GAMING IN INDIA: WHEN WILL IT TAKE OFF?

Depends on how you define gaming–if you are referring to Angry Birds on iPhone, Android, or Chrome, the “gaming” industry is set to take off very soon.  If you are a hard core gamer and are offended by Angry Birds players calling themselves “gamers”, then I am afraid the Indian gaming industry is still a few years away from taking the mainstage.  For the purpose of this article, I am referring to the latter group (and yes, I am offended by Angry Birds players calling themselves “gamers”).

The Sony Playstation 3 and the Microsoft XBOX S are both very popular worldwide and have great potential in India, considering how they tend to be more attractive to the geeky kids in school–and there are millions of those in India.  The problem though is whether the average Indian parent is ok with spending about 15,000-20,000INR on a console and then splurge on 2,500INR games every month?  Most likely, the answer is no.  Companies seem to realize that though, with both Sony and Microsoft introducing stripped down versions of their popular PS3 and XBOX consoles in India.

While most newspapers and Internet articles focus on how much potential the mobile gaming market has, they tend to ignore the potential of the console gaming market.  Contrary to popular biases, KPMG estimates shows that console gaming market had 4.5B INR in revenues back in 2008 and is expected to grow to 9.4B INR in 2013.  Considering the small demographic segment that consoles are aimed at, this is pretty big money.

In our opinion, there are a few things that Indian industry and government will need to get right to really allow this market to grow:

Reduce entry-load:  Consoles, especially those with current generation hardware, cost a lot.  A lot more than what dollar-earning Americans pay for them.  Does it not sound surprising that consoles manufactured in China cost less when imported to the U.S.  than to neighboring India?  Yes, it is the government to blame.  There is about a 27% tax on gaming consoles shipped to India.  Considering that there is no Indian company that manufactures consoles (for itself or for Microsoft/Sony), it is hardly justified for the government to charge this hefty tax–who is it protecting anyway?  That said, it does lead to an interesting situation–if the current trend of reducing console prices continues, and companies manage to get enough loyal gamers in India, then they can start manufacturing in India and reduce costs as well as tax liabilities and pass on some of those benefits to consumers.

Reduce ongoing expenses for gamers: A key reason why gaming has not taken off is because gamers–typically students and young professionals–don’t always have the disposable income required to buy the newest games.  In a month, you can probably buy Crysis 2 (~2,000INR), Homefront (~2,500INR), or Dirt 3 (~2,500INR) but not all.  So gamers are forced to choose one, and typically don’t end up buying the other two altogether for a variety of reasons (reviews didn’t speak highly of the others, they chose to borrow from a friend, or a new game piqued their interest instead).  This leaves a lot of money on the table that companies are unable to capitalize on.  Companies must therefore look not at how much they are gaining from a specific game, but how much their portfolio of games is earning them in all.

The tax on imported game DVDs is about 15% (if you believe this article).  While at some point, companies may move to manufacturing DVDs in India, it still has to make business sense.  Also, console DVDs will always cost more than PC DVDs.  Check out what the good folks at Indianvideogamer.com teach us about this.

Involve the family: This one is for manufacturers and marketers.  More often than not, the decision to buy the console (and sometimes, games) is taken by a parent, not by the consumer.  So, it is essential to attract them as well.  It is obvious that our kids will have an easier time getting their consoles than we did!  The XBOX Kinect, the PS3 Move, and the Wii are all steps in the right direction as they help the family get together for some fun times together.  There hasn’t been any conclusive evidence collected in India, but Kinect definitely turned around XBOX’s feeble position in the gaming market.

The above is hardly exhaustive and there are numerous other steps companies can take to establish a console market in India.  What are your suggestions?  Use the comments below to share your opinions.  And don’t forget to follow us on facebook and twitter.

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