Territory report: India

India, traditionally, has not been perceived as a big console games market – but that’s a trend that is changing fast. According to an industry study from NASSCOM (India’s industry body for IT and allied services), the console gaming market of India is estimated to grow to $125.4 million by 2010 at a CAGR of 75 per cent plus.

Young Indian consumers (between the age of 12 and 25) are now accepting gaming as a legitimate form of entertainment. The nascent Indian market is showing signs of growing manifold in a short period of time – creating the largest untapped market potential for console gaming.

Indian consumers are fast transitioning from casual gamers to serious gamers and are ready to invest in gaming systems and game software.

The emerging games market has got the major industry players interested. The organisational presence of Sony Computer Entertainment, Microsoft and EA Games India has helped each of them get an early start. Many leading publishers are also making use of the distributors in India to get national coverage for their titles.

A SOLID BASE

In spite of the nascence of the market, India today has an installed base of 0.5m consoles – 65 per cent of which is PS2, followed by the PSP (75,000 units). Ever since the advent of next-gen systems like PlayStation 3 and Xbox 360, the sales number for both the consoles and the games have shown an encouraging level of acceptance from Indian consumers.

In a price sensitive market like India, it’s critical to match consumer price expectation for consoles as well as for games (perceived as the running cost). PlayStation 2 acts as a fantastic entry level console for Indians new to video gaming – both due to the low console price as well as the low cost of games. The complete PlayStation product range, along with a strong brand image, enables SCEE to effectively target the different consumer segments in India.

The business response to the increased activity for PlayStation has been encouraging. The last fiscal year has seen almost a six times jump in console numbers and ten-fold growth in PlayStation games sales in India. The growth perspective continues in the current fiscal year with a very positive outlook for the segment.

Being able to achieve the right price point in India is not easy. The biggest barrier is the high import duty of around 34 per cent for games consoles as well as the games.

This not only creates a barrier to right-pricing but also encourages a thriving grey market. And, as the industry has only just been created, a lack of industry body inhibits any meaningful discussion with the government on taxation issues.

However, the attitude towards IP protection from government and judiciary is positively helpful, with India having a strong film IP industry. Sony Computer Entertainment has also invested in a specific anti-piracy programme that covers the top six key cities in the country. The regular anti-piracy raids have started to show positive results in reducing access to pirated games in key markets.

The investment by Sony Computer Entertainment in the local replication line for PlayStation 2 games with Sony DADC India has been effective in creating the new price points for the Indian market – starting from $12 for Platinum titles to $24 for full value games. Local replication is being used by SCEE as well as EA and the facility is available for use by other publishers for the Indian market.

EMERGING POTENTIAL

The criticality of the emerging Indian market also comes from the potential of games development in the country. There are already established players in the animation area and the country’s capability in the IT space today is unquestioned. There are gaming companies being set up to be able to combine these strengths and move into the space of game development. SCEE has already organised a two-day developers’ conference in India with the backing of Devstation Mumbai08.

This created considerable interest in the Indian game development fraternity. It also saw one of the first Indian games with complete Indian content. SCEE has combined with Aurona Technologies India to roll out a game on the character of Hanuman from Indian mythology. The competence and the state of readiness of Indian developers make it imperative that India soon will emerge as a key development hub for many international games.

The growth of an emergent category in a large country like India is dependent on the distribution reach. The changing landscape of modern retail in the country has definitely helped such an experiential purchase. The new, elaborate shopping malls have created the console games’ footprint not just in the big six cities, but also across 20 cities in the country.

The distribution width for the consoles and the range of titles available has been instrumental in the market’s growth. For any new entrant, therefore, it’s critical to have the right partner who will give a pan-Indian presence to their products.

The Indian gaming market is showing all the signs of becoming a large market with innumerable opportunities for all. It is just a question of timing and how we put our efforts together to tap into the vast potential in the country.