Indian Game Market -- Is 2008 the year it breaks out?

by Sashi Reddi, founder and chairman, FXLabs Studios

Games have been around in India for a long time. However, other than a few thousand game enthusiasts with money to spend, it has not been an interesting market. In the last few months there seem to be some stirrings in the industry:

# Zapak has begun to create awareness of games amongst casual gamers and even non-gamers about the fun of playing casual games. They claim to have four million registered users on Zapak.com. They definitely have the name recognition due to their ads on billboards, TV, and radio. Essentially, Zapak (and the ADAG Reliance brand) has given credibility to the game space.

# Companies like FXLabs have demonstrated that a full game could be conceived, developed, and launched in India with the launch of their title 'Agni'. However, being an unknown property, Agni is unlikely to be nothing more than a milestone in the evolution of the Indian game industry.

# The price of a PS2 (PlayStation 2) has dropped from around Rs 20,000 to around Rs 6,000, finally making a console an affordable item in India. This seeding of the market by Sony is giving the space a boost.

# A game based on Dhoom 2 will be launched in April 2008. This promises to be a game that will appeal to the film-going audience as opposed to the hard core gaming audience. The performance of the Dhoom game will be a clear verdict on whether the Indian gaming market has arrived or not.

# The year 2007 witnessed a tremendous growth in mobile games. Players like Nazara and Mauj are driving growth in that segment. However, the mobile games industry is plagued by the structure where most of the money is made by the telcos rather than the game developers.

# The growth of game cafes is slowly breaking down the access issues. Zapak’s Gameplexes and Sify’s Game Dromes are making the game experience more accessible. Their plans to rapidly scale up the number of game cafes should bring the gaming culture to second tier cities in India.

Given all of the above developments, one can be optimistic about the prospects for games in India. However, some current data on game sales throws a sobering view on the challenges ahead.

No game in India has sold more than 20,000 units to date. So, assuming that the price of a game is Rs 700, then the 20,000 units would generate revenue of Rs 1,40,00,000. Assuming that the developer of the game gets 50 per cent of this (actually it is likely to be lower than that), then the revenue to the developer is Rs 70,00,000. Clearly, a game cannot be built for Rs 70 lakh and that is the reason why there are no games built for the Indian market.

At FXLabs, our view is that the unit sales are so low because there are no games that a mainstream user can relate to. All of these imported titles require sophisticated game play that can be intimidating to the casual gamer.

A simple game costs Rs 2 crore or more to develop so if a game does over 50,000 units sales then we know that games has become a viable business in India. If Dhoom succeeds, then we can expect many more studios taking the plunge into building games for the Indian market. If Dhoom fails, then we know that 2008 is not the year for Indian games and that perhaps we are still a couple of years away from having India join the rest of the world in playing games.