Will The Great Lockdown Unlock Monetisation For India’s Gaming Startups?

Professionals, business owners, daily wagers, students and people from all walks of life who would go about their usual business in the world outside have turned inwards. With over a month of the lockdown, Indians are latching on to internet-based services with great appetite. And while digital entertainment and OTT have grown tremendously, the lockdown could finally solve the monetisation puzzle for mobile gaming in the Indian market.

Statista’s report from September last year projects the number of mobile gamers in India to reach 370 Mn by 2022. Among the channels expected to grow, monetisation is a key element and Indian gaming companies will have to overcome the challenges in infrastructure, payment channels and low spending habits. Mobile gaming can be broadly divided into socially competitive games such as ludo or other multiplayer games which involve no money, real money fantasy games and games of skill such as rummy or poker, multiplayer games which also fall under esports such as PUBG, Free Fire, Call Of Duty and others, as well as casual games such as Candy Crush which may have a user monetisation element but are primarily backed by advertising.

Among these, the last model is what works best in India as getting Indians to pay for games has always been a problem. A KPMG report on the state of the digital media and entertainment sector, though, says that this is about to change. “Paid models could see growth as online gaming gets more entrenched into overall time spent on media and entertainment,” the report said, adding that the accelerated growth in consumption and monetisation has come as a result of the habit-forming behaviour under the lockdown.

“Today, people are a lot more comfortable making payments,” said Paavan Nanda, cofounder, WinZO Games.

Rising Tide Brings User Monetisation For Games

Backed by Hike, WinZO is witnessing 30% to 40% increase in the usage of the in-app wallet for both casual games and real money games. The wallet amount is used towards participation and for in-app purchases (IAPs) in certain games.

The average transaction size has also increased from the previous INR 35-40 to INR 75-80.

“This is because people know that they will be spending more time on the platform in the near future and to avoid adding money repeatedly,” Nanda said,

Paytm First Games which caters to casual, real money games and competitive gaming said its user base has increased by around 40%-50% in the last few months. While casual games are monetised by both advertising and in-app purchases, there has been a 60% increase in the number of transactions and the average transaction size has also increased similarly.

Gunning for an IPO in the next couple of years, Nazara Games is seeing growth across all categories like cricket, kids games, quiz or trivia games and esports streaming on YouTube and other platforms.

Apart from a 50% increase in the user base in the past month, Nazara has witnessed a 5X increase in in-app purchases.

The company’s World Cricket Championship 2 (WCC2) title is seeing revenue growth of 20% and with 100% growth in in-app purchases.

Interestingly because of the big spike in the number of users, advertising revenue has fallen. “While we are serving more ads due to more people spending time on games, the cost of inventory has dropped by around 30% across games and regions. There are not many people spending on advertising campaigns,” Sudhanshu Gupta, Paytm First Game’s chief operating officer, told Inc42.

He reiterated the habit-formation that is being seen as a key metric. Getting people to pay small amounts for a period of several weeks can help build a habit which has been a major barrier for a long time.

Nazara CEO Manish Agarwal said that the penetration could add more than 100 Mn new gamers in India during the period.

“Internally we have seen high adoption in games which people are familiar with. Say ludo or cricket, where people do not have to learn the rules, etc,” Agarwal added.

Ludo is indeed a highly popular game in the Indian market. Ludo King from Gametion Technologies holds the top spot among free games on the Google Play Store. While it is free to play, it also offers IAPs. Founder and director Vikash Jaiswal said that alongside the 5x increase in traffic, Ludo King has seen a 10x surge in in-app-purchases and a 4x increase in advertising revenue.

While the expansion and growth have been triggered by the practice of social distancing and the lockdown, will it implode once things go back to normal?

“We understand that the scenario will change when people start getting back to work but what I’m really hopeful about is, 4-6 weeks is a good time for forming long term habits,” Paytm First’s Gupta said.

WinZO’s Nanda said that the practice of social distancing and the refraining from stepping outdoors could continue for a slightly longer time right after the lockdown ends as people will still avoid public transport, travel, public gatherings and more.

Nazara CEO Agarwal also believes that social gaming for a few months will build a habit. “The frequency may come down. In my opinion, the games are the new community platforms,” he added.

Social Gaming On The Up As Fantasy Gaming Takes A Break

Gametion’s Jaiswal added that there is a huge demand for player-to-player interaction with users wanting to socialise with friends and family while playing. This is borne out in the growth for the likes of HouseParty in the initial days of the lockdown. Nazara’s Agarwal said that games that are socially-competitive and have IAPs will witness growth due to more activity, more engagement and more competitive thrill.

Prior to the lockdown, Gametion’s players mostly chose random match-ups, while ‘play with friends’ was only a fifth of the user base. This has flipped as more people sought to connect with friends from their homes. Gametion is building in-game audio chat options and support for games with more participants.

WinZO also has witnessed a 3X growth in multiplayer gaming.

“Private tournaments and ‘Vs’ mode where players play with friends and family has grown well. This suggests that people are interested in connecting, almost as if gaming is a conversation facilitator. Also, due to the social nature of games people always bring others along,” Nanda added.

Nazara is working on a social multiplayer cricket game aimed at replicating the experience of playing gully cricket with friends. The focus is on areas that are growing. The company is trying to bolster demand by onboarding cricket commentator Aakash Chopra for these virtual tournaments.

While social games have grown, fantasy games that rely entirely on real-world sports events have seen revenues crash for over a month. “It has been the casualty of the Covid-19 crisis as live sports are not happening,” said Paytm First’s Gupta.

The immediate future also looks bleak as public sporting events won’t be picking up any time soon. The big hope for fantasy sports games was the Indian Premier League, which was postponed from March 29 to April 15, before being put off indefinitely. Dream11, BalleBaazi, Halaplay, My11Circle, FanFight, among others had invested a lot in advertising and marketing during the IPL, which has delivered no returns.

Startups Broadening India’s Gamer Base

Besides user and revenue growth, user behaviour is a key metric for gaming platforms. WinZO’s peak traffic hours used to be 9-10 PM but this has now changed to 10-11 am, and weekday traffic is higher than weekends. It is also seeing a better response to its marketing campaigns in Tier 1 cities, which often are the revenue centres for such games.

“We are seeing a spike in traffic from non-metros. In fact, now, Jaipur is our top contributor in terms of traffic. Cities like Bhubaneshwar and Indore are figuring in the top 15 list,” Paytm’s Gupta said.

On the esports front, Paytm is drawing interest from global game publishers who hadn’t focused on India for a long time. “We recently initiated our Clash Royale tournament with Supercell and were expecting around 500 registrations but it got filled in an hour. We ended up getting 11K people. We didn’t monetise it and took it as an opportunity for dedicated gamers to discover it. We also live-streamed it and it was viewed by around 70K people,” Gupta recalled.

Nazara runs a subscription-based gaming platform (Kiddopia) for two to six-year-old kids.

“The subscriptions have increased tremendously in these markets and post the lockdown. More users are converting from the week-long free trial period to paying users for a lower consumer acquisition cost. There has been some marginal increase in the Indian market but the subscription cost at the moment is not feasible for the market. Companies that are working on a subscription model will see growth like OTT platforms,” Agarwal said.