Enter the digital playground

Written by Rakesh Raman | Updated: Apr 1 2008, 05:30am hrs
Late last year, it was an ecstatic moment for tech marketers when Halo 3, a video game developed for Microsoft Xbox 360 console, grossed $300 million worldwide in its first week of launch. Even a big Hollywood movie will struggle to do that kind of business. Computer video gaming is a new-generation craze that has its own blockbusters.

Recent big global hits include Enemy Territory, Spider Man: Friend or Foe, Guitar Hero III, Heavenly Sword, and Fracture: Terrain Demolition. These are produced by players such as Microsoft, Activision, LucasArts, Sony, Nintendo and Disney. According to DFC Intelligence, a global digital games market tracker, the worldwide video game market will reach $47 billion in 2009. This includes revenue from video game hardware and software, dedicated portable system hardware and software, PC games, and online PC and console games. And the combined cumulative worldwide sales for Microsoft Xbox 360, Sony PlayStation 3 and Nintendo Wii systems are expected to be 180-210 million units by 2012.

But these figures hardly make any sense for the Indian market that has mostly relied on low-cost PCs, which are not capable of running high-end games because of their weak graphics/multimedia performance. Of nearly 600,000 home PCs sold annually in India, barely one-tenth can handle processor-burning video games. And sales of gaming consoles can be counted on your fingers.

In India, services like Zapak, Yahoo! Games, and Indiagames are offering digital gamessome free, some paidmostly targeting young consumers. However, the market is in its infancy, as most consumers are interested only in casual games like car racing, crossword, sudoku and so on. But global markets are fast moving up the value chain by offering epic games (like Halo 3 and Heavenly Sword) that use high-end technology for development.

Can Indian entertainment companies ignore the promise that video games offer No. Simply because India has a huge potential consumer base. Currently, the Indian market is in the casual games phase. Its easy to develop these cheaply. But they are rarely addictive, and command low premiums. Indian entertainment marketers should focus instead on lucrative high-end games. And they should be prepared to spend on product and market development. Its estimated that massively multiplayer online games (MMOGs) that are played on dedicated systems in gaming parlours or on expensive gaming consoles like Xbox, PlayStation or Wii consume over $20 million per game (enough to make a couple of big Bollywood flicks) as development cost. And theyre very high priced: $20-60 per game in the retail market. So, if there are not enough consumers for them, it doesnt make sense to develop such games. Market development, therefore, is crucial.

Thriller film franchises, of course, are the obvious partnership deals to strike. But here, too, one should not assume that readymade character or concept fame via the silver screen will translate into success without any of a games own thrills. Global competition is high, and production is a stiff challenge. Top-class epic games can take a couple of years to makethe process is even more elaborate than a film, with animation software and special effects to go along with the games script. Game developers tend to be specialised units, such as Bungie Software (of Halo 3 fame), id Software and Ninja Theory. Microsoft is trying to create an open ecosystem by inviting gamers to develop games for its Xbox. The future is big. It is also a 21st century opportunity for Indian developers to combine Indian software development and entertainment industry skills to compete for the big money.

The writer is a technology market analyst. These are his personal views. Email: rr_thakur@yahoo.com