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Online Gaming – a Profitable Venture in India

July 20, 2020

By Rupin Chopra and Reetika Wadhwa

With over 18.9 crore monthly active users and 5.1 crore daily active users[1], it would not be wrong in saying that online Ludo has become the King – the LUDOKING.  

Why is Online Gaming a profitable business in today’s time? Find the answers in numbers  

As the impact of the COVID-19 continues, online gaming industry is witnessing a profitable increase in the number of its users as those confined within their houses have sought respite in the virtual world for entertainment as well as monetary benefits. The wide availability of hand held devices, deep penetration of internet in the remotest nooks and corners of India coupled with factors of  social distancing and lockdown have also contributed significantly to the rapid popularity of the online gaming in India and across the world. Gaming portals such as Paytm First Games and Gamerji have reported a 200% and 50% increase in their users of online gaming portals over March 2020.[2] Over half a million daily active gamers spending 30- 45 minutes on gaming platforms. According to a KPMG report, India is already the largest emerging market when it comes to gaming app downloads.[3]

Gaming industry is expected to witness a rise in revenue $1.1 billion by 2021[4]. With the viral outbreak having increasing number of victims and more and more people have found increased number of users and the online gaming market in India is expected to rise.

All you need to know about Online gaming business in India

Is the Profit story true for Gaming Startups as well?

India’s gaming industry has acquired investment of about USD 350 million from venture capital firms between 2014 and 2020, growing at rate of 22%, with over 400 gaming Startups in the nation, according to a report by Maple Capital Advisors titled ‘Gaming – India Story’. As per the said report, the Indian gaming industry currently valued at USD 930 million and is expected to grow at 41% annually thereby raising its expected valuation at USD 3,750 million by 2024.[5]

Launched last year, Paytm First Games, the gaming arm of the fintech giant Paytm, has also witnessed a 200% increase in the user base in the last one month.[6] Another startup joining the club here is Gameberry Labs, whose two games- Parchisi STAR and Ludo STAR together have seen an over 300% growth in daily engagement and installation.[7] Adda52Rummy is also following the same path. It has seen a 200 percent increase in new users[8]. Ashish, of Adda52Rummy, in an interview given to online portal, was quoted saying ‘Earlier, people used to play from 7 pm till 1 am. Now, we are observing that they are playing in the morning and afternoon hours as well. We have launched new tournaments for these hours’[9]

Also read Lockdown: A potential for the Online Gaming Industry

Key pointers- for game developers

While online games are one of the most loved sources of entertainment it is essential to ensure that the customer loyalty as well as new acquisitions continue to ascertain revenue generation of gaming portals. Some of the key aspects which should be taken care of while developing the game have been listed as under:

  • New concepts– the developers must focus on enhancing their creativity while choosing the scheme and themes of their game. Novel concepts should be adopted so that it creates greater customer base.
  • Longer engagement – the developers should develop games with subjects engaging the users for a longer time. This may be done by opting for multi-level games, accrual of points/ rewards and multiple attempts.
  • Virtual assets– the developers may take recourse to the development of games including graphics, designs, look and feel and animation which involve high degree of skills and detailing thereby attracting greater customer attention.
  • In-App purchases– the developers may add animated equipment/ tools/ devices which may be purchased by the users for real money. With the optimum pricing, this can serve as a media to increase the profit share for the game developers.
  • Multiplayer– the developers can engage many users at a time by permitting multiplayer game scheme. This will allow the users to advertise about the game by word of mouth this increase the number of users on the gaming portal.
  • Personalization– the developers can provide a scope for the users to personalize their space on the portal. This can be a source of attracting users who can add their personal touch to the game within the allocated space.
  • Skills– the developer must ensure that the games being developed and offered to the public comprise of substantial degree of skill. The winner should not be determined by luck or chance.

On one hand it is mandated under the law to have the winning outcome dependent on sufficient exercise of labour by the users while on the other hand skills of varied nature creates interest amongst the users to choose the developer’s games over all others available in the market.

What is the law related to Online Gaming in India?

By the virtue of the provisions of the Public Gambling Act, 1867, gambling activities where victory is dependent on the occurrence/ non-occurrence of an uncertain event are prohibited in India. The games which base success upon the existence of skill are known as games of skill. The law in India holds a game to be a game of skill, even with the element of chance if it depends upon3:

  • Superior knowledge;
  • Training;
  • Attention;
  • Experience;
  • Adroitness of the player;
  • Element of Skill predominates over the element of chance

The Legal framework clearly recognizes that the games with below elements are not “gambling[10]:

  • where success depends on substantial degree of skill; and
  • despite there being an element of chance there is requirement of application of skill.

However, the games involving exercise of a skill of some sort are permissible to be offered, even for real money except, in few States such as Assam[11],  Odisha[12] , Telangana[13]

Also read Online Gaming Law in India

Can we get a License for Online Games in India?

Online skill games are not prohibited in most of the States in India, however the north-eastern State of Nagaland accords legal validity to the games of skill under the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 and the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 (hereinafter referred to as the “online game of skills law”).

The online game of skills law provides legal accreditation to the games where the users are required to expend their efforts and skills to emerge out victorious in a game session. Some of the games for which the said license is issued are Chess, Sudoku, Quiz, Rummy, Virtual racing, Virtual sports (Soccer/ Cricket/ Archery/ Snooker/ Bridge/ Pool), Fantasy games, etc.

Conclusion

With the gaming spree becoming the new favorite for all, the potential players may face challenge to stand out amidst their competitors. The developers need to think out of the box to have customers diverted towards them and thus enabling them to carryout successful business operations and at the same time ensure that there is adherence to the provisions of the applicable laws pertaining to online gaming in India.

[1] https://gadgets.ndtv.com/games/features/ludo-king-creator-vikash-jaiswal-total-users-downloads-india-success-2232634

[2] https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/egaming-companies-have-a-field-day-as-virus-keeps-millions-home/articleshow/75001617.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[3] https://yourstory.com/2020/03/online-gaming-startups-coronavirus-covid-19

[4] report by Google-KPMG- https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/for-indian-gaming-startups-covid-19-lockdown-is-a-boon-for-business/articleshow/75115595.cms?from=mdr

[5] https://economictimes.indiatimes.com/tech/software/indian-gaming-industry-attracted-350-million-venture-capital-investments-between-2014-2020-report/articleshow/76009775.cms

[6] https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/for-indian-gaming-startups-covid-19-lockdown-is-a-boon-for-business/articleshow/75115595.cms?from=mdr

[7] Ibid

[8] https://yourstory.com/2020/03/online-gaming-startups-coronavirus-covid-19

[9] Ibid

[10] State of Bombay v. RMD Chamarbaugwala[ A.I.R., 1957 S.C. 699] – held by the Apex Court of India

[11] Assam Game and Betting Act, 1970

[12] Orissa Prevention of Gambling Act, 1955

[13] Telangana Gaming Act 1974

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