This is the second episode in our Emerging Markets mini-series, co-hosted with Tom Wijman, Senior Games Market Analyst at Newzoo. Founded in 2007, Newzoo is an intelligence provider for the games and eSports industries, providing data across both global and local markets.
Our guest this episode is Tejas Shah, Head of Distribution and Revenue at Games2Win, a leading Indian mobile games publisher with over 290 million downloads. Listen to the podcast or skim the edited highlights.
The history of the Indian gaming market
8:45 - Tom: “There was always a small market for gaming in India but it was restricted for a couple of reasons, like access to software and hardware, and also access to the internet. The market is really starting to grow since very cheap smartphones have entered, primarily by Chinese manufacturers, as well as the availability of cheap mobile internet, which only really started happening in the past 4-5 years. India is really a mobile-first market, but there was always a small but dedicated group of gamers in India.”
English makes it easier
9:51 - Tom: “A lot of the working Indian population speaks quite decent English to very good English, which compared to other emerging markets makes it easier to enter the market. That’s not me saying that localization isn’t a factor, you still need to localize to be successful in India. But it does mean that the barrier to entry of language is not as high as other emerging markets.”
11:02 - Tom: “A few years ago, I would have said that casual and casino games were the most prevalent genres in India. But since 2018-9, the market has sort of shifted - starting with PUBG-Mobile which is an action-shooter game, and more recently Garena Free Fire as well, which consistently ranks high in terms of in-game spend. The market has matured from casual and casino games to include more core experiences. There’s also a very specific type of card game that’s very popular in India that gets a lot of people to spend which are Teen Patti games, a local card game that’s been doing well for many years.”
The big gaming companies in India
12:15 - Tejas: “There are lots of studios that have made a great position for themselves in the country. Lazada has been around for a very long time and been focused completely on India. 99 Games are IAP heavy. Otro is in the card category that Tom mentioned earlier. Ludo King launched their first game 3-4 years back and have amassed around 300 million downloads, mostly from India. To go back to Tom’s point, when you localize a game to a particular region it tends to well. There are new players coming up as well, like PlaySimple based out of Bangalore. Lastly, there’s one success that happened last year, Nukebox Studios.”
14:42 - Tejas: “Just because of the fair amount of volume that India has, it’s anyone’s game right now. If you come into this country and make a game that’s specific to the taste India gamers have, the amount of downloads will be phenomenal. But one needs to look at it from a revenue perspective as well. What tends to happen is a lot of companies come into the market from outside of India, but realize it’s not easy to make money in India. Yes, there is a very large English speaking population in India, there’s a very large millennial population and Gen-Z, but a lot of habits that these segments have is very different from the US or UK. It’s a different ball game but it’s still an open ground.”
The eSports scene in India
17:30 - Tejas: “The eSports market has grown way beyond what we would have expected. About 15 years back, professional gaming, or eSports, in India was very small. That was partly because of the amount of cost required for having that kind of bandwidth, since the internet was not that great in India at that time. And at the same time, it was mainly at places in cities where you had video gaming parlors, like small cafes and people playing with each other. But now, you have gaming centers with hundreds of machines in it and have gaming competitions that don’t require machines - it’s completely on mobile now. The reason partly is also because the world started noticing India and the opportunity due to the large volume being generated on mobile. The existing environment is a great way of catapulting eSports in India in the next ten years. It might just be the second largest market after China, mirroring the volume and sheer dominance from an entertainment perspective.”
The potential (or not) of cloud gaming in India
22:07 - Tom: “My understanding is that the reason PC gaming never really took off in India is because you can go to these PC cafes to play games. If you don’t go there, it’s very difficult for the majority of players to access these games. But with cloud gaming, like the XCloud solution Microsoft is bringing to India, that might change.”
22:41 - Tejas: “I think there’s a definite market for cloud gaming but it’s still nascent. Cloud gaming is meant for larger PC and console titles that can be played on less powerful hardware. In India, most internet connections are still mobile connections and although the amount of data we get here is extremely cheap, the devices themselves are not that great from a gaming perspective - they’re great for casual games but you can’t really play a PC or console game on a mobile device. At the same time, there’s a lot of restriction on data as well. Most of the consumers in India use prepaid connections and have 1.5 or 2 GB per day. They can surf the internet and play games but the speed would be reduced to maybe 1/10 of what they would need, so they could reach the threshold of the day. When you’re going to be playing on cloud, the amount of data you’ll be consuming will be really large. I think it’ll still be a very niche segment initially, but once Microsoft starts becoming more mainstream, they’ll have to work with broadband players like Jio to offer a packaged service to console users, verses expecting mobile users to get on the bandwagon.”
Ad monetization vs. in-game spending
25:31 - Tom: “From our perspective as market analysts, we’ve already predicted in-game spending to pick up a couple of times, and it hasn’t happened, or is a lot slower than we expected. We’re still at a point when ad revenue is bigger than in-game spending. The audience is so large but it’s difficult to get people to go from seeing an ad to actually buying a product, so the revenue you get per view is low as well. In general, both advertising revenue compared to the number of eyeballs and in-game spending in the region is low. There is an increase in in-game spending due to the more complex core gaming experience that we’ve seen in the past two years, again PUBG-Mobile, Free Fire, Supercell's games. We’re estimating that this year about 334 million people will be playing games in India. So as soon as part of that audience starts spending a bit, the market will start growing really fast. But so far it hasn’t really happened yet.”
27:37 - Tejas: “In-app spending is nowhere close to what you would see in other nations, including other emerging nations as well. But from a growth perspective, in-app has grown quite a bit in the country. That’s due to many reasons. One of the larger reasons is games like PUBG and Garena and Free Fire that are coming into the country and driving in-app spending. Second is also card games, which has a lot of in-app revenue coming through. Third, which is the largest reason for in-app spending growing in India, is there’s a lot of focus by the government and digital companies towards enabling end users to spend money, however little, digitally - educating them and giving them the opportunity to see how easy it is to spend money and not be worried about something happening while they’re using their mobile phones. Most of the people in India are hardwired to pay cash to buy everything. This has changed a lot in the last few years, which is why you see in-app going up.
From an advertising perspective, India has traditionally been an advertising-driven economy, and consumers don’t mind seeing ads. So advertising based revenue is still the largest and most stable way of making money in the country right now. But I’m seeing a lot of developers come through with a mixed approach of having ads and IAPs as well so that they can find the right balance. When they arrive at the right opportunity, they shoot up and become more profitable.”
Challenges for foreign developers entering India
32:10 - Tejas: “Although English is widely spoken in India, a lot of people outside of the metro cities feel more comfortable with the local languages. And a lot of users do not relate to games that western publishers make. If you look at the top grossing titles in the US right now, most of them are heavy RPG titles or based on basketball or baseball. The same kind of content does not work for India. Indians have a certain kind of taste. I’d say 30% of what works outside of India works in India. But 70% of what works in India has a very local flavor to it.
One of the challenges I hear is that foreign developers don’t understand they need content localization in India to be successful from a download perspective.”
Global brands and advertisers in India
34:42 - Tejas: “The biggest differentiating factor that India brings is that most of the 400 million users India has on the internet is young. There’s hardly any country out there which has so many millennials and Gen Z available as an audience at their doorstep. If you look at it, a lot of the large brands start advertising very early on so that when that user reaches a certain age and has a buying capacity, that brand is the first thing they recall. That’s something you should start seeing a lot in India now, especially because Gen Z is approaching an age where they’ll have a much higher spending power than they had. This will enable two things: As publishers, what will happen is you’ll start seeing better CPMs from advertising. Second, you’ll see eCommerce and digital payments go up as well, because Gen Z is more used to spending on mobile and credit cards. They’re not as accustomed to a cash based economy.”
Cricket, Bollywood, and astrology
37:31 - Tejas: “There are 3 main things Indians like: one is cricket, second is Bollywood, and third is astrology and religion. You really can’t do anything about astrology and religion, since it’s a very personal topic and one does not really like to be told about it. But cricket definitely, and there have been numerous successful stories of creating cricket content for Indian audiences. Bollywood is also consumed a lot.
Tejas: “Localization and themes make a very large difference in India. A lot of Indians like to see what’s the world up to. What does the guy in the city like doing? What does the guy outside of India like doing? A lot of users like to consume content that makes them feel aspirational. It helps them figure out things that they have never really seen.”
One last tip for the road
48:02 - Tejas: “Don’t only rely on in-app purchases. That’s a mistake a lot of people in India do. There’s a very large market out there for users who want to play games as much as they can without really spending, and at the same time advertisers are willing to play premium for showing ads because your users are great. That’s an opportunity a lot of people miss.
Another piece of advice, which isn’t necessarily related to India is, just launch it. A lot of times we end up thinking, will it happen, will it work, will it not work, should I do an alpha test first, should I do a $100 marketing test? I always say just launch and figure out the numbers after you launch the game. See what happens at least versus worrying over what might happen and not getting the benefit of anything at all.”