Mobile Mavens

Will India's mobile games market really be worth $1.1 billion by 2020?

Will India's mobile games market really be worth $1.1 billion by 2020?

At the NASSCOM Game Developer Conference 2016, App Annie released a report in which it projected that Indian mobile gaming revenues will reach $1.1 billion by 2020.

But what do the mobile game developers currently working in the country think of this? Do they see the potential, or is this nothing but a case of wishful thinking?

To find out, we asked our Indian Mavens

  • Do you believe that the Indian mobile games market will hit $1.1 billion by 2020?
  • How do you think the Indian mobile games industry can help reach this figure?
Shailesh Prabhu Founder Yellow Monkey Studios

Shailesh Prabhu is an Indie Game Designer from India who has been designing games for over ten years. Seven years ago he founded Yellow Monkey Studios and is the recipient of numerous game design and entrepreneurship awards around the world. Socioball, HUEBRIX, It’s Just a Thought are some of his recent games. Shailesh is also an excellent cook, loves playing tennis, gardening and DIY projects apart from sporting facial hair.

No. Not the first time such claims have been made. I will believe it when I see it actually happen.

Also, "At NASSCOM Gaming Forum we are excited by these findings and the opportunities these give to both local developers and publishers," said NASSCOM Gaming Forum Chairman Rajesh Rao" contradicts "Clash of Clans, Candy Crush Saga and Clash of Kings made up the top three grossing in Q2 2016, with strategy the top genre by revenue".

Clearly the international games are dominating and followed by gambling "games". How then are we continuing to build an innovative games economy?

We still have major issues to tackle in terms of the economy which historically NASSCOM has been more than happy to ignore to simply push the investor agenda and paint pretty pictures.

Shaan Mishra Founder, Designer Tryhard Entertainment

Will agree what Shailesh says.

The problem with the Indian market has always been the audience's preference for international products.
Shaan Mishra

The major problem with the Indian market has always been the preferences of the audience for international products which carries a good critical reputation as well as a strong word of mouth from their peer circle.

As such, if you remove the gambling, cricket and bollywood base, it's hard to develop a loyal, dedicated fanbase that ensures future growth for your next ventures.

I think moving away from established genres or getting out new interesting games that matches global standard is the right step forward.

India is really cheap for game development compared to the Western game dev hubs, and it's really weird that we are not taking more risk on the type/reach of the games we are putting out.

I think if we start with the above, then coupled with the recent demonetisation changes, we might develop a gaming culture as India moves forward towards a digital economy and gets comfortable paying online.

Manish Agarwal CEO Nazara Games

I hope the above happens, as all of us in the ecosystem would love to have large domestic market and make money, as well as getting high off seeing unknown people around us playing games created by us.

However, the probability of  the Indian market hitting the above numbers massively depends upon what I call 'the Joker in the pack' - which is nothing but Indian consumer’s habit of paying for content they have got for free.

I believe the IAP-based model in India is going to be tough nut to crack and will need a new business model tailor-made for Indian consumer habits.

Multiple experiments would be needed to arrive at the sweet spot, and I hope passion for making a success in Indian market outlasts the gloom and doom associated with monetisation in India.

Massive investment in creating user habits for paying for gaming content, whether indian or global, would be needed to spur user transactions in mobile gaming.

In my opinion, this would happen either by companies like Facebook or Tencent and its investee companies in India, as none of the Indian players in the current ecosystem have seen the massive revenues that gaming can generate and hence conviction on a long gestation period is kind of hard to expect.

Rituraj Behera Co-founder Cympl

My name is Rituraj Behera and I am Co-founder of Cympl, an Indie game studio started back in November 2012.

I had begun my career as an application developer but I always loved playing games which attracted me to the fast growing mobile games industry.

I had started the organization with a vision to create high quality mobile games and an attitude to learn & improve everyday.

Well, to come to this conclusion we need to look at the current scenario and future assumptions on how things that affect revenues are going to change over time.

I am assuming here we are not even considering revenues from ads, which is also going to be a huge chunk of the revenues.

I have listed three major factors that affect total revenues:

  • Total Players (DAU)
  • IAP Conversion (Player to Payer percentage)
  • ARPPU (Average Revenues Per Paying User)

Increase in any of the above factors directly affects revenues earned. We are at $16M per quarter and need to move to $275M per quarter, which is 17x current revenues.

Now let’s look at environmental factors and how they affect the above:

  • Smartphone Penetration

Smartphone adoption is on the rise and expected to increase from 260 million to 600 million by 2020 (presented in Google Playtime event). Also, 85% of our population is below the age of 44, perfect for gamers.

Leads to: Increase in Total Players.

  • Payment infrastructure

Most people do not have credit cards, but recently other cashless options like carrier billing and payment wallets such as Paytm have arrived.

Idea Cellular has already rolled out carrier billing

Therefore, assumption is that payment infrastructure will continue to improve.

Leads to: Increase in IAP Conversion.

  • Internet Infrastructure

Most people are on a 2G network and do not have easy access to WiFi/3G/4G, which prevents them from downloading heavier size games (as games are comfort/luxury for most people and not a necessity).

But soon that is going to change with introduction of cheaper and faster internet with increased 4G/WiFi usage.

Leads to: Increase in Total Players.

  • Smartphone Quality & Affordability

Today, the mobile phones have limited storage.

Because of this, one needs to delete other apps to make space for a new one. With smartphones becoming better and cheaper, there will be higher chances of people having more and better games on their phones.

Leads to: Increase in Total Players.

  • Player intent

The market is currently in download and engage phase and poised to move towards retain and monetise phase for the mass mobile game audience.

Leads to: Increase in ARPPU & IAP Conversion.

  • Quality games with local content

As the games with relevant local content and better quality increases, the chances of people downloading, engaging, retaining and monetising also increases.

The masses will be able to relate to the theme better, and most importantly, will continue playing the game for a long time.

Leads to: Increase in Players, IAP Conversion & ARPPU.

  • Economic Improvement

As the economic situation of the country improves, the majority of Indians' standard of living and earning potential will also increase.

This will make sure that people have enough money to spend on entertainment.

Leads to: Increase in IAP Conversion & ARPPU.

Keeping the above points in mind, even if we double revenues every year (200% CAGR) until the end of 2020, we should reach over $1 billion in revenues.

I believe that we will, if not hit, then reach very close to $1.1 billion.
Rituraj Behera

So yes, I definitely believe that we will, if not hit, then reach very close to $1.1 billion revenues!

The local industry can help by making quality games with theme that appeals to your target audience.

In the case of the Indian audience, we need to make games that are locally relevant so that they can quickly and easily relate to the game.

No need to teach players how to play Teen Patti as we have been playing it for years, but if we introduce Poker then only a niche audience understands it.

In terms of quality of the game, it does not just mean how the art looks or the game feels.

It should be a complete package: interesting and deep gameplay, relevant theme, game balancing, amazing UI/UX, retaining core players for months (content planning) and much more!

Amit Goyal Co-founder SuperSike Games

I personally think calling this report optimistic would be an understatement, though I would love to be wrong about this.

My stance on this has always been the same: Indian mobile consumers do not see value in spending on games owing to a range of economic, social and cultural factors, some of which have been touched upon by Shailesh.

This is not changing any time soon, and certainly not fast enough to drive the monstrous growth suggested by App Annie’s report.

The dramatic growth forecasted by App Annie

Data can be interpreted in multiple ways. Some of my observations on the report are below:

As per the report, the game downloads have more than doubled (2.1x), but the growth in time spent playing games has not grown at the same pace (1.3x) in the same time period.

This tends to indicate that while Indians are downloading more games, they are spending less time on each individual game.

I don’t know about the others, but that is not necessarily good for the lifetime value of F2P games, which rely on LTV to offset the user acquisition cost.

Indian users are sampling a range of games, but do not seem as keen on spending money.
Amit Goyal

What it indicates is that due to huge variety of F2P games on the App Stores, Indian users are sampling a range of games, but do not seem as keen on spending money on the games they are playing, instead moving on to the next one when they get bored or hit a paywall.

On the very next page, the report suggests that the revenue growth is based on their App Market Maturity Model.

However, they have also mentioned in the same breath that “at the current stage of growth, game monetisation in India has yet to peak, quagmired by existing challenges in infrastructure, payment channels and low spending habits".

While I do not have data on how the recent addition of carrier billing to Google Play is impacting app monetisation, anyone residing in India will vouch for the fact that challenges in infrastructure and low spending habits is not going to improve drastically any time soon (certainly not by 2020).

Here’s another recent statistic for you: the percentage of wealth controlled by the top 1% population in India is 58.4% of the total wealth of the country.

Globally, we are second only to Russia. This statistic, in my opinion, is very relevant especially to the low spending habits.

If you want to look at the “billion strong” market, then you also must look at how many of the billion are even capable of splurging on games.

So while the growth in the revenue does seem impressive (1.8x between Q2 2014 and Q2 2016), hitting $1.1 billion by 2020 seems like a far stretch.

App Annie shows things are going in the right direction

But I think we should decouple the Indian mobile games industry from Indian mobile games market.

The Indian mobile games industry is capable of growing at a much faster pace than the Indian mobile games market, but the growth indices are different.

From a qualitative perspective, there has to be a strong focus on knowledge sharing (both within the Indian developers community as well as with the larger international community).

I personally feel there has to be renewed efforts on overall improvement in certain aspects of game development, such as game design and game art.

Hitting $1.1 billion in revenue from the Indian market is not impossible, but I believe it is going to be a long game (2025, maybe?), and the Indian games industry can only be a driver in that space if the quality bar is on par with international titles.

Otherwise, even a larger Indian market will see the same trends as we are seeing now - i.e. the charts being dominated by global titles.

Nalin Savara CEO and Technical Director Darksun Technologies

Definitely - the Indian mobile games market will hit $1.1 billion by 2020 - though it will definitely not a smooth ride ahead.

It will not be smooth because:

  • I agree with Shailesh that NASSCOM and others are talking up the market a lot - because that's what investors want.
  • I agree with Manish that the IAP model is going to be a tough nut to crack - and the Indian consumer will not necessarily switch to paying for content at the same rate at which the market grows.

However, obstacles aside, the Indian mobile games market will definitely hit $1.1 billion by 2020 because e-commerce and smartphones are already big in India, and their further explosion will mean that everyone will have transacted online.

Demonetisation means Indian may well become one of the largest markets in the world for cashless transactions.
Nalin Savara

This means they will already have a comfort factor with paying online and if they have paid for goods or services online, they will be comfortable even paying for mobile content online.

Crucially, they would also have others in their social circle who regularly pay for and consume paid content online - including games.

Furthermore, the current demonetisation - and the push towards mobile wallets, electronic and internet banking - means that in a few short months, India may well become one of the largest markets in the world for e-commerce and cashless transactions.

And it is already one of the largest markets in the world for mobile phone connections and smartphones.

This means that there will be a proportionate increase in the number of online transactions and IAPs, even from categories of users totally outside the tech industry - like housewives, college students and middle-aged men.

They will now start paying for online content as impulse purchases - just as they pay for a bottle of cola or a chocolate bar.

We can help the Indian mobile games industry reach this figure by being bullish and optimistic about the ecosystem.

We should create India-targeted content which we ourselves are passionate about rather than trying to find rationalisations and globalised generalisations to fit our own content creation strategy.

Chandan Mohanty CEO Leprechaun Games

I can only answer this from the point of being a person who spends money on games in India.

I believe that the Indian mobile games market can hit $1.1 billion by 2020, but no one is making games in India where I can spend my money.

Unless, we fix this, we won't get to the money. In Clash Royale, where I spent about $1,400 last year, I am in an Indian clan.

Clash Royale proves Indian users will pay

It's a top 10 clan. Most players buy something or other. Now, with the 320 Rupees offers, most are at least buying the legendary chests.

People are ready to spend. If we are smart about the pricing and 10 Rupees IAP, like Timuz does, you can get lots of traction and grab more people.

Hrishi Oberoi Founder Photon Tadpole

Will the Indian mobile games market hit $1.1 billion by 2020? Well, after the year that 2016 has been, I’d have to say anything is possible!

Seriously though, to see if this market can hit $1.1 billion, we have to see where we are right now and by my estimates, we are at $230 to $250 million.

Out of this, only about $50 to $60 million is on the organised App Stores (Google Play and Apple App Store), the rest is through multiple other forms of distribution and monetisation including third-party app stores, OEM embeds, OEM app stores, operator portals and legacy WAP portals.

App Annie’s report did state that this overall market would hit $1.1 billion, and not just the organised App Stores.
Hrishi Oberoi

Most of these alternative store's business models cater to the middle men rather than the game developers themselves and therefore the distributors, publishers, operators and billing providers are the ones who really make the money and not the game creators themselves.

A significant portion of this would also be from advertising and since the usage is overall increasing, advertising revenues would also increase.

I’m not sure if anyone picked this up, but App Annie’s report did state that this overall market would hit $1.1 billion, and not just the organised App Stores.

Still, even with the this current estimate, the market would have to quadruple in just about four years and even that’s a significant ask.

Having said that, I think a more pertinent question is what does this mean for Indian developers?

Well, for most Indian developers, unless they are working towards creating a business from the Indian market, it won’t mean much and this is why:

  • Poor Monetisation

A lot of Indian developers are not good at monetising their games so regardless of the number of downloads they manage to get, they won’t be able to convert those users to revenues unless they try to focus on monetisation a little more.

The bottom line is, if you are making $50 from India now, you will only make $200 from India by 2020 - so no major shift.

  • Global Focus

A lot of Indian developers are not building games for the Indian market so the growth of the Indian market is just an incidental revenue increase for them.

They will still focus on overall global success and revenues from developed markets like the US and UK.

  • $1.1bn market is still small

In 2020, even if the market hits $1.1 billion, India will still not be amongst the top 20 mobile gaming markets worldwide.

And even then, it would just make up 0.5% of the global market (considering that the global games market is already at about $100 billion in 2016).

  • Global Consumption:

As the report also states, apart from a few genres - Teen Patti, Cricket, Bollywood, local IPs - local content has not been able to crack the dominance of global players in the market as yet.

If the market does grow, the maximum benefit will continue to be to these dominant international players.

In the end, the factors that would push this market to reach $1.1 billion would mostly constitute of areas outside the direct influence of the industry.

What we can do is continue to work towards creating better quality games.
Hrishi Oberoi

In general, and this would depend more on the Indian ecosystem, infrastructure and general socio-economic factors that most of the others have already stated.

Factors such as growth of the smartphone user base in India, increase in digital payments due to demonetisation, the increase in connectivity due to easier access to 3G and 4G and new players like Jio making the internet rates more affordable, etc.

For those in the industry who do believe this will happen and are interested in building a business around it, what we can do is continue to work towards creating better quality games.

Better polished content, with production values that can rival the international players who dominate the industry and content that would be relevant for the Indian audience that we want to serve while not turning a blind eye to multiple monetisation opportunities as well.

By doing this, I’m not sure whether we would still see a single game that would dominate the people’s consciousness, but as an industry I’m sure that the small successes of multiple games will contribute to this overall growth.

Or, the world could be destroyed by 2020… you never know!

Features Editor

Matt is really bad at playing games, but hopefully a little better at writing about them. He's Features Editor for PocketGamer.biz, and has also written for lesser publications such as IGN, VICE, and Paste Magazine.

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