Gaming industry beckons Indian entrepreneurs
Jul 05 2013, 16:32 | By SME Mentor
Up until 2000, Anand Khemani was just a gaming enthusiast who spent hours trying to save the world online. Frustrated at the lack of gaming opportunities in India, Khemani went overseas, which introduced him to the global potential of this growing industry. It was a casual visit to the mecca of gaming - the E3 (Electronic Entertainment Expo) annual video game conference and show in Los Angeles - that convinced Khemani to hit the 'Start' button.
The young entrepreneur got his first break in 2002, when he secured the distribution and licensing rights to two games, Conflict Dessert Strom from Square Enix. These were the first two titles of his company, E-Xpress Interactive Software, a Mumbai-based publishing, distribution and retail company for gaming products in India.
Fast Forward: Today, Khemani is the official licencee and distributor of nine international gaming titles. He also owns ten retail outlets in Tier I and Tier II cities across India. Welcome to Games The Shop.
Having experienced ups and downs in a sunrise sector in India, Khemani shares some valuable advice for entrepreneurs who want to follow in his footsteps. With the potential for gaming in India yet to be unleashed, an excited Khemani has just two words - "Game On?"
According to Khemani, these are wonderful times for the Rs 600-crore gaming industry in India. The industry is growing at a healthy 30 per cent but I think we have the potential to grow 200 per cent! Growth projections look even better, with the gaming market in India pegged to reach Rs 4,000 crore by the end of 2017, he says.
What Are Your Options?
Khemani points out that there a variety of verticals, from game development, distribution, retailing, e-commerce to running a gaming parlour/lounge. Those with a flair for playing combined with good writing skills can set up their own blogs, portals or media firms. Heavy-duty gamers, who go participate in tournaments and international competitions, could even make a career as professional video game players! If you are a software expert, you could join a big development company and later launch your own studio, he reasons.
Investment in Retail
"If your heart is set on retail, you will need Rs 30-40 lakh to set up a store. You will also require Rs 25-30 lakh as working capital to stock game consoles, peripherals and software. Due to thin margins and high import duties, it is imperative that your store is of the correct size. A large store with high rentals and operating costs is no good for business. So, 300-400 sq ft is good enough. If your store is in a good location, you can expect to break even in three to four months with a decent ROI of 25-30 per cent per annum.
If finances are an issue, you could trade in gaming products or start a small e-commerce site for gaming products. Other options are starting a game parlour with just six to eight machines or a studio with just one computer to write gaming apps. Who knows, your programme could be the next Angry Birds story!
Navigating The Challenges?
High Duties: High import duties - 25-30 per cent - considerably raise the prices of gaming products in India.
Retail Real Estate: Mall developers still fail to see the potential in this segment. Some of them do not understand our economies. They feel they should get more revenue from us since we are in a high turnover business, although we may have rented only 300 sq ft!
Tax Dilemma: The gaming segment is highly prone to Internet piracy. From the retail perspective, the implementation of GST is crucial as entrepreneurs would not have to worry about different formalities in each state to open a store.
Betting On The Future
Gaming is divided into two segments: casual and hardcode. Casual gaming is restricted to mobile phones and tablets. Hardcore constitutes high-end PC games or console games for platforms like Playstation, Xbox, etc. In recent times, with smart phone and tablets getting more and more popular, and business models like freemium and micro-transactions coming into play, we have seen an exponential growth in mobile gaming.
However, with announcement of new-generation consoles (PS4 and Xbox One), we are bound to see hectic activity in the hardcore segment as well. MMOG (Massively Multiplayer Online Gaming) is very popular in the Western and Far East. With an improvement in Internet speeds, we will see a spurt in this segment in India too.
The Online Onslaught
I believe both models - e-commerce and brick-and-mortar games - will co-exist. Gaming in India is a new segment and so is e-commerce, which has given gaming a huge boost. In fact, e-commerce has helped take hardcore games distribution to more than 220 cities. This, in turn, is helping the brick-and-mortar format of game retail to flourish, since they now have a ready base of customers who are exposed to gaming."
As told to Nivedita Jayaram Pawar
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