surprising
to see it Top the list of sports games played. According to I-Cube 2008, 80%
gamers prefer Online games as it allows them to play with other people
and 85% overall preferred Online games over Offline games due to wider
variety of games and it being free.

Innovative distribution models: India is in desperate need to find new

and innovative distribution models which will help reduce if not eliminate
piracy of games in the market. If such a technique comes to the fore such
as digital downloads or social gaming, then it is sure to trigger more
people to simply buy the game online instead of the grey market. Also,
social networks in India such as Orkut, Facebook, etc are already
attracting a large number of users. Now when these sites come up with
innovative games they indirectly attract the social person to gaming as
well which in turn shall trigger a whole new set of online gamers.

Increasing broadband speeds: With every passing day the consumer

especially the hard core gamer is getting more eager for advanced
graphics, more interaction and faster gameplay. All these require high
amount of bandwidth and hence great Internet speeds. Broadband in India
is currently hovering around the >64 kbps limit only, once this gets
converted to speeds of at least 256 Kbps and more, then this will most
likely trigger a gaming desire in Internet users.

Large potential segment: The large youth segment (12-25 years) which
forms the bulk of Online Gamers in India is driving the demand for games
on multiple platforms. This segment also will form the largest segment of
Internet users in the future and shall be more technology savvy than their
predecessors which will make them ideal bearers for accepting new
technologies. However this segment is also very fickle in their tastes and
yearns for wider variety of games coupled with super cool graphics which
shall make them very difficult to please.

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6.0 Market Size

Estimating market size of the gaming industry has proved to be a difficult

undertaking due to the existence of unaccountable parallel offerings in the guise
of pirated devices and gaming CDs/DVDs. Any amount of product development
by gaming companies will not foster the industry unless prohibitions are levied on
illegal duplications. While conducting research for this study the participants,
specifically game developers and promoters in console and PC industry,
categorically reflected on this limitation. Below, however, are the estimates based
on secondary as well as certain past research studies.

Console Games

Based on our primary research study conducted in 2007, the annual revenue
across consoles and handhelds was arrived at INR 800 Million. In these
revenues, the volume share of PSP® (Play Station Portable) was higher (55%)
compared to other console devices. This was followed by the share of Xbox 360
® – 23%. Play Station 2 (PS2) and Play Station 3 (PS3) comprised 21% of the
volumes. The parallel or grey market selling was higher than the authorized buys
at INR 900 Million. The volume share in this market seemed highly skewed
towards PS2 with more than 50% followed by Xbox 360. Considering India as a
price sensitive market, with the gradual decrease in prices in the authorized sales,
we expect that the grey market could be overshadowed. The game providers,
however, have not been liberal in their price cuts. Apart from price cut on PS2 in
2007, there has not been any significant attractive offering on new products in
the console gaming devices.

Hardware sales of Console devices, including parallel grey market for PS2, PS3,
PSP, Xbox360 and Nintendo) is estimated at INR 2650 Million in 2008 and INR
4050 Million – rate of growth of 57% and 52% respectively. The sales of this
hardware will continue to grow at 41% and reach INR 5750 Million in 2010.

Mobile Gaming

Mobile subscription has been on an upswing since past few years in India. With a
monthly growth of more than 10 Million subscribers, wireless subscribers have
crossed 400 Million. Ranked second in the global subscribership, India‟s mobile
market is soundly placed to grow at an exponential rate in the Value-Added
Services (VAS) – including gaming. Further, gaming options over mobile are less
mired with piracy and duplicity issues than other platforms.

A recent Mobile VAS report by IAMAI and IMRB International estimated the
mobile gaming industry at INR 2,890 Million (5% of overall mobile VAS industry)

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in June 2008. The report, further, estimates that overall VAS industry to grow
steadily at 70% over the next two years and touch INR 97,600 Million by June
2009 and INR 162,500 Million by June 2010. Even if we consider a constant 5%
gaming share of VAS market, the estimation stands at INR 8125 Million by June
2010. Although, it is very likely that the share of gaming in the VAS pie would
increase at higher 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

Desktop Offline Games and Online Games

The share of offline PC games has been dwindling over the years. It constitutes
around 12% of the overall gaming market. Online games, however, is a growing
market in India. Although with a similar share as offline games, it is expected to
grow at a very high rate in the coming years. Unlike offline gaming which has
been marred by grey markets, online gaming offers providers the facility of
distributing their games through efficient and secured channels. With increasing
usage of social media and emergence of wide variety of online games, Internet
users are gradually getting hooked to casual as well as serious gaming.

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 About eTech Group | IMRB

eTech Group | IMRB (a specialist unit of IMRB International) is a research based consultancy
offering insights into IT, Internet, Telecom & emerging technology space.

Our continuous link with industry and a constant eye on the pulse of the consumer ensures that
we can decode the movements of technology markets & consumers. To our clients we offer an
understanding of the present market environment and a roadmap for the future.

Contact Details: Research team for this report:

eTech Group | IMRB Balendu Shrivastava, Group Business Director

IMRB International Tarun Abhichandani, Insights Director

„A‟ Wing, Mhatre Pen Building
Senapati Bapat Marg, Mumbai
Tel : (91)-22-24233902 Contact us:
Fax: (91)-22-24323900 balendu.shrivastava @ imrbint.com
www.imrbint.com

About Internet and Mobile Association of India (IAMAI)

The Internet & Mobile Association of India (IAMAI) is a not-for-profit industry body registered
under the Societies Act, 1896. Its mandate is to expand and enhance the online and mobile value
added services sectors. It is dedicated to presenting a unified voice of the businesses it
represents to the government, investors, consumers and other stakeholders. The association
addresses the issues, concerns and challenges of the Internet and Mobile economy and takes a
leading role in its development. The association‟s activities include promoting the inherent
strengths of the digital economy, evaluating and recommending standards and practices to the
industry, conducting research, creating platforms for its members, communicating on behalf of the
industry and creating a favorable business environment for the industry. Founded in January
2004 by leading portals in India, IAMAI in the only specialized industry body in India representing
the interests of online and mobile value added services industry.

Contact Details:

Dr. Subho Ray, President, IAMAI

406, Ready Money Terrace, 167, Dr Annie Besant Road, Mumbai - 400 018
Tel : +91-22-24954574 | Fax : +91-22-24935945 | http://www.iamai.in

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 Published By:
Dr Subho Ray, President, on behalf of Internet and Mobile Association of India,
406 Ready Money Terrace, 167, Dr Annie Besant Road, Worli, Mumbai 400018

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