India seems to be lagging behind when it comes to video games. In 2016, global gaming industry clocked up to $100 billion in revenues, with India’s estimated share of $543 million.
When compared to other countries, India appears to have a modest impact on the overall industry growth. However, it is improving at an incredible speed.
The local video game market has become an important contributor to India’s GDP and government’s initiative to build world’s largest digitised economy.
In fact, it is expected to double and to become a $1 billion opportunity by 2021. In order to reach the scale, the market will have to increase at a compound annual growth rate of 17-20 per cent, according to KPMG.
Here, there are three key factors that will drive the growth: increasing smartphone penetration, the proliferation of game distribution platforms and rise of blockchain technology that allows for smart monetization for developers and gamers.
Powerful and Affordable Game Devices
Today, India is the second largest online user. According to CII and TechSci Research, the country’s market is expected to grow as youngsters will add 190 million to the online gamer base by 2021. As economic prospects improve, this will, in turn, boost demand for affordable smartphones and tablets with larger RAM and storage capacity.
The mass adoption of high-end game devices will contribute to the evolution of online consumption and let the country climb up the global leaderboard in terms of game downloads.
In fact, leading manufacturers such as HP, ASUS, Sony and service providers like Twitch have already reported an increase in local sales and viewership numbers.
Apart from it, India has already taken the lead by Google Play downloads with just 30 per cent smartphone penetration rate, as reported by App Annie and NASSCOM.
As the gaming space expands, so does the need for technological advancements in the game development and distribution process. This will push both developers and publishers towards creating compelling content and utilizing new types of digital distribution platforms based on the blockchain technology.
Digital Distribution Platforms
Despite the fact that Google India registered a 117 per cent spike in local searches for online games and game-specific websites, global platforms such as the App Store, Google Play and Valve’s Steam are the most preferred channels of game procurement and distribution in India.
With the local presence of major game developers such as Zynga, Ubisoft and EA, together with the adoption of PaaS by local developers, these platforms are expected to have more Indian titles in the nearest future.
However, there are multiple issues to be resolved when it comes to micropayment infrastructure of digital platforms.
As a pilot project, Valve had integrated domestic net banking and online wallets in cooperation with Novaplay, India’s first gaming platform, in 2016, and launched cash on delivery to simplify payments on Steam.
To date, there have been a couple of technical problems, but Valve and Novaplay have resolved most issues and have all the integrations running smoothly since the processing glitch was fixed.
Apart from Valve’s Steam and other established platforms, there are new independent blockchain-based projects such as the Abyss.
This type of platforms is far more advanced, as it is based on the technology that allows for completely new and untapped opportunities for trust building, reducing transactional costs and replacing fiat currencies with blockchain-based tokens.
In fact, Bitcoin and Ethereum are blockchain-based as well, and they have already found its way into the video game industry via Valve, Zynga and other game companies experimenting with it as a payment method alongside with fiat money.
In turn, blockchain-based tokens, such as ABYSS token, are utilized as a priority internal mechanism for interaction and trade within the new type of distribution platforms. This technology allows for secure and transparent micropayment architecture based on the peer-to-peer trust-management technology.
Monetisation is one of the biggest challenges for the local video game industry.
Today, the market is dominated by advertisers and publishers. In the absence of reliable and straightforward ways to directly pay for games and make in-app purchases, most developers still depend on the middleman.
However, indie developers have started to adapt, and are increasingly deriving revenues via in-game mechanics.
As the market grows in terms of volume, this model, which is largely driven by engagement levels, can generate additional income for local gaming companies.
According to KPMG, top three games by download and revenues in India are all freemium or Free-to-Play ones. They are monetized via in-game and incentive-based advertisement and, in turn, provide the younger audience with instant gratification: free access, multiplayer and social features.
Today, in-game mechanics combined with the F2P model are best suited for the Indian market, as local players are still reluctant to pay for games.
On the other hand, the integration of new payment solutions in cooperation with telecommunication companies can unlock direct in-game purchases that will benefit both developers and gamers.
In addition, the F2P model is being adopted by the next generation digital distribution platforms such as the Abyss.
By design, it is blockchain-based and allows for tamper-proof recording of anything of value: proof-of-ownership, in-game achievements, referrals and more. It enables completely new monetization tactics — from secure trading and exchange of game-related content to multilevel motivational and referral programs to bonuses for creating UGC content around the game.
These mechanics can boost the engagement and drive direct sales, together with rewards for gamers. Payments here are powered by platform-specific tokens that, in fact, can be cashed out into fiat money or cryptocurrency with the help of continuous liquidity mechanisms at any time.
Indian gaming Inc
The Indian gaming industry stands at an inflection point. It is set to become one of the largest and fastest growing game markets in the world. With the rise in online gamer base and adoption of new payment technologies, the future of Indian game developers looks bright.
The combination of Free-to-Play model, digital distribution platforms and emerging technologies such as the blockchain will allow various monetization and engagement tactics, and drive the local industry growth in 2018.
Konstantin Boyko-Romanovsky is the founder of Destiny.Games video game company and of The Abyss project (https://www.theabyss.com/), a new kind of game industry ecosystem where both developers and gamers can earn money. He has more than 17 years of experience in the game industry. Konstantin is a successful blockchain investor, cryptocurrency expert, and technology entrepreneur.