India has emerged as a bright spot this year amid a slowdown in the global gaming industry. The sector is set to take a big leap in the coming year as demand for local content increases and capital inflows increase.
The Indian startup world has been cooling off, but the domestic gaming sector has seen a lot of action in 2022. As Indian consumers warmed to spending money on mobile games, local game studios were eager to make bigger, better and more complex games.
“Now is a good time to start investing in building games focused on in-app purchases in the Indian market. If you build them with global quality, if you have enough of a local angle, it should do well,” said Rohit Bhatt. Founder of 99Games, a Udupi-based game studio that develops and publishes mobile games.
Anuj Tandon, CEO of JetSynthesis, said that Indian game studios have started experimenting with bigger projects and now there is capital to support these initiatives, which is a positive sign for the nascent but growing industry.
JetSynthesys, which counts Kris Gopalakrishnan, Adar Poonawalla and Sachin Tendulkar among its backers, launched a new gaming startup Jetapult in June this year, which plans to invest up to $100 million to acquire game studios and other new markets in India – and model it over the next two years. .
South Korean gaming giant Crafton invested $5.4 million in JetSynthesys-owned Nautilus Mobile in February 2022, with $10 million in funding led by Bengaluru-based Leela Games and Rain Ventures and participation from Bitkraft Ventures, Galaxy Interactive, Krafton and Sequoia Capital, among others.
Esports and skill game app Mobile Premier League this year established a game studio called Mayhem Studios to develop AAA mobile games for the domestic and international markets. He announced the title of Indian War Royale. AAA games typically have larger budgets for development and marketing purposes.
“There were more (game) studios funded this year than any other year,” Tandon said. He said a vibrant game development studio ecosystem is crucial to building a strong gaming ecosystem in the country in the long run.
As the real-money gaming sector faces significant regulatory headwinds, tax uncertainty related to GST or growing hostility to state governments trying to ban some or all forms of real-money gaming, investors are looking to diversify their portfolios, Bhatt said. .
Several gaming founders and industry executives Moneycontrol spoke to said they expect more gaming-focused funds to be set up locally and international funds to make large-scale investments in the sector in the coming years.
That said, he pointed out that there is currently a supply crunch in the market, as a result of which there are not many companies seeking support yet.
These developments are being driven by the ever-increasing gaming habits of consumers in India who are looking for games that offer deep, complex experiences and are ready to spend more on mobile games.
Robbie John, co-founder of Supergaming, said that there is a growing awareness of complex gaming genres, something that they have not seen in India’s audience in large numbers till this year.
“As we ramp up our efforts around the upcoming Battle Royale Indus, we’ve noticed that the audience is incredibly familiar with the genre and has a distinct preference for features and options that help us build a better game,” John said.
Justin Keeling, general partner at Lumikai, a gaming and interactive media venture fund, said more Indians are playing “deep midcore gaming experiences,” creating a “huge opportunity for developers to build high-quality, culturally resonant games for a highly monetized audience.”
Midcore games typically provide a more complex gaming experience than arcade games, requiring players to use their own skills and strategies to progress, resulting in a longer investment of months to years.
Midcore games were the fastest-growing gaming category in India in FY22, generating revenue of nearly $550 million, according to a report by gaming and interactive media venture fund Lumikai.
“While real-money gaming (RMG) has traditionally been the largest revenue driver in the Indian gaming market, we forecast Midcore Games to be the largest revenue driver, growing at 32 percent year-on-year (YoY). It is driving casual in-app purchases as the fastest growing revenue channel, year-on-year.” growing by 34 percent,” Keeling said.
India is the fastest growing region in Asia in terms of both revenue and players, with mobile and PC gaming revenue expected to reach $704.5 million by 2022, according to Nico Partners, a market research and consulting firm that covers video games. E-sports, and streaming across continents.
This is set to grow at a five-year compound annual growth rate of 21.1 percent to touch $1.4 billion by 2026. This does not include earnings from real money games. In India, 34 percent of gamers will spend money on non-RMG titles by 2022, firm said.
Sports as an industry is maturing in the country, the segment is seeing huge growth this year, be it tournament organizers or talent agencies managing game influencers and sending athletes.
Earlier this week, Esports received official recognition from the Indian government as part of “multi-sports activities”, giving a major boost to the fast-growing industry.
This growth is coming at a time when the global mobile games market is suffering from difficult macroeconomic conditions and a recession-like environment. Apple’s IS-related privacy changes have put enormous pressure on small and large organizations to engage in targeted marketing, exacerbating the industry’s woes.
Bhat says these changes will completely reset how in-game consumer purchases happen in the global gaming industry, resulting in inefficient marketing campaigns, putting pressure on the margins of many large companies.
Revenue from the global mobile games market is set to decline for the first time in 20-25 years. Mobile games are estimated to generate $92.2 billion in revenue this year, a 6.4 percent year-over-year decline, according to game market research firm Newsoo. The overall gaming market is expected to generate $184 billion in revenue this year, down 4.3 percent, he said.
Tandon, however, believes that there are two markets that are driving the trend – India and the MENA (Middle East and North Africa) region – which are currently experiencing high demand and growth, with better opportunities for local developers to succeed.
“Although the global industry looks bleak, if there is an opportunity to build games, two markets to focus on are India and MENA. These are probably the global bright spots in the overall game industry. Therefore, I am still very optimistic about it. The industry is moving forward,” he said.
One of the challenges in the sector is regulatory uncertainty. Earlier this year, India’s biggest grossing games Garena Free Fire and Crafton Battlefield Mobile India (BGMI) were suddenly pulled from the Google Play Store and Apple App Store under a government order under Information Technology Section 69A. Law.
In addition to having a major impact on the esports industry, these restrictions are making global game studios somewhat wary of expanding their operations into the country, industry executives said. However, he also pointed out that this could serve as an opportunity for local gaming companies to make it big in the country.
Game distribution and marketing is also becoming more difficult on mobile phones, as Apple’s privacy policy changes and Google navigates similar restrictions on Android smartphones, restricting the sharing of user data with third parties. “How to solve is going to be a big trend in 2023, not just in India but globally,” Tandon said.
“Getting a new global hit is much harder now than it was 3-4 years ago, and it’s getting more complicated with things like IDFA (Apple’s ID for Advertisers) and app store commissions,” he said.
John expects gaming to be creator-driven and personality-driven to maximize visibility and distribution. “The knowledge of game development and content creator-powered distribution ensures that these games are treated as genuine, sincere endeavors – essential to break through and build a genuine relationship with players and the community at large,” he said.
He cited the lack of an IP innovation or expert framework in the country or any training to shape the skills of experts as a barrier to building a new or original title in the market.
Another key issue is the difference between RMG and non-RMG games, which the founders believe could lead to more attention and investments for other non-RMG game companies as well.
“At some point, the government should decide to classify them separately and not both as online gaming clubs,” said Bhatt.
Many game studios and developers across the country are building games of different types and sizes and require specific tools and platforms to handle certain aspects of game development such as player data management, analytics and effective monetization. .
According to Tandon of JetSynthesys, game developers will become more dependent on game publishers for distribution and discovery of their game titles, which was not needed for the past 2-3 years.
In the year 2023 Monetization is likely to improve in other gaming genres, especially sports related games, football, cricket or carrom among others. “I think cricket is one dark horse to look for in terms of monetization,” he said.
With the growing adoption of blockchain and digital assets, Web3 Games saw a surge of activity and investment earlier this year.
However, the collapse of Axie Infinity, once considered the poster child of the blockchain game, along with the collapse of Terra Luna and FTX, and a major correction in the crypto space have created serious credibility issues for the ecosystem. This has led to a cooling of investor interest in the space.
“Web3 gaming was hyperbolic earlier this year, but now it’s becoming a bit more realistic. Everyone understands that it’s not just about building a game and putting Web3 elements on top of it. Things in mind,” said Bhat of 99Games.
Tandon in 2010 He believes 2023 could be the year Web3 gaming matures with serious players exploring the space, though there will be “a lot of pain for the next quarter or two.”
“The first wave of any part of the game is always the first guys, what I like to call tourists. The real good starts now in 2023. Those who are willing to hang in the market and endure will start to find more mature business models. This will eventually lead to stable income generation.
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