Indian Gaming Market Review 06112015 Secured

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T h e I n d

i a n G a m i n g

M a r k e

t R e v i e

w

O p p o r t u n i t i e s i n a R a p i d l y G r o w i n g M a r k e t

GAMING FORUM


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01 | The Indian Gaming Market Review: Opportunities in a Rapidly Growing Market

Foreword

India, with 1.3 billion people and two-thirds below the age of 35, the world’s largest youth

population, is poised to become one of the world’s leading markets. Historically, games did

not gain a foothold in India due to the lack of access to gaming consoles and PCs, and the low

social acceptance of this entertainment medium. This is all changing now as the Indian

games industry is at the cusp of a major transformation. Economic growth has resulted in a

society that is embracing digital content and entertainment like never before, enabled by the

explosive growth of smartphones and affordable wireless internet.

These rapidly evolving changes will create tremendous opportunities for game developers,

publishers and enabling technology players, in what is destined to be one of the top gaming

markets in the world. This study, undertaken by NASSCOM Gaming Forum, offers a

comprehensive assessment of the Indian games industry. It provides an overview of the

Indian media and entertainment industry and digital landscape, a roadmap to the history and

evolution of the Indian games industry, an assessment of the Indian games market from the

consumer spending standpoint, and demographic insights into the Indian gamer. To put this

together, we conducted an extensive survey of the Indian developer and service provider

ecosystem, and interviewed key players to gather data and trends. We placed greatemphasis on data validation, as obtaining accurate data in a nebulous, and rapidly growing

and evolving market like India can be challenging.

The picture that emerges states that the building blocks for the creation of a massive market

are now falling in place. India is the world’s fastest growing smartphone market. By 2016, it

will top the US as the world’s second largest smartphone population with more than 200

million users. Thanks to this, consumers are experiencing games at a mass-market level like

never before. Huge momentum in eCommerce is building online purchasing habits, and

several initiatives, both by the government and private entities, are at play to crack

payments. With a growing consumer base and payment solutions in place, the Indian game

developer ecosystem will have ample opportunity to innovate and provide compelling

content with social and cultural context, which is key in engaging the Indian consumer.

As it discovers and capitalizes on market opportunities both in India and abroad, it is truly

exciting times for the Indian games industry. We hope that you find this report informative

and useful, and we welcome your feedback and comments at [email protected].

R Chandrashekhar

President, NASSCOM

Rajesh Rao

Chairman, Gaming Forum

GAMING FORUM


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Acknowledgements

This report is a culmination of a four-month concerted effort by NASSCOM Gaming

Forum to provide a comprehensive overview of the Indian Games Industry.

We would like to thank various people for their valuable contributions, without which

this report would not have been possible. First, we would like to thank member

companies of NASSCOM Gaming Forum, who went out of their way to provide detailed

inputs, insights and perspectives on the industry, their companies and clients through a

comprehensive survey. More than 50 companies participated in this survey.

We would also like to acknowledge inputs from third-party sources cited in the report:FICCI, KPMG, IAMAI, TRAI, IDC, Cisco's Visual Networking Index, IMRB, ASSOCHAM,

Deloitte, Opera Mediaworks, eMarketer and We Are Social.

Finally, we wish to convey special gratitude for the efforts and contributions from the

NASSCOM research and the Google team, without which successful completion of this

report would not have been possible.

03 | The Indian Gaming Market Review: Opportunities in a Rapidly Growing MarketGAMING FORUM


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Table of Contents


Chapter 1: The Digital Enablers 05

Media & Entertainment 04

Internet 07

Mobile, Smartphone & Tablets 08

Digital Media 09

Mobile Advertising 10

Chapter 2: The Indian Games Industry 11

The Industry: A road Map 12

Industry Overview 13

The Developers 14

The Service Providers 15

Chapter 3: Indian Games Market Trends 17

Indian Games Market Indicators 18

Trends, Challenges & Opportunities 20

Chapter 4: Game Developer Salary Trends 21

Quick Facts 22

Talent Overview 23

Survey Background 24


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1

CHAPTER

The Digital Enablers


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Media & Entertainment

Overview

Growth of the media and entertainment industry

in India is being driven by digital players, in

addition to traditional media. TV is the largest

segment, followed by print, while radio is seeing

the fastest growth.

Digitization Drives Growth

The M&E sector growth in India

CAGR (2014- 2019)

13.9%2X global M&E industry growth

World’s Second Largest TV Market by Viewers • 168 million TV households (TV penetration rate of 61%)

• More than 800 TV channels, of which ~167 are paid

• 139 million paid cable and satellite subscribers in 2014

(82% of TV households)

• Future growth: 175 million paid cable and satellite

subscribers in 2019 (90% of TV households)

Media & Entertainment Revenues (INR billion) | 2014-2019

Total Industry, TV, Print, Film & Radio Revenues & Growth

2014 YoY

(2013-2014)

2015P 2016P 2017P 2018P 2019P CAGR

(2014-2019)

Total M&E 1,026 11.7% 1,159 1,330 1,532 1,740 1,964 13.9%

TV 474.9 13.8% 543.2 634.2 739.6 854.6 975.5 15.5%

Print 263.4 8.3% 284.5 307.1 331.9 358.0 386.8 8.0%

Film

126.4

0.9%

136.3

155.6

170.7

186.3

204.0

10.0%

Radio

17.2

17.6%

19.6

22.3

27.0

32.7

39.5

18.1%

• Year-on-year growth of 17.6%in 2014

• 90% of the Indian population

has access to radio

• Future Growth: Phase-II

auctions of 135 FM channels in

2015 will increase reach to

small towns and cities

• More than 330 million newspaperscirculated daily

• English print is struggling as

subscribers switch to online

platforms, but regional print is

largely isolated from this trend

• Future growth: Rising cover prices

and subscriptions aided by low

media penetration, population

growth, rising income and literacy

• World leader in films produced yearly, but industry lags in terms of infrastructure

• Low screen penetration (7 screens per million people)

• Slow growth (0.9%) in 2014, due to poor box office returns and lack of quality content

• Future growth: Increasing number of multiplex screens in Tier II and Tier III cities

Source: FICCI-KPMG Indian Media and Entertainment Industry Report 2015

GAMING FORUM


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Internet

Potent Growth Ahead • 354 million internet users by Q2 2015 (>75 million users added since Dec 2014)

• In 2015, India is all set to surpass the US as the second largest internet population

in the world, after China

• Internet penetration remains low in India (19%), leaving much room for growth;

future growth will come from increasing smartphone penetration in rural areas

The World’s Second Largest Internet Population

Internet Growth in India| 2013-2017Internet Users (Millions)

190

278

354

427 503

2013 2014 2015e 2016e 2017e

Source: IAMAI-KPMG July 2015 - India on the Go: Mobile Internet Vision 2017

Mobile-First Internet Adoption

• 159 million mobile internet users of which 82 million are 3G users

• Mobile internet users set to grow at a CAGR (2013-2017) of 27.8%

• 3G users will grow with a CAGR (2013-2017) of 61.3%

• Future growth: Mobile internet adoption in rural areas through

increased availability of low-cost smartphones

Mobile Internet Growth in India| 2013-2017Mobile Internet Users (Millions)

Source: IAMAI-KPMG July 2015 - India on the Go: Mobile Internet Vision 2017

110 159

213 236

314

2013 2014 2015e 2016e 2017e

Digital India Programme To Increase Internet ReachThe Indian Government has identified nine pillars to realize Digital India:

• Broadband Highways

• Public Internet Access • eGovernance

• E-Kranti

• IT for Jobs

• Universal Access to Mobile Connectivity

• Electronics Manufacturing • Information for All

• Early Harvest Programmes

GAMING FORUM

503Minternet users in India

by 2017E

314Mmobile internet users

by 2017E


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Mobile, Smartphones & Tablets

Overview

India has the world’s second largest mobile user

base and the world’s third largest smartphone

user base. Future growth will come from

smartphone adoption in smaller cities and

towns, particularly in lower socioeconomic

groups.

World’s Second Largest Mobile User Base

95%of Indian mobile subscriptions

are on prepaid plans

Top 4 Operators Take 70% of Market

• 981 million mobile subscriptions at the end of June 2015,1

of which 90% were active

• 563 million urban vs. 418 million rural subscribers

• The top four mobile operators account for 70% of the

market

World’s Fastest Growing Smartphone Market2 • 122 million smartphone users in 2014

• Smartphones are the device of choice; the average Indian spends

162 minutes/day on it v/s. 96 minutes/day on TV

• Android dominates, with Samsung as market leader in Q4 2014

• Future Growth: Increasing availability of low-cost smartphones

and dropping data charges are fueling growth


1 2 Source: TRAI as of June 2015, IAMAI-KPMG

Unbranded Tablets Wiped off Market in 2014 –Slows Growth • Tablet penetration is low: 3.2% of the Indian population in

2015.

• 56% Y-o-Y growth in shipment volume in 2013, however,

15% Y-o-Y decline in 2014 due to unbranded tablets being

wiped off the market

• Future growth: The tablet market is expected to grow in

2015, driven by tablets with 8-9 inch screen size


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Digital MediaSmartphones As Media & Entertainment Screens

Mobile Devices Have Multiple Uses

• Mobile devices in India have gone beyond simple voice and SIM;

mobile video, social networking and instant messaging are

proliferating in the Indian consumer market

• Smartphones now complement traditional channels such as TV

Online Video Accounts for About Half of Internet Traffic

• Video accounted for 46% of all internet traffic in India in 2014

and this will increase to 74% in 2019 (Cisco VNI Forecast)

• YouTube is the most popular video app in India; it is accessed

by 35% of smartphone users who spend an average of 1.5

hours/month on it

• Future growth: TV on the go - internet TV providers (Big Fish,

Dish TV, etc.) have mobile apps as part of multi-screen strategy

Top Social Platforms| 2014

Percent of the total population using the platform in the past month11%

9%8% 8%

7%6%

5% 5% 4% 4%

Whatsapp FacebookMessenger

Facebook Skype Google+ Twitter WeChat LinkedIn Pinterest Viber

social network messaging/chat app

Source: GlobalWebIndex Q4 2014 survey-based data via We Are Social

Mostly Mobile Social Media • 143 million social media users as of April 2015,

1of which 61% access social media on mobile

• Facebook and Whatsapp are the most popular

platforms

Google Play Dominates App Market • App downloads will reach 9 billion in 2015, up

2from 1.5 billion in 2012

• Games are the most popular category among

paid apps

• Within the Android dominated market, Google

Play prevails

125million

monthly active Facebook

users, of which 114

million are on mobile


1 2 Source: IAMAI-IMRB, ASSOCHAM-Deloitte


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Mobile AdvertisingIndia Is the Driver of Asia Pacic’s Mobile Ad Market

ndIndia is the 2 largest mobile ad market in the world • Mobile advertising volume in India grew 260% between July 2013 and July 2014,

compared to 70% growth for Asia Pacific

• India is the world’s second biggest market in terms of mobile ad volume, behind

the US (Opera Mediaworks)

• India’s ad spike is mainly due to the rapid shift from feature to smart devices

Social Sites/Apps Account for Half of Mobile Ad Revenues • Similar to the global trend, social sites/apps in India account for half of mobile ad

traffic and almost half of mobile ad revenues

• However, India shows a significantly higher use of mobile app store sites, gaming

and education sites than globally.

• Ads for games and mobile devices represent nearly half of all ad impressions

(25.5% and 22.7%), followed by classified ads (20%) (Opera Mediaworks)

User-Rich Mobile Advertising on the Rise • 96.8% of mobile ad impressions are simple banners

• Remaining 3.2% of impressions are rich-media creative generating more than one1

quarter of revenues

• Future growth: While the mobile advertising market continues to transition to

advanced smartphone platforms, advertisers will deliver more user-rich

experiences

Mobile Internet Ad Spending in India2013-2018 (USD Millions)

26 79

173

347

589

943

2013 2014 2015 2016 2017 2018

$1billion

Mobile internet ad spending in

India will touch

by 2018

Notable Indian Mobile Advertising Platforms*

• InMobi, founded in 2007, recently unveiled Miip, a discovery platform that

will compete with Google. Miip transforms advertising into a personalized,

content-rich experience

• Vserv, founded in 2010, is a leading mobile marketing platform that delivers

smart data-led results to marketeers, app developers, telcos and datapartners. Vserv has raised $15 million in funding to date

*Illustrative

Source: eMarketer March 2015


1Source: Opera Mediaworks


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2

CHAPTER

The Indian Games Industry


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The Indian Games Industry A Roadmap: Indies & Start-Ups Spurring Growth

• Outsourcing for consoles • Online portals

# of companies: 5

• Feature phone mobile games, Smartphone games

• MNCs setting up backend operations and studios • First wave of VC funded game companies

# companies: ~25

EARLY INNOVATORS

EARLY MOBILE, GLOBAL PLAYERS

EMERGING INDIES

Set Up Pre 2005

Set Up Pre 2005-2010

Set Up 2010 Onwards


• Early PC game titles

• Mobile game analytics

• Focused/experimental game design

• Social/PC games

• Mobile games

• Kickstarter projects

• Angel investors for early stage funding

# of companies: >200


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Industry OverviewA Young Industry With a Fresh Perspective

2014 Revenues ($USD) Indian Game Developers & Service Providers

27% of companies with average

revenues of above

$1.6 million in 2014

Company Size

Indian Game Developers & Service Providers

57%

Year of IncorporationIndian Game Developers & Service Providers

15%

11%

19%

48%

9%

< 2005 2006-2008 2009-2011 2012-2014 2015

Location SplitGame Developers & Service Providers

The industry follows a lean structure, with 57%

of companies having fewer than 10 employees

Almost 60% of respondents are

based out of the top 3 Tier I cities

13%

17%

11%

2%

500

More than half of companies were

incorporated from 2012 onwards

Delhi-NCR

Mumbai Pune

Hyderabad

Kolkata

Others*

*Others include

emerging citieslike Vadodara,Jaipur, Indore,

Vizag, etc.

24%

17%

20%

18%

7%

6%

22%

Bangalore

< 160,000

160,000-800,000

> 1,600,000


Source: NASSCOM Indian Gaming survey


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The DevelopersMajority Focusing on Global Market & Mobile

Market Segmentation – Development Platforms

Indian Game Developers

96%

22%

18%

8%

6%

14%

61%

35%

29%

Free-To-Play Freemium Premium

MobileGames

SocialWebgames

Casual PCGames

MMO Games ConsoleGames

Other

2014 Revenues ($USD)


Game Genres


Of Indian developers,

75%

are focusing on theglobal market

Business ModelIndian Game Developers

*Includes companies who are involved in both as well (developer and service providers)

With mobile games set to outpace other segments,

it’s no surprise that 96% of developers are working

on mobile

61% of developers use the

free-to-play model

Arcade style games are the most popular

genre followed by puzzle and racing genre

39%

31%

31%

22%

20%

14%

12%

8%

Arcade Braintraining,

puzzle, quiz

Race Sports Simulation Action oradventure

Shooter Casino (exl.Poker)

< 160,000

160,000-800,000

> 1,600,000




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The Service ProvidersOffshoring is Gaining Momentum, Along With Value Added Services

2014 Revenues ($USD) Indian Service Providers

Content creation andco-development arethe main sources of

revenue

Source of the Majority of ProfitsIndian Service Providers

95%

30%

30%

20%

50%

Mobile Games Casual PCGames

Social WebGames

Console Games Other

Market Segmentation – Service Platforms Indian service providers

95% of providers are mobile-centric

*Includes companies who are involved in both as well (developer and service providers)

Mobile is the most popular

segment on which service

providers are working,

followed by casual

PC games

Top 3 Services OfferedIndian Service Providers

90% of service providers offer

development services

90%

80%

55%

Development Game ArtServices

Animation

< 160,000

160,000-800,000

> 1,600,000

Content Creation Services

Co Development

Revenue Share

Other





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3

CHAPTER

India Games Market Trends


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Indian Games Market IndicatorsMobile gamers leading the market


Mobile: • Market size - Approx. 40 to 50 mn people play

games on their smartphones and older

feature phones, this number is growing

rapidly at a CAGR of 40% to 50%

• Revenues across all models including

premium, freemium and ad-supported

• Smartphone based is estimated at 200mn by

2015, to grow at 100 mn every year thereafter

• Future outlook - Most industry players areawaiting the integration of mobile carrier

billing, as this is expected to grow revenues

exponentially.

Gaming in Cyber cafes:

• Market size - Estimated 3000 cyber cafes in India with games, of which 1500 have 5

machines or more dedicated to games

• In addition, there are few exclusive gaming cafes with console games as well

• Estimated 250,000 active PC/MMO players

• Popular games -

– Counterstrike

– DOTA

– League of Legends

– World of Tanks

CONSOLEMarket size - Estimated around 3 to 4 mn console gamers

• 3 to 3.5 mn is the lifetime sales of all consoles (including PSP handheld), this includes grey

market imports

• 2m PlayStation, 2 lifetime sales, including grey market imports

• Around 500k units combined for both PS3 / Xbox360 (PS3 is around 350k units)

• Less than 100k units for PS4 / XBox1 with PS4 around 65k

Number of active consoles are much less than installed base, as many consoles are defunct, with dust

and weather resulting in high failure rate.

“Attach rates” or the number of games purchased by a console owning consumer in India is much

lower than international average. Many console gamers share game titles among each other.

Future outlook - As in the case of PC gaming, most industry watchers expect console gaming to gain

from the rapidly growing gamer base due to smartphones

Mobile gaming revenues

$150 mn

50 mnApprox gamers


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*Disclaimer: We initially wanted to do a full market sizing for this report, but after discussions with a variety

of players in the ecosystem - developers, publishers, distributors, platform owners, hardware

manufacturers and journalists - we realised that it was very difficult to arrive at reliable estimates. India is a

nebulous, rapidly growing market, and reliable numbers are hard to come by. Existing market reports and

revenue estimates turned out to be in wide variance with our own research, which threw up far more

conservative numbers. We hence decided to put forth market indicators, data that we are confident as

reliable based on our own industrywide research and validation. We don’t have revenue estimates for all but

the mobile segment, and we hope that in future as the market matures and we have better data, we can

publish numbers that are reliable for all segments of the games industry

Indian Games Market IndicatorsWith growing advent of smartphones, PC online players are set to rise

PCs sold in Indiaevery year

~17 mnPC / Web gaming • PC Market - Around 10 mn of which 50% are sold to

businesses/corporates, and 50% to home consumers

• Overall “active” installed base estimated at 50 mn PCs

• 100,000: Number of high-end graphics cards being sold

in India per year

• 300k ~ 500k : Estimated ‘high-end gaming’ PCs and

laptops in India

• Estimated number of PC gamers: Between 5m to 7m,

with “hard core gamers” around 1m to 1.5m

• Biggest selling PC franchises

• FIFA, Grand Theft Auto, Assasins Creed, Need For

Speed, Call of Duty, Cricket games

• Most industry watchers expect PC gaming to gain from

the rapidly growing gamer base due to smartphones.

Between and , rapid growth in2011 2013Facebook user base coupled with widely

popular casual games like Farmville spurred a

mini-revolution of sorts, with many consumers

especially women gaining access to casual /web games

In India, the definition

of broadband is512kbps or higher, anda majority ofconnections are atspeeds 2mbps or less

This is set to changewith the advent ofFiber to Home (FTTH)


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Trends, Challenges & OpportunitiesHigh Potential for the Indian Games Industry

Overview

Presently, most game developers and service providers in India are focusing on the

global market. Approximately 9% are generating revenues from the domestic market,

while foreign developers and games are dominating the app store rankings. With recent

developments however, such as Apple and Google lowering the minimum price for apps

and in-app purchases in India, we expect more Indian companies to turn their focus

towards the local market.

Trends: Localization & Virtual Reality Are Emerging • Virtual Reality & Localization: 24% of developers see localization and virtual

reality as emerging trends

• Free to Play Reins: Gamers in India have a relatively high tolerance for in-game

advertisements and prefer free games

• Low ARPU: The ARPU of Indian gamers is far lower than the global average. 45%

of developers state that ARPU is low for those gamers who actually spend money

Apple and Google Lower the Minimum Price for Apps

• In July 2015, Apple announced new pricing tiers for App Store customers in India,allowing developers to price their iOS app as low as Rs. 10 (approximately $0.16)

• Google quickly followed suit with the same price minimum

• Google also recently started selling prepaid vouchers in India to facilitate

purchasing in a country with low credit card and electronic payment use

Problems Faced by Indian Developers: Lack of Talent, billing • Lack of scalable talent base (e.g. programmers, designers)

• Working with international partners comes at the cost of revenues

• Infrastructure: Only 2% of Indian consumers have a credit card, making it difficult

for many gamers to pay for games, carrier billing integration has not yet

happened.

• International games dominate mobile charts: with most local developers focusing

on global markets, only 15% of the revenues from the top 100 iOS games in India

in June went to Indian publishers, or publishers with offices in India

Opportunities • India will continue to be one of the fastest growing game markets in the world,

delivering more and more opportunities for new and existing developers

• With the new app minimum, mobile developers can target a wider audience and

acquire new paying users and this will drive overall monetization

• International companies will increase their effort in India, providing a push on the

local industry



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4

CHAPTER

Game Developer Salary Trends


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Quick Facts


*Having less than 30 people and development of the game should have been self-funded **Includes people involved in Art, Tech, Production/Project Management and Marketing/Biz Development

#Includes Indie founders or people employed in Indie studios

‘Developers’ are

the heart of the

industry

‘Developers’

are the key

~80%

Average

compensation

Upto 5-6Lacs

(Designers)

Average

compensation

Upto 8-9Lacs

(Non Devs)**

Indian gaming

industry follows

the global trend

% of Women

employees

~15%

Average

compensation

~6-7 Lacs(For Women)

Average

compensation

~8-9 Lacs(For Men)

Game Dev is

more about

‘INDIES*’

#‘Employment

with Indie

studios’

~65%

Fresh minds;no prior

experience

~40%

Average

compensation

Upto 5 Lacs(


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Talent OverviewTrendsetting the Gen-Y Evolution, Focus Shifting towards Skills

36%

30%

22%

10%

2%

15 years

A fair mix of experience across age groups

A Young & Dynamic Workforce

75%

Future Ready Entrepreneurs

21%

6%

38%

30%

11%

17%

Well diversified role with capabilities across levels

Trainee Developer/ executiveLead/ Manager Senior Management

All the above (Indie)

Diversity an increasing trend in the gaming industry

21% of the workforce is

SELF-EMPLOYED*(Approx. 4-5% are freelancers adding

more capabilities to the industry)

75% of the workforce constitutes

MILLENIALS(less than 30 years of age)

85%Male

Female

0 20 40 60 80 100

15%


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Survey Background

% of respondents

Responses by Age Group

40

20%

54%

24%

2%

To assess the effect of thechanging businessdynamics on hiring trendsand the outlook of GamingIndustry, NASSCOMGaming Forum conducteda dip-stick survey duringthe period Aug to Sep. Wereceived responses fromover 100 people associatedto Gaming Industry

Responses by Location

Delhi-NCR Mumbai Bengaluru Hyderabad Pune Others

25%

21%

19%

13%

11%

11%

N=11313%

11%

35%

2%

11%

4%

8%

15%

Design

Art

Technology

Marketing/ Business Dev

Production/ Project management

General management

Product management

Multiple (Indie)

Responses by functional areas

Ahmedabad Kolkata

Chennai

Kochi

~7per cent

Chennai, Kochi and Kolkata

Ahmedabad, Chandigarh andJaipur are emerging fast

Chandigarh

Jaipur


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International Youth Centre Teen Murti Marg Chanakyapuri New Delhi – 110 021 India

Documents

Indian Gaming Market Review 06112015 Secured