Casual Gaming in India Summary of Findings

Casual Gaming Industry Overview Casual Gaming in India Mobile Casual Gaming PC Casual Gaming Consoles and DTH Casual Gaming The Road Ahead Presentation Plan

Casual Gaming in India 1. Industry Overview 2. Market Drivers and Inhibitors 3. Business Models

Casual Gaming revenue to quadruple by 2015 Casual Gaming in India is at a nascent stage but is expected to grow significantly at a CAGR of 32% over period 76%of casual gaming revenue (on an average) will come from Mobile over X % Break-up in 2010 % Break-up in 2015

… while the number of casual gamers will increase eight times over period 8 X CAGR: 51.3% % Break-up in 2010 % Break-up in 2015 By 2015, 12.4% of the total online consumers will be casual gamers By 2013, Mobile Gamers (53.4%)will outnumber the PC Online Gamers (46.8%)and will form the largest segment

Casual Gaming in India 1. Industry Overview 2. Market Drivers and Inhibitors 3. Business Models

Four factors will be driving the Casual Gaming Market in India Wireless Broadband is the catalyst for Broadband penetration Wider choice of content across multiple platforms Aggressive Marketing by Telecom Companies Increasing penetration of devices  Availability of low-cost handsets will increase the target market that can be addressed by the gaming companies  Increasing penetration of netbooks and tablet PCs will lead to higher number of people accessing internet for online games  Launch of wireless broadband networks (3G and 4G) will drive internet penetration. The number of broadband users is expected to reach million by 2015, sharply up from 8.65 million in 2010  Given the low voice ARPU, telecom companies are actively promoting games to encourage their subscribers to switch to 3G, which is in turn helping create interest in even the 2G subscriber base.  Leading telecom companies have launched app- stores offering games and application in the last one year and a few more are in the pipeline.  In India, all segments, namely, Consoles, Mobile, PC/Online and DTH are being promoted and evangelized by different stakeholders, giving consumers multiple choices to entry  Aggregated libraries of well known international games are available across multiple platforms – mobile devices, tablet PCs, consoles etc.

… while three factors act as major growth challenges Ease of Payment Lack of local Content Piracy  Non-availability of a one-click payment mechanism acts as a deterrent for the sale of games  Indian consumers are not comfortable in using credit card for online transactions other than air/rail ticket bookings  Gaming companies partnership with Telecom companies for billing is not mutually beneficial as operators retain approx. 70% of the revenue.  Piracy is a critical issue for the downloadable casual games on PCs, Consoles and Mobile devices which heavily impacts the revenues for game development companies.  In Indian gaming market it is reported that for every one unit of legitimate copy sold there are more than 10 pirated copies sold. Sideloading of pirated games when smartphnoes are purchased is common  Majority of the games available today are based on international themes and story-lines and invoke limited interest from Indian consumers  Lack of casual games based on Indian environment, society, lifestyle and culture inhibit the adoption in Tier-2 and Tier-3 cities

Casual Gaming in India 1. Industry Overview 2. Market Drivers and Inhibitors 3. Business Models

Indian casual gaming industry going towards a Freemium model Business Model Adoption Trend for Mobile Casual Gaming Present  Majority of the casual gaming companies have adopted Ad supported/In-game advertising and Pay-per-download business models Future  Pay-per-Use, wherein the gamers pay for the content as they use, and Ad-supported business models are expected to be preferred models in the near future  Expected M-commerce laws to have an impact in the near future Present  Majority of the casual gaming companies have adopted Ad supported/In-game advertising and subscription based business models  Use of Payment gateway is the preferred mode for transactions Future  Micro-transactions, Ad-supported and Subscription based (all you can consume) business models are expected to be preferred models in the near future  Cash-cards which can be purchased at retail outlets in lieu of cash is expected to gain traction in the near future Business Model Adoption Trend for PC Casual Gaming

‘Micro-transactions’ is a well tested and successful concept in Indian market ‘Sachet’ marketing in FMCG and retail segment ‘Micro-transactions’ as a concept has been successfully adopted by FMCG and retail companies in India by launching most of their products in smaller packages (‘sachets’). The concept has high awareness among Indian consumers who have adapted to the process of buying goods in small and incremental quantities. Cashing on the initial trial behaviour Indian consumers are highly conscious about ‘value-for-money’ and have a preference to try-out the products initially before becoming a regular customer. The micro-transactions approach allows consumers to use and feel the product before they buy the larger quantities of the same product or service. Increasing product penetration in lower income groups A majority of Indians are in middle or lower income groups in Tier-2 and Tier-3 cities. Given the high dependence and variability in the monthly family earnings, Indians prefer to divide their purchases in multiple smaller amounts. This is unlike western countries where people have the preference of buying products in bulk. The micro-transactions concept allows the product companies to target the middle and lower income groups and increase the product penetration. Micro-transactions is an existing concept in India. The task ahead for Casual Gaming companies is to identify the micro- transactable items and market them effectively to the consumers.

Mobile Casual Gamers in India

Mobile Casual Gaming Revenue expected to grow at CAGR 27.5% over Up-gradation of infrastructure (3G and LTE) leading to availability of affordable and stable mobile internet services will be the driving factors for mobile casual gaming revenues. Note:* The total mobile gaming revenue is based on FICCI-KPMG report 3.4 X Mobile Casual Gaming Revenue Mobile Casual Gaming contributed 80% of the total gaming revenue in 2010 … … however, this contribution is expected to decrease to 60% by 2015, which can can be attributed to the higher adoption of the hard core games over casual games

… while Mobile Casual Gamers are expected to grow at a CAGR of 60.4% 10 X Mobile Casual Gamers Ratio of the total online mobile subscribers to the mobile casual gamers is expected to increase from 10% in 2010 to 20% by G will overtake GPRS as the preferred technology for mobile gamers by 2015, primarily driven by higher speed, affordable 3G-enabled handsets, and decrease in the prices of 3G services.

PC Online Casual Gamers in India

PC Online Casual Gaming Revenue expected to grow at CAGR 29.9% over X  PC Online segment will have a moderate increase in revenue in contrast to a higher increase in number of users because of the lower ARPU, which can be attributed to the fact that games on PC are largely ad- funded.  Majority of the growth in the PC online casual gaming revenue will come from the increasing adoption of net-books and tablet PCs. By 2015, 3% of the total online PC Gamers are expected to indulge in Micro- transactions contributing 70% of the total PC Casual Gaming revenue

… while PC Online Casual Gamers are expected to grow at a CAGR of 41.2% ~5.6 X Approximately 80% of the total PC Online Gamers in India are Casual Gamers.  By 2015, the wired PC Online Gamers will decrease to 16% and more than 57% of gamers will use 3G network due to the higher penetration of low cost 3G dongles.  LTE (4G), expected to be rolled out in the country by 2012, will further boost the shift to wireless broadband network and will be used by 13% of the casual gamers.

Console Casual Gamers in India

 Number of Console Casual Gamers is expected to grow over 100% on a year-on-year basis ( ) which will provide a strong platform to casual gaming companies.  Casual gaming companies are marketing console casual games as a family activity thus expanding their reach beyond individual gamers.  Average price of retail boxed games is currently USD 22 and is expected to decline to USD by 2015 Console Software Gaming Revenue expected to grow at CAGR 79.9% over X One of every three console games purchased in India is a casual game.

Direct-To-Home (DTH) Casual Gamers in India

Direct-To-Home (DTH) – An Emerging Segment for Casual Games DTH segment is at a nascent stage but revenue from this segment is expected to grow significantly at a CAGR of ~69.3% over period 3.3 X E  DTH Casual Gaming revenue was USD 0.79 million (or 1.3% of the total casual gaming revenue) in 2010 and is expected to reach USD million (or 4.5 % of the total casual gaming revenue) by However, the changes in ARPU can impact the projected revenues  Telecom companies offering DTH services such as Airtel are using their existing relationships with Casual Gaming companies and also, partnering with international gaming companies to tap the library of the business

The Road Ahead

The Road Ahead(1/2) Current Scenario  Majority of the gamers currently are males and the female segment has largely been left untapped  Majority of the games available in the market are in English language and based on international themes. Opportunity  Higher proportion of women in India, are housewives, who have spare time during day hours, which they utilize for entertainment  Development of women centric games such as based on TV-soaps – which have huge fan following, will help the gaming companies to target housewives in not just Tier-1 cities but also Tier-2 and Tier-3 cities  Game creators can take cues from Television, where incorporating local language and socio/cultural context by shows such as Indian Idol, Who wants to be a Millionaire, India’s Got Talent have proved to be hugely successful.  Development of games in local languages, which are based on demographic, cultural and social topics, can positively impact the adoption and penetration of casual games.

The Road Ahead(2/2) Current Scenario  Gamers are uncomfortable about revealing credit card details for online transactions in India  Majority of the games are arcade or puzzle based games or adventure based games in the 2D format Opportunity  Casual Gaming companies can partner with banks to enable net-banking for online transactions.  Operators and casual gaming companies need to agree on revenue share which is more realistic with global averages  Mcommerece, Google ‘s one click payment, pay pal are looking at Indian market to enable payments and this will have positive impact.  Casual gaming companies can partner with content providers to develop games in different genres – Augmented reality, edutainment, event based games, location based etc.  Development of games that provide near real, interactive and engrossing experience to users. This will help the gaming companies in ensuring sustained interest of the gamers.

Leading Companies in Casual Gaming in India Note: The companies have been listed in alphabetical order and an Indicative List IronCode

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