Video Games in India
Headlines
·
The market for video games in
India is increasing rapidly. Vendors have reduced their prices, which has
helped them to penetrate non-metropolitan markets. Industry estimates of the
total market for video games in India rose from Rs 4.8 billion in 2007 to
Rs 6.2 billion in 2008.
·
Sales of software titles exceed
those of hardware, in a ratio of more than 4:1, which is expected to increase
over the forecast period.
·
The Indian market in gaming
consoles currently involves just three players. Sony and Microsoft have
officially launched their latest-generation products in India, while Nintendo’s
Wii has not yet been officially launched there, although it is sold through
various channels at a substantial discount and also in the grey market.
·
Competition in the video games
console market is set to increase in India. Sony’s PlayStation 3 was officially
launched in India in April 2007.
·
As the market for gaming
consoles is still in its nascent stages within India, it has huge potential for
growth. All the experts are bullish about its potential and expect this market
to grow at 25–30% per annum in the early part of the forecast period.
Trends
·
The console gaming segment is
not very sizeable in India, although expectations of its future growth and increased
consumerism are prompting companies to establish themselves in India. Gaming
consoles attract high duties, which comprise approximately 35% of the total
product price in India, and these higher prices are limiting their legal sales
and encouraging the development of the grey market.
·
In 2008, the video games
industry in India recorded total revenues of Rs 6.2 billion and growth of
30.0% over its 2007 level. The sector comprises two subsectors – video games
hardware and video games software – and excludes the other gaming subsectors
such as mobile and online gaming. The market has registered growth rates of
more than 25% throughout the review period and is expected to continue to
follow the same growth trend throughout the forecast period.
·
Sales of software titles were
much higher than those of hardware, and software sales are expected to grow
rapidly in the short term. The market for hardware in India is yet to pick up,
as their prices are quite high. Sony PlayStation 3 is priced at Rs 39,990
for a 60 GB model, which is too high for a normal Indian household. Other
gaming consoles such as the PlayStation 2 and PSP are also priced at more than
Rs 10,000.
·
Experts report that maybe 1
million consoles are used by serious gamers in India, but it is online or PC
platforms that will draw the largest revenues in the Asia–Pacific region.
Zapak, which entered the market in 2006, claimed to have 1 million registered
users already and was expected to register 10 million users by the end of 2008.
There has been a decline in content providers’ reliance on international game
titles and increased use of Indian developers during the review period, which
are expected to continue. Almost 70% of the content sold today comprises
international titles or is based on borrowed formats, which restricts its
appeal to the mass market.
·
The online gaming market is
growing, and India will have 40 million Broadband connections by 2010, so it is
just a matter of time before gaming companies start making substantial profits.
To help overcome the primary problem of reaching out to the masses with its
gaming products, Zapak plans to launch up to 50 gaming cafes, following a model
that has been perfected by a number of countries including China.
·
Among the 15-odd game
development and distribution companies, the outlook for mobile games looks the
most promising. The mobile gaming market is currently worth about US$200
million in the US and US$3 million in India. The fact that India has more than
170 million mobile phone subscribers is a good enough bait for most game
developers, since they are downloading 1.3–1.5 million units of songs,
ring-tones and other value-added services per day, including some 30,000 game
downloads per day. This represents a good start, but not yet a significant
income stream. Most popular mobile games are based on Bollywood movies, in the
Rs 50–150 price range.
Competitive Landscape
·
Sony has emerged as leader of
the hardware subsector with a market share of 56.7% in 2007, while Microsoft
held second place with 33.4%, leaving just 9.9% divided among the other
players. Sony operates its chain of Sony World retail stores, through which its
products are available in most parts of the country, which has helped it to
become the market leader.
·
UTV Software Communications is
making a foray into the gaming business, acquiring two companies for
Rs 1.28 billion to emerge as what it claims is the largest entity in the
gaming and animation sectors in India. It also plans to invest Rs 1.35
billion in making animation movies during 2008–2010.
·
In 2006, UTV acquired a 51%
stake in Indiagames Ltd, a mobile and Broadband gaming company based in India.
In 2007, UTV acquired 70% stake in Ignition Entertainment Ltd, a US$15 million
console gaming company based in the UK. UTV has emerged as biggest player in
the software subsector, with a market share of 16.8% in 2007.
·
Gaming is not a mainstream
activity for India’s young people, so very few advertisements are broadcast
that focus on video or other computer games. Nevertheless, gaming shows are broadcast
on popular television channels such as AXN and TEN (Taj Entertainment Network)
Sports, both of which promote the newest developments in the industry by taking
users through the gaming experience using features lasting some 20–40 minutes.
·
The key brands in the gaming
console market are Microsoft and Sony. Sony has maintained its leading position
with a market share of almost 60%, while Microsoft’s Xbox is also doing well in
the market. Their success is largely attributable to the absence of competition
from any local or multinational vendor. The third major console manufacturer,
Nintendo, has not yet officially launched its Wii in India, and its products
are available only in the grey market.
·
Video games are sold through
different distribution channels from traditional toys, being sold through
specialist stores and modern, large-format retail outlets. As these stores are
mainly present in the metropolitan cities and other urban areas of the country,
sales in rural areas are almost negligible.
Prospects
·
In India, the market for video
games is still at a nascent stage and there is a huge potential for growth. It
is expected to record a CAGR of 29.0% over the forecast period and reach
Rs 22.2 billion in 2013. The software subsector will be the main driver of
this growth as customers purchase many software titles with each console. The
market in gaming software will increase from Rs 5.1 to Rs 18.8
billion during 2008–2013, while the market in gaming hardware will increase
from Rs 1.1 to Rs 3.4 billion.
·
The household penetration of
PCs in India is increasing rapidly, leading to a parallel growth in the gaming
industry, which is expected to grow at a CAGR of 29.0% over the forecast
period.
·
Increasing penetration of
Broadband in Indian households will drive the growth of online gaming and vice
versa, as the increased speed and greater bandwidth relative to dial-up
connections enhance the gaming experience. The experience of countries such as
South Korea and China suggests that online gaming will take off as the in-home
penetration of Broadband increases, and ISPs are offering their users packages
including games on demand to encourage them to spend more time on line.
·
Entertainment appeals to
Internet users of all ages, genders and income levels, and some 54% of active
Internet users enjoy access to entertainment-related applications. Online
gaming will provide another platform with which to whet the appetites of Indian
users, while casual games may be positioned to appeal to non-core segments
including women and older men.
·
The mobile gaming market has
grown rapidly within India and mobile game downloads account for a fast-growing
component in the overall mobile market.. Mobile gaming is serving to introduce
gaming to a large customer base, and many users may graduate to online gaming
over time to benefit from an enhanced gaming experience.
·
Massive multi-player online
games (MMOGs) have finally caught the fancy of Indian game developers and
consumers. Zapak and Games2win are investing heavily in building an MMOG platform,
in order to increase their retention of existing customers, and the market for
MMOGs is expected to register increased growth over the forecast period.
·
Localisation of games and
content will better address the demands of the target audience. Although most
of the development work undertaken in India is directed towards the overseas
market, the focus will shift to the domestic market in future. Several Indian
companies are currently starting to focus on customising content for the Indian
market using local themes and icons for their games, and on modifying the
available international content/idea to appeal to a larger audience within
India. A special mention should be made of Kreeda Games India Pvt Ltd and
Games2win Pvt Ltd, both of which are focusing on customising the online gaming
experience to suit Indian tastes.
Sector Data
Rs million
2003 2004 2005 2006 2007 2008
Video games
hardware 282.3 362.0 473.2 625.0 875.0 1,137.5
Video games software 1,249.9 1,565.9 2,001.3 2,599.9 3,899.8 5,069.7
Video games 1,532.2 1,927.9 2,474.5 3,224.9 4,774.8 6,207.2
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
estimates
% current value
growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Video games
hardware 30.0 32.1 303.0
Video games
software 30.0 32.3 305.6
Video games 30.0 32.3 305.1
Source: Official statistics, trade associations,
trade press, company research, trade interviews, Euromonitor estimates
% retail value
rsp
2003 2004 2005 2006 2007 2008
Store-based
retailing 99.6 99.4 98.9 98.3 97.8 96.8
Grocery retailers 4.6 4.0 3.7 3.2 4.2 5.6
Non-grocery
retailers 68.9 67.8 65.8 64.5 64.0 63.3
Mixed retailers 32.0 31.6 30.2 29.4 29.0 28.5
Leisure and
personal 36.9 36.2 35.6 35.1 35.0 34.8
goods retailers
Other store-based 26.1 27.6 29.4 30.6 29.6 27.9
retailing
Non-store
retailing 0.4 0.6 1.1 1.7 2.2 3.2
Vending - - - - - -
Homeshopping - - - - - 0.3
Internet
retailing 0.2 0.3 0.6 0.9 1.2 1.6
Direct selling 0.2 0.3 0.5 0.8 1.0 1.3
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor estimates
% retail value
rsp
Company 2004 2005 2006 2007
UTV Software
Communications - - 6.0 13.7
Electronic Arts
Inc 16.2 16.2 7.2 11.0
Sony India Pvt
Ltd 17.8 18.2 11.0 10.4
Take-Two
Interactive Software Inc - - 6.8 8.9
Konami Corp - - 7.8 7.7
Microsoft Corp
(India) Pvt Ltd - - 6.0 6.1
Activision Inc 5.7 5.7 8.6 5.6
Dhruva
Interactive - - 2.8 4.9
Ubisoft
Entertainment SA 4.1 4.0 7.8 4.6
Atari Inc 9.7 10.5 4.4 4.0
Infogrames
Entertainment SA 8.9 8.9 5.6 3.8
THQ Inc 6.5 6.5 3.6 3.3
Vivendi Universal
SA 8.1 8.9 4.1 3.1
Microsoft Corp 8.1 8.1 3.5 2.8
Eidos Plc 3.2 3.2 - -
Others 11.5 9.9 14.7 10.0
Total 100.0 100.0 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor estimates
Rs million
2008 2009 2010 2011 2012 2013
Video games
hardware 1,137.5 1,442.4 1,827.5 2,288.0 2,782.2 3,355.3
Video games
software 5,069.7 6,651.5 8,813.2 11,536.5 14,824.4 18,797.4
Video games 6,207.2 8,093.8 10,640.7 13,824.5 17,606.6 22,152.7
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
estimates
% constant value
growth
2008-13
CAGR 2008/13
TOTAL
Video games
hardware 24.2 195.0
Video games
software 30.0 270.8
Video games 29.0 256.9
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
estimates
