🇮🇳 The Rise of the Indian Gaming Market
+ 10 Things Every PM Should Know
India is exploding as a hub for innovation. These days, it seems more common to hear Unicorn announcements out of Bangalore than out of San Francisco.
The numbers back up the feeling. Unicorn announcements in India have literally 10x’d. In 2021, India had 44 new unicorn announcements. Only 37 companies had hit that mark in the prior decade. The country is minting unicorns.
With a total of 90 unicorns now, India is third behind the US (487) and China (301), but far ahead of the UK in fourth (39). All the funding has added up to Bangalore surpassing even Beijing and Shanghai for venture capital funding in 2021. Those are phenomenal stats for a developing country with a per capita GDP of nearly a fifth of China and a thirtieth of the US.
With all the funding and tech success has come the rise of gaming in India. India has always had a rich film market, and its audio market had developed in the last few decades, but gaming is really the story to come on in the last few years.
This week, I am very excited to present a collaboration with Joseph Kim, CEO of LILA Games, which is developing a mobile first-person shooter with 25 employees predominantly in Bangalore.
Before LILA, Joe has had a long career in gaming in the US, including recent positions as SVP of Gaming and Digital Platforms at NBCUniversal & Chief Product Officer at SEGA. Before that, he was the lead at FunPlus on King of Avalon, which helped establish the Chinese developer as a leader in the 4X game genre.
Most of us know Joe from his amazing content. I was first introduced to Joe as the lead MC of This Week in Gaming (TWiG) over at the Deconstructor of Fun podcast when I was working on Fortnite at Epic Games. A large percentage of the industry listens to that podcast. So, it should go without saying that he brings a unique, authoritative perspective on developing games in India.
Join us as we go 5,700 words deep on:
The History of Gaming in India
Market Size and Growth
Key Players
Trends Driving the Future
Key Obstacles to Overcome
Country Comparisons
History
Phase 1 - Almost No Traction
After gaining independence from the United Kingdom in 1947, India’s economic policy was influenced by the imperial experience. The government turned inwards, enacting and keeping up a series of protectionist policies.
The state intervened in many areas of the economy. Red tape was infamous. It was said that establishing a business was like winning the lottery, the paperwork and bureaucratic hurdles presented such long odds.
On the other hand, in the United States and abroad, video games have been a thing since at least the 1950s. From Atari to Sega and Nintendo, consoles and arcades were big business for decades in the US and Japan. In the 1970s and 80s, arcades also became huge.
But gaming did not blossom in India. The country’s protectionist policies created widespread economic stagnation. Although Nintendo was licensed to sell in the country, numbers were anemic due to the import tax, which was above 100%. For a country with already poor purchasing power, doubly priced devices were too much.
As it became evident that India’s economy was lagging behind its peers in the 1980s, the governments of Indira and Rajiv Gandhi began pursuing economic liberalization.
Then, following the tragic assassination of Rajiv Gandhi in 1991, the conditions were in place for massive economic liberalization. This is finally when the Indian flirtation with video games began.
Phase 2 - Coin Parlors
The 1991 liberation reform reduced import tariffs, deregulated markets, and reduced taxes. This led to an increase in foreign investment and the introduction of coin parlors and arcades.
Naturally, Japanese arcade companies like Sega, Konami, and Capcom became players in the market. Especially in urban centers, it was easy to find a parlor with international gaming machines. Pac-Man, Street Fighter, Contra, and Metal Slug did particularly well.
Meanwhile, globally, consoles like the SNES and Sega Genesis took the world by storm. These TV-gaming consoles were too expensive for Indian consumers. They did not take off. Instead, the consoles that were sold were made into arcade machines. More than any international machines, these were the bulk of most parlors.
But in a country of over a billion, the number of parlors is not estimated to have crossed the single-digit thousands. There were a few parlors in each city, but overall gaming was quite niched.
To this day, you can actually still find about the same number of gaming parlors throughout India. They exist as odes to this era of gaming in India when primarily the hardcore participated. While arcades saw a swift decline in the West in the early 2000s, they continued in India.
Arcades have two factors that make them more culturally significant and enduring to Indians than the West. First, they are social. India’s communitarian society especially values social experiences. Second, they enable players to buy in at low prices. While consoles and systems were large purchases, arcades were a relatively cheap visit.
Still, for the two-thirds of India living in rural areas, electrification was too much of a barrier. Expensive transformers were required to supply consistent electricity for the boxes, making parlors far less common in rural than urban centers. Throughout this phase, the average Indian remained unexposed to gaming.
Phase 3 - PCs
As the PC took off around the world, it also took off in India. Unlike gaming consoles, PCs had educational uses, like access to the internet and the ability to learn software engineering. This helped them take off in India in a way gaming devices could not culturally.
Although Indians culturally do not care about gaming, they do care about engineering and education. Scores of kids begged their parents for a PC, supposedly for school, but often also for gaming.
As a result, gaming really started to take off as electrified Indians started to get home PCs. Games like Aladdin, Prince of Persia, and, of course, Doom took off.
But, very few Indians paid full price for their games. The vast majority pirated them. The cost was often free, downloaded over the internet, or less than a dollar, purchased on a burned CD-R at the local market. Even games that seemed in proper packaging were often just pirated discs inside.
Phase 4 - Playstation
As consoles came to dominate the global market size for gaming in the mid-2000s and 2010s, they barely made a dent in India. The console to do the best was Playstation.
Somewhat like the arcade era before it, India lived in gaming history. While the rest of the world was playing on expensive Playstation 2s, Indians played Playstation. When the world was focused on Playstation 3, Indians were purchasing Playstation 2s like hotcakes. Sony revealed they sold over 1 million of the devices in the country.
Playstation 2s still sell in Indian markets today, in part due to the sheer volume of pirated games to play on them. The CDs were made for easy copying. Whereas a Western gamer contended with a game that was a fourth or a sixth ($50-60 for a game vs a $200-300 console) the price of the console, Indian gamers could enjoy games at a fraction of the cost ($0.50-$2 for a $200-300 console).
As Vice puts it:
Piracy helped grow the video games industry in India.
Playstation 3 games, on the other hand, are nearly impossible to pirate. Players prefer original games because they enable online modes and game updates. With the decline in piracy has come, again, a decrease in cultural significance in the ecosystem. PS4s, and now PS5s, remain too expensive for most Indians.
Phase 5 - Mobile Cambrian Explosion
I hope you enjoyed this week’s deep dive! It was so fun to get back into tech content. Let me know what you thought about it.
Before I get to our next piece today, let me tell a quick story.
I gave a talk to the Katz Ops Club a few weeks back. For that, I prepared a presentation using 10 resources for the 10 skills I identified in a tweet . On a whim, this week I turned that talk into a LinkedIn post. Somehow, it was my biggest LinkedIn post ever! I have gotten over 1,500 followers from that post alone.
As they say, “the power of crowds is not wrong.” So, I had to share the piece with all of you newsletter subscribers as well. Cheers, and till next time 🍻
10 things every PM must know
• Design principles
• Tech stack
• Influence
• Jobs to be done
• Difference between strategy & vision
• How to prioritize a roadmap
• How to say “no”
• Pitching
• Metrics that matter
• Review cycle politics
Plus the best resources to learn and improve:
1. Design Principles
Resource: Roadmunk on Medium
2. Tech Stack
Resource: Heap
3. Influence Without Authority
Resource: Diego Granados
4. Jobs to be Done
Resource: Clayton Christensen
5. Difference Between Strategy & Vision
Resource: Marty Cagan
6. How to Prioritize a Roadmap
Resource: My Article
7. How to Say "No"
Resource: Holly Donohue
8. To Pitch Their Product
Resource: Steve Jobs
9. The Metrics that Drive their Business
Resource: Lenny Rachitsky
10. Review Cycle Politics
Resource: My Twitter Thread
It’s a long learning journey that never ends as a PM. Keep growing.
Thanks for the collab! Was fun and super fast. Let's do more stuff together soon!