On the occasion of the 78th Independence Day, Prime Minister Narendra Modi urged youths to focus on designing world-class products including semiconductors and gaming experiences, highlighting the country’s talent and potential to become a global leader in the rapidly growing sectors. This has sparked hope of growth for the currently struggling online gaming companies. Experts opined that Indian game developers can dominate the global gaming market by focusing on what we do well. “Game development requires the building of various skillsets. In India, our core capabilities mainly centre around mobile games. However, given the capabilities of our storytellers, artists and animators, we need to invest in AAA games to take advantage of global demand for such games. However, it is not only about developing a game. Building a global game requires an understanding of what type of game works well in which market and how to manage and operate games. Once a game is developed, it needs to be marketed, skinned in multiple languages, customized for markets and its fan communities managed. We’ve become a significant back office service provider for technology services to entire world, and that should encourage us to aim for a similar goal in game development and management.” Ashish Pherwani, leader – media and entertainment, EY told BrandWagon Online.
The online gaming industry grew 22% to become the fourth largest segment of the Indian media and entertainment sector in 2023 displacing filmed entertainment, according to a recent FICCI-EY report. Although it is expected that, the total online gaming industry is expected to reach the Rs 38,8oo crore mark by 2026 as per the FICCI-EY report and transaction based games are expected to earn Rs 32100 crore by that time, there is a steep decline, especially after the imposition of 28% GST in total deposit value. Investments have lowered significantly when compared to last year. The online gaming industry raised total fund of s worth $23.4 million between January-August this year, thereby reporting a decline of 78.77%, when compared with the same period, during the previous year, when it raised funds worth $110.2 million, revealed data from Tracxn, a data platform.
Go for global
To be sure, already a few Indian game developers have pivoted their business model from being pure-play fantasy gaming companies to game-developing firms. Companies like WinZO, and MPL among others have expanded their business in global markets. For instance, WinZO, an Indian interactive platform partnered with Fundação Getulio Vargas (FGV), Brazil’s educational institution for research projects and hiring local talents in July 2024. The company claimed that this partnership would deepen its presence in Brazil, extending the company’s objective to invest $50 million in the continent.“Indian game developers can enter and dominate the global gaming market by leveraging their strengths in mobile gaming. We have to also harmonise the disparity between our global share of users and app downloads and the share of the revenue. Global companies had to innovate to compete in the Indian market wherein they offered micro-purchases (such as in the case of FMCG) to attract the Indian consumer user base. However, Indian game developers and companies have already tested and aced this model,” Saumya Singh Rathore, co-founder, WinZO games said.
It is considered that the Indian market has a strong potential to dominate the global market Industry experts opine. even if India increases its market share to 20% (in line with its global user base and global app download share) by 2034, we are looking at a $60 billion opportunity. According to Rathor, this is possible considering the US holds 19.3% of the market share with just 7.4% of the app downloads, Japan accounts for eight percentage of the market share with just 1.1% of downloads, the UK accounts for 3.4% of the market share with just 1.3% downloads, and Germany accounts for 7.2% market share with just 1.6% downloads. But this convergence will happen when Indian gaming companies will go global and when these companies can successfully produce AAA titles.
AAA games: From cost to challenges
It is believed that developing a AAA game is not a small feat as it always takes a large amount of money. On the other hand, fantasy games have a broader cost range. Experts opined AAA games typically require much larger financial investments due to their scale, technical demands and market expectations where fantasy games offer more flexibility in budget. “AAA games are akin to blockbuster movies in the gaming world, often requiring budgets that range from $50 million to $300 million or more. Projects like Grand Theft Auto V, Red Dead Redemption 2, and The Last of Us Part II, involve large development teams, cutting-edge technology, and top-tier production values. The high costs are driven by several factors, including advanced game engines like Unreal Engine, high-quality art and animation, professional voice acting, and extensive testing and quality assurance processes. In contrast, fantasy games have a broader cost range, typically between $10 million and $100 million, depending on the project’s scale,” Roby John, co-founder and CEO, SuperGaming said.
However, according to experts, it is not only about investment that can solely make an AAA game. “It takes about four to five years of time and a team of more than 200-300 developers to make such game. This cost does not even include the marketing budget that will be required to push the product in the market,” Rohit Agarwal, founder and director, Alpha Zegus, said.
Ray of light
Despite lower investments after October 2023, it is considered that India has the potential to become a major player in AAA game development which happens to be high on investment endavours. “Investment remains a significant hurdle for building AAA games, however, multiple pay-to-play companies, including the two gaming unicorns have also set up studios in the past couple of years, which aim to build AAA games from India for the world. Nazara, the only listed gaming company in India is growing exponentially and planting India’s flag across various geographies,” Roland Landers, spokesperson for All India Game Developers’ Forum (AIGDF) said.
In addition to that, there is hope that upcoming policies, especially around animation, visual effects, gaming, and comics(AVCG) and regulations could attract the necessary investment. However, with success not being assured and million dollars at stake in the case of AAA games, industry experts realise that specialised technical talent to build AAA title is limited in India at the moment. According to Landers while we have enough potential talent, it will take some time to organically realise it. Mentorship is equally important here. We believe that the government through its AVGC mission, as well as its soft nudge approach, can work with and encourage multiple stakeholders to solve all these challenges. It is a long-term project and the government has already started thinking on these lines.