Grey market, piracy and higher taxes are affecting the growth of the gaming industry in India
The existence of a thriving grey market in the country (with almost 70%-80% of games being sold through this channel) coupled with high customs duty on gaming consoles are severely impacting the growth of gaming in India, said a study.
According to a study conducted by the Internet & Mobile Association of India (IAMAI) and IMRB International (formerly known as Indian Market Research Bureau or IMRB), the high customs duty, about 25%, not only makes games out of reach for the majority of consumers, but also encourages the grey market as it is able to sell gaming consoles cheaper after avoiding duties and taxes.
"Like with any content business, piracy is a key problem area that affects the growth of the Indian gaming industry. While it seriously restricts the sales of many international game franchises, it completely jeopardises the possibility of the Indian game development industry which may be interested in creating Indian intellectual property (IP) content, with dependence on a captive audience in India for initial success," said Atindriya Bose, country manager, PlayStation, Sony Computer Entertainment Europe.
The Internet is the driving force behind the gaming market in India. Gamers constitute 41.2% of the total active Internet users in India, a whopping 89% increase from 2007.
The population of gamers is also on the rise and this is attributed to the rapidly rising number of mobile subscriptions in India and high-profile launches of the Microsoft Xbox 360 and Sony's PlayStation (PS) 3 in the country. The report said that by 2010, it expects the gaming industry to generate revenues of Rs575 crore from consoles and Rs812 crore from mobile gaming.
However, there has been a significant shift in demographics of gamers, with college and school going students accounting for almost 50% of the total gamers in India. Many of these students are unable to afford high-priced games and often tend to get them duplicated from friends. This is a major reason for piracy in India.
Sudeep Shukla, who runs a gaming blog, said, "As games are initially released in the US and other foreign countries and are not released in India, pirates are easily able to create pirated CDs and sell them in the country.” The gaming industry needs to price its games at a lower cost and launch its products as early as possible in order to curb piracy, he added.
Again, the buyer may face problems if he wants to turn in a game CD for replacement from an authorised dealer. In the gray market, however, you get replacement of any faulty CD, without any question and within minutes, said Mr Shukla.
Prices of new game titles are usually very high in India compared with other countries due to a variety of reasons, including high taxes and duty. Dealers often sell old game titles at a discounted price, which disappoints earlier buyers as they may have paid a higher price for the same.
"While making prices more accessible for DVDs may help, it needs to be done with a business perspective. Piracy control needs a dual approach of making products more accessible and acceptable to end consumers, along with using regular steps against people indulging in selling of pirated products," said Mr Bose.
Earlier, while speaking at a Confederation of Indian Industry (CII) conference in Panaji, Harish Dayani, chief executive, Moser Baer India, had said that film piracy industry in India is worth Rs1,500 crore and its profits are being used to fund terrorism in the country.
“The rate for each pirated DVD is Rs25 and the cost of a raw DVD is a mere Rs11 to Rs12. Imagine the profits they are reaping in,” Mr Dayani said, adding that Moser Baer was forced to come up with a 'revolutionary pricing strategy' to popularise film CDs and DVDs in the face of piracy.
Moser Baer has been selling CDs/DVDs of popular Hindi movies at very cheap rates or for just a few rupees more than the prices of pirated ones. A blogger picked up a legal copy of a movie and compared it to its pirated version. He said, "At Rs34, the price (of an original DVD title) is the real killer. This price cannot be beaten. Why buy pirated stuff anymore?"
"You will not be tempted to buy pirated copies as you can never be assured of the quality of pirated movies," added another blogger.
The same low pricing method can be applied for game titles as well. "They (the gaming industry) need to take the approach like that of the film industry where Moser Baer has joined hands with film producers to sell cheaper DVDs for the audience," Mr Shukla concludes.