PokemonGO opens up possibilities for developer’s, advertisers; here’s how India can play catch-up

By: | Published: August 23, 2016 6:35 AM

The success of Pokémon GO has opened up a vista of possibilities for game developers and advertisers alike. BrandWagon examines what the mobile gaming fuss is all about and how India needs to play catch up

 (Reuters)The success of Pokémon GO has shown the potential for AR and game developers are sitting up and taking notice. (Reuters)

As the adage goes — life is a game; play it. In today’s context, that applies quite literally. Crushing candies or targeting pigs with angry birds seems passé as mobile gaming evolves to bring in a convergence of different technologies like augmented reality (AR), GPS and social media to deliver exciting experiences to users.

The latest to take the gaming world by storm is Pokémon GO, marrying a classic 20 year-old franchise with AR, where players walk around their neighbourhoods in real life, searching and ‘capturing’ Pokémon cartoon characters on their smartphones. Although the game is still not officially available in India, enthusiastic gamers have downloaded the package files and can be seen spread across neighbourhoods in search for the characters.

But does this also induce a habit of paying for Pokécoins, which help you buy special items to capture the characters? The answer is a clear no.

With Indians not habituated to pay for content or games, the mobile gaming industry is not growing as fast as in other markets and is dependent on native advertising while in-app purchases (IAP) are low. “The day this changes, the market will change,” states Manish Agarwal, CEO, Nazara Technologies.

Although Pokémon GO features no ads at the moment, it gives advertisers and game developers an opportunity to insert geo-targeted ads within the game, or brick and mortar stores to integrate within the game content. For example, auto-rickshaw aggregator Jugnoo has integrated Pokémon GO into its app. This customer engagement endeavour helps users play the game while riding with Jungoo. The latest update of the app will show all the Pokéstops and gyms that are essential to the game and users can plan their ride accordingly.

While technologies in gaming are being leveraged to create immersive consumer experiences, it is yet to take off fully in India. With banner and interstitial ads contributing to a bad user experience, how are game developers making money, and do advertisers see value?

Let the games begin

This is an exciting time for the Indian gaming industry, believes Siddhartha Roy, CEO, Hungama.com. “In a mobile gaming market that is worth approximately R1,300 crore, around 50 million people play games on their smartphones and older feature phones and this number is growing at a CAGR of 40-50%,” he says.

The success of Pokémon GO has shown the potential for AR and game developers are sitting up and taking notice. The game has the power to lift users off their couch and take them out in the real world physically encompassing retail stores, bars, restaurants, cinemas etc. A good example of an omni-channel experience done right.

In fact, over 60% of Indian game developers use the free-to-play model that is backed by advertising. Native advertising, by integrating brands inside the game, is the mainstay for content developers and publishers.

Earlier this year, with the launch of the Angry Birds action game, Rovio experimented with AR in cognition with Kurkure where the angry birds, namely Red, Chuck and Bomb, photobombed consumers’ selfies as a feature of the game.

Reward videos and advert games among others are some of the other ways in which brands are integrating themselves into games to derive value. A majority of revenues for mobile games lies in the freemium model and is split amongst IAP and ad revenues, with the former commanding a bulk of revenues at around 80%. India is very focussed on advertising revenues as most of the players are not earning money through IAP.

“Until Pokémon GO, no game in this space had the scale or the user base to drive significant traffic and have

revenue-generating business models. This is a great start for all location-based game enthusiasts and something which we think will evolve in the future,” says Amit Khanduja, CEO, Reliance Entertainment — Digital.

Now consider mobile ad network Seventynine, which helps advertisers place their brands in a non-intrusive way. For example, it incorporated Parle G into a Chhota Bheem game where Bheem picks up Parle G biscuits for energy.

“The time spent on gaming apps is around 15-20 hours weekly. But people will wait for hours to move onto the next level rather than paying for it. Banner ads or pop-ups are not getting a very good response so the only thing working is smart native advertising,” says Chirag Shah, co-founder, Seventynine.

Interestingly, 48% of app usage time on mobile phones is on gaming in India. Advertisers need to pick a game that has capacity to reach a wider user base, show a lot more impressions and allow for fine targeting.

Anila Andrade, AVP, operations at 99Games, says the company has tried both approaches. “Our flagship title Star Chef — a freemium game in the cooking and restaurant management space, has 80% of its revenue coming in from IAP. While in the case of Dhoom: 3 The Game, 75% of our revenues came from ads versus 25% from IAP.”

Unlocking monetisation

Rajiv Dingra, founder and CEO, WATConsult states India is Asia’s fastest-growing mobile gaming market, but the problem is that 80% of brands are fence-sitters and don’t take risks till someone else does. Advertising on games in India is very limited and would be single digits of overall ad spends, state experts, but it could grow in the near future when brands realise the engagement level.

Monetisation remains a challenge because in-app purchases in India are inhibited by two reasons. One, the last mile payment is a problem, and two, more importantly, people aren’t used to paying in-app unlike China, Korea or Japan where people are habituated to pay.

“The game dynamics have to be simpler. If it’s too complex, users will get overwhelmed and run away. The exit barriers are very low and they will uninstall the game if they don’t like it and move on to another one. The data conscious consumer is also reluctant to download games because of large file size,” explains Agarwal of Nazara.

Roy of Hungama.com adds, “Barely 20% of the total users who play games on mobile opt for in-app purchases. People who buy games are generally parents, who opt for in-app purchases for their kids’ consumption.” Currently, game developers in India are earning only 30% of what game developers in the West are earning through advertisers. Another problem is the lack of measurement in the gaming vertical and with no data guiding them, brands are reluctant to spend.

Giving a perspective of the West, Dushyant Jani, founder and CEO, Mobclixs Technologies says, “With only 2.8% of mobile gamers classified as big spenders globally, gaming companies are focussed more on unearthing these ‘whales’, measuring their value and attempting to increase their spend. The US boasts of the highest percentage of these lucrative mobile gamers at 4.8%.”

The next level

Rohan Patil, MD, AppLift shares that as per a research by IAB, 75% of gamers are willing to accept advertising in free apps or online games if it means gaining access to exclusive and interesting content (an extra life in the game or unlocking a level). Thus, on-the-go apps can have elements like discount vouchers and goodies that can be unlocked within the game itself.

In India, most of the in-game advertisers are from e-commerce, fashion, travel and payment apps which are looking for engaged mobile app users. As more brick and mortar sectors enter into the mobile space, it is going to get increasingly competitive. In fact, globally, QSR like McDonald’s are already identifying ways to integrate with Pokémon GO.

“Ad monetisation will be the primary driver but we should also expect in-app monetisation growing especially with the subscription model for in-app purchases,” says Khanduja.

In terms of popularity, local games have had a good uptake in India. “The success of Indian games like Teen Patti and Rummy clearly suggest that Indian gamers also like localised games, so offering content in Hindi can take your game a long way especially when looking at a larger outreach in regional markets,” says Zafar Rais, CEO, MindShift Interactive.

Games like Candy Crush, Subway Surfer and Temple Run are also performing well and experts state there are 53 million monthly active users for Candy Crush in India. But the future of gaming does not lie in gaming, believes Karan Binani, associate director, client services, Razorfish India. “It is going to be about applying game mechanics to user interaction in the context of real life to deliver personalised experiences,” he says.

So can India produce the next Pokémon GO and generate the same kind of frenzy for advertisers and players? Well, it isn’t ‘game over’ yet.

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