Searching For An Identity

The Indian CD game market defies
logic. With most PCs coming bundled with CD ROM drives, the multimedia market in the
country is expanding. According to an IDC report titled, Peripherals Market in India,
"Over the last two years, there has been a considerable rise in the ratio of CD ROM
shipments to PC shipments. This is because PC vendors have started bundling CD ROM drives
with some of their PC models. CD ROM drives sold in 1995-96 were 11.2% of the total PC
systems sold during the same year. In 1996-97, this ratio increased to 38.5% and stood at
58% in 1997-98." The same report forecasts the number to increase steadily till
2000-01. Thus, one would normally expect the expanding SOHO segment to push the CD game
market.

However, the market dynamics have a
different tale to tell. Abhinav Dhar, Head, LEDA Business Group, NIIT, says, "The
volumes in this business are really low. And gaming in India is a very small part of the
interactive multimedia content. The games titles are not being developed in India. They
are only being resold." While in the West, the CD games market is a hugely successful
industry with a turnover of about $700 million, in India it is primarily a resale market.
A successful game title in the US sells around half-a-million copies, while resales figure
ranging between 1,000 to 1,500 copies is enough to make a title a hit in the Indian
market.

Primarily a resale market
The games market in India is basically a resale market. Most companies import titles from
the western market and sell them through retail channels in the country. Till recently, no
game of international standard has been developed in the country.

In India, usually once a title
becomes popular other companies also import the same title and float them in the market.
And once their costs are recovered, they don’t mind selling a Rs1,500 game CD for as less
as Rs300 since anything would be a profit. This leads to a loss for the company which had
imported the title. Ravi Krishnamoorthi, DGM, Padmini Multimedia, says, "India
doesn’t have a very established gaming market. It becomes very difficult for an organized
player to compete with an unorganized one. Since overheads are low for the unorganized
sector, the marketing costs too is low." He further adds, "They always try to
piggy-back on the advertising and promotional campaigns of the organized players."

Piracy is also a big obstacle to the
growth of the industry. The costs of an original CD game ranges anywhere between Rs1,500
to Rs2,000. However, the pirated version of the same game is available for as little as
Rs300 in the market. And so the customer who bought the original version justifiably feels
duped. Says Md Imran Amin of Sixth Dimension Multimedia, "The biggest and the only
threat to the gaming market is piracy. The developer knows that he wouldn’t be able to
recover even the cost of development as the pirated version of the game would hit the
market the very next day of the release. This is because piracy laws are very weak in
India."

Delay in release of titles
Another important reason that the gaming market is not able to realize its potential is
the time gap between the release of a title in the western market and its release in the
Indian market. For instance, HalfLife and Tom Clancy Rainbow’s Six which were released
almost six months back abroad are still to hit Indian shores. Says Jayant Sharma, CMD,
Milestone Entertainment, "Though the lead-time between the international launch and
the Indian release has reduced significantly in the last six months, the delay still
exists. These delays can be attributed primarily to two reasons.

The first being documentation and
shipping coupled with significant delays at customs. The second reason is that many of the
smaller publishers are still to set up distribution channels in India." Indian
businessmen also look for the commercial viability of the title before going whole hog.
Manoj Saraogi, MD, Innoserv Systems, explains, "Over 90% of the titles released
abroad are not commercially successful, and so a wait-and-watch policy is adopted by
Indian importers. Secondly, when the titles are released, their prices are very high and
then as time passes prices tend to drop." In many cases, the starting prices of a
games title are at levels where they become unaffordable for the Indian consumer.

Educate target customers
Another reason why CD games might not grow at the same rate as the SOHO segment is
that India is basically an education-oriented society. The decision regarding the purchase
of games is generally taken by parents. Says Krishnamoorthi, "Parents feel that they
have bought a computer for their children to learn something but they don’t realize that
playing games increases analytical skills of the child." So, despite the increase in
the SOHO segment, the games market might not expand with it.

Dhar of NIIT endorses the view,
"Any amount of money that is being spent on games would shift toward education and
entertainment titles in coming times. In fact, this is happening very fast and in the end
there would be a very small window left for the games with just 10 to 20 best
titles." The target customers of most companies are the age-group of 10 to 40 years
in the middle and high-income households with a computer at home or in the office.
Therefore, despite its potential in the Indian market, the CD games industry might not
grow as expected.

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