Cloud gaming is already happening in India without 5G

Playing a video game by streaming it live to your computer or phone may sound like something that only countries in North America and Europe can pull off, but Indian networks can already handle it. At least one startup already serves a few thousand customers through regular home broadband connections.

In the industrialized west, this is a service being offered by the likes of Microsoft’s xCloud and Google’s Stadia. In India, though, a company which seem to be offering on demand PC games is The Gaming Project, a New Delhi–based startup that raised $500,000 in seed funding in June.

The funding round is clearly a long term bet, as India’s internet, while cheap, is not exactly known for being very reliable. According to data by Ookla, the firm behind Speedtest.net, India’s mobile internet is ranked at #118 globally, a curious figure considering the sheer quantity of data Indian mobile internet users consume.

So how does cloud gaming even work in India, let alone attract half a million dollars in funding?

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Cloud gaming is a massively challenging puzzle to solve. Unlike a TV broadcast or a video streamed live, each user needs to get a unique and personalized experience where even milliseconds of delay count. From a user’s device being connected reliably to their home WiFi network to their internet provider having reliable connectivity to the data center where games are actually rendered, there are many things that have to be right for cloud gaming. An example of things going wrong can be Google Stadia, which had near 4 times the normal input lag of a local machine and had “oddly smoothed out video, almost like an overagressive anti-aliasing filter” as sampled by a reviewer on YouTube.

While services like xCloud and Nvidia Geforce Now have existed for quite a while now, India has been left behind for a while in matters regarding cloud gaming. This can most likely be attributed to providers of such services focusing on North America, where they already have the required infrastructure to support cloud gaming.

Wireless telecom providers are generally unable to support these services in India, because faraway cell towers connected to hundreds of devices simultaneously cannot guarantee the speed and reliability cloud gaming requires; but telecom companies have pointed to next-generation 5G networks as the leap forward that will let them address that hiccup. Carriers in India have committed a whopping Rs 1.5 lakh crore towards buying 5G spectrum, which will be rolled out at some point in the coming months.

But cloud gaming isn’t waiting for 5G in India — thousands of people have already played a game streamed to them on a home connection. Remember how Indian mobile data speeds have been ranked low? Home broadband connections fare much better, with India ranked #72 globally by Ookla, with an average speed of 48Mbps, more than enough to support decent-looking cloud gaming (under the right circumstances).

Fixed line internet providers have a lot of bandwidth to offer, as they don’t have to buy expensive wireless spectrum, and can transport data on fiber optic or copper cables. Data allowances have grown too, with most class A ISPs reviewed by Entrackr offering a 3,300 terabyte data cap before they start limiting speeds, even on lower-tier plans.

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As a percentage of data allowance, Indian home broadband users don’t guzzle data like their mobile internet counterparts. Data from Hathway, one of India’s largest broadband providers, showed that per-user internet use actually declined slightly during the COVID-19 pandemic, even as more professionals worked from home. That’s a surprising statistic, but makes sense considering that a lot of new broadband users moved from using mobile internet only, previously accustomed to modest data allowances on mobile plans.

Because of all these reasons, home broadband users have a dramatic advantage when accessing cloud gaming, and ISPs have the bandwidth to support it. But that’s not all.

The economics of gaming on the cloud are attractive too. While India is a mobile-first gaming country, the personal computer market is growing rapidly year-over-year. But the most highly anticipated big-budget games — AAA titles, as they are called — are getting more demanding with their graphics and system requirements, and the average budget PC sold in India largely can’t do them justice, if they can run them at all. The Spider-Man port from Sony has recommended requirements include a 1060, which places the price to run the game at around 50k rupees.

Properly implemented cloud gaming however, can undercut that weakness, as games don’t need to be rendered locally, and a single graphics card can be used by multiple players throughout the day, reducing its cost to each player.

Gaming cafes — facilities with several high-end PCs dedicated to running demanding video games — have emerged as an alternative solution, but they are a tough business to run, as they have to pay for prime commercial real estate, and rely on constant interest from players showing up in person often. The pressures can prove to be daunting — Arknemesis Gaming, a Chennai-based gaming cafe that was India’s biggest, shut down during the pandemic and never reopened.

Cloud gaming relies on shared infrastructure running out of data centers that have other customers to serve, and so its costs are minimized and socialized.

In spite of these theoretical advantages, though, cloud gaming in India hasn’t taken off. But investors are clearly interested in building the runway for it to do so. And surprisingly, it works.

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Gaming Project is arguably the biggest cloud gaming service provider in India right now. But the firm, billed by one of its co-founders as the “Netflix for Games,” cannot compare its user base to the film and TV streaming giant. (The business model isn’t exactly the same either; gamers are required to purchase licenses for games on platforms like Steam before they can actually play them, unlike Netflix, where all titles are included as a part of the subscription.)

But TGP is shaping up surprisingly well for a service most people don’t even know is possible or available in India — Sarang Atri, one of the company’s co-founders, told Entrackr that the service has signed up 350,000 users till date.

Atri said the service had good interest from gamers in Delhi, Mumbai and Bangalore, where it currently operates data centers; these were users, who, as Atri put it, had the passion to play PC games, but a limited budget to actually buy the hardware required to run them. High end graphics cards and processors made by firms like Intel, AMD and Nvidia have grown more expensive over the years, due to a depreciating Indian rupee, increased taxes, and demand from cryptocurrency miners snapping up essential hardware, not to mention the ongoing global semiconductor supply crisis. While prices on AMD GPUs have come down to Earth in the last few months, the entry point for AAA high framerate gaming is still quite high, even on resolutions like 1080p, where a 6600 will set you back nearly 35k.

While The Gaming Project includes a very limited number of games to paying subscribers, the hardware savings alone tip the economics in its favor. Entrackr sampled a few games on internet connections in Bangalore and Chennai, and found that, save a few hiccups, they largely worked well.

Atri said that even the introductory pricing, which the company plans on increasing at some point, is revenue neutral for the company, and that it expects to be profitable soon. But the business model faces a looming threat: global technology conglomerates.

Sony’s PlayStation Plus Premium, Microsoft’s xCloud, and Google’s Stadia, have all yet to release in India. But the companies behind them already have an extensive presence in India, with the marketing muscle to give The Gaming Project a run for its money if they decide to expand to India. These services also offer a vast catalog of games included with cloud gaming subscriptions, something that TGP does not provide. Microsoft has repeatedly said that it plans on launching xCloud in India soon, but has not provided a timeline.

Atri conceded that half a million dollars may not be enough to face off against these companies. But he said that even in the event that they enter the market, the firm’s first mover advantage would help it in an unexpected way. Over the months, TGP has tweaked its software to stream optimally in the typical Indian broadband connection, based on data that only it has.

“These guys [Microsoft, Sony or Google] can come in and bulldoze me, but I will always have the opportunity to sell them my software,” Atri said. Perhaps just the added comfort his early investors needed to jump in and play.