Many of us have colleagues who have been playing the gorgeously designed puzzler, Two Dots, or pairing their coffee break with a couple of rounds of Candy Crush or Temple Run, launched a decade ago. These games are often described as the ones that have made gamers out of all of us.
Gaming is the largest emerging digital consumption basket globally, with the market likely to reach ~$340 B by 2027 as per Mordor Intelligence. India now has 507M+ gamers – the Indian market hit $2.6 billion in FY22 and is set to reach $8.6 billion in FY27. More interesting is the fact that over 43% of Indian smartphone gamers are women, and that number is increasing at a faster rate than the number of male gamers in India. While most Indian gamers play daily, spending one to two hours per session, gaming is becoming the choice of entertainment with gamers spending nearly nine hours a week playing.
Why do these numbers matter? In India, almost a quarter of the gamers are paying users ($20 revenue per user). And in FY21-22, the industry added about 2 million new paying users (NPUs) every month, with NPUs growing at the fastest rate in the world. This leads to an opportunity to create India-first, financially viable gaming brands. To give you an indication, with 15 billion installs, India had the highest share of game downloads (17%) globally in FY22, making it the largest consumer of mobile gaming apps worldwide.
The consumer brand opportunity
At Fireside, we’re always looking for white spaces in the consumer brands space. And while the gaming numbers have long looked attractive, we decided to explore the space, building our understanding of the game development life cycle, while still applying our new-age consumer brand lens of market timing, consumer need, and social responsibility.
The understanding we arrived at led to our investment in the casual gaming startup, Giga Fun Studios. The time is now, to build an India-first gaming business.
The casual gaming landscape
Access to a smartphone is key when it comes to gaming in India. And with the smartphone market in India set to grow to 175 million units this year, the possibilities are endless. Like other forms of online entertainment, mobile gaming, too, saw a huge uptick during the pandemic which led to an inflection point and a shift to a higher consumption graph.
Casual games, have been, are, and will continue to be extremely popular. Within casual games, both globally, and in India, is an evergreen phenomenon called Match-3. This category alone has seen several large outcomes, way back in 2001, with Bejeweled, which EA acquired for $1.3B); and a decade ago, in 2012, with Candy Crush, which Activision Blizzard acquired for $5.9B at 10x revenue. More recently, Peak Games saw great success with their games Toon Blast and Toy Blast, which were acquired by Zynga for $1.8B, and the Peak Games breakaway, Dream Games, creator of Royal Match, whose last round valuation was $2.75B.
This gaming format has thus seen successful outcomes across timeframes of decades and has also been successful across geographies. This lends it a special place with very low risk of disruption and high longevity potential and thus reduces the so-called “Single Title” risk perceived in gaming investments.
The India opportunity
Mobile game development costs can vary from a few thousand dollars to sometimes a few million dollars. However, with the right phased execution mindset and an iterative process, this sector has seen one of the most capital efficient businesses being created. One example of such high capital efficiency is the bootstrapped Gameberry Labs, which reported a PAT of ~INR 110cr in FY20-21.
Another problem to be solved on the game localisation vector is that play does not always translate into pay. Monetisation has historically been a challenge, especially India. Traditionally, monetisation in casual games happened through ad revenues which accounted for 90% (~$450M) of the category’s revenues in FY22. However, with the right localisation game design, complemented with right pricing strategy, games such as BGMI, Free Fire, and board game-based titles like Ludo King and Carrom have showcased the potential of monetisation.
Indian consumers are extremely underserved by the large players like Zynga and Playrix, and yet, their games are amongst the most highly downloaded games in India. Many of these games have in-game power-ups and customisations that come with dollar price tags. And content wise, they inhabit lands like Farmville, Gardenscapes, and Homescapes.
Another example of the monetisation potential waiting to be unlocked is Coin Master, which has managed to tap into the Indian audience, by employing low cognitive load mechanics, which is one of the pillars of localisation. In 2022, Coin Master made ~$20 million just from in-app purchases in India, even though slots are a largely unfamiliar concept here.
The lack of tailored monetisation and a low focus on India have contained the footprint of Match-3 games to being high engagement but low monetisation here. We believe that there is an opportunity to build a large Match-3 studio tailored to Indian audiences, and going beyond, to build Indian-themed Match-3 games for a global audience, too.
The strategy
In our attempt to separate out the noise, we’ve tried to identify patterns of success:
- While there have been many successful game outcomes globally, there are some consistently successful games in genres across time frames and geographies lending them high longevity potential and low disruption risk.
- Match-3 is one such genre – the puzzle genre is said to be the fifth most popular sub-genre, generating almost $1 Billion in consumer spends in Q3 2021 alone globally. The genre has seen consistent success. Even without localisation, Match-3 is the third-largest genre in India, with great appeal among young women.
- Candy Crush Saga alone generated $1.2B in 2021 and is the sixth highest grossing mobile game of all time with 273 million people playing it once a month. In 2022, Candy Crush Saga was among the most downloaded games worldwide with 138 million new installs across the App Store and Google Play. However, Candy Crush has no cultural resonance or the right game design for the Indian player, and that in turn, limits its monetisation capabilities in India and leaves a white space in the Indian context.
- Using the analogy of a car, game localisation has as much to do over the hood, as it has under the hood. How do you create the game engine, or the design and artwork of the game itself? How do you plan rewards, nudges, and progression, and enable social networking and leaderboards, while serving the right audiences an unmatched experience? Game localisation is not just about translating text and dialogue into a target language, it’s about optimising the entire gaming experience to maximise relevance for each audience. Only then will localisation eventually translate into longer retention rates (D30+ numbers of 10%+) and lead to higher conversions to in-app purchases.
Room for disruption
Insights and patterns are vital for sustainable growth and success in any business. But one factor becomes even more critical when it comes to the gaming sector: people who know the game business completely. Who understand the ideas and concepts that can be adopted en masse, and lead to consumer delight and also monetisation.
The founders of Giga Fun Studios are folks who have scaled global gaming businesses and created data-oriented processes for decision-making and monetisation: Krishnendu Mukherjee (Former AVP and Head of Game Design at MPL, former Lead Product Manager at Zynga), Rahul Daga (Former Director of Products Zynga, Country Head at m56 Studios), and Rahul Shekhar (Former Engineering Lead at m56 Studios). Together, they bring 25+ years of experience in building and running games as well as building high-performance game development teams, and have collectively shipped and operated 10+ games with experience managing gaming P&Ls of $100M+.
Giga Fun Studios’ core thesis is to build games on relatable content for the Indian audience, like Bollywood, weddings, mythology, and more, while using familiar game mechanics such as Match-3, which are deeply localised and customised for the Indian audience. It isn’t just themes and mechanics that will be localised, the monetisation model will be too, with curated pricing and modes such as battle passes, as will distribution through targeted consumer engagement.
In conclusion, we, at Fireside believe that this is an exciting beginning for Giga Fun Studios, and gaming in India, which could well be the next successful vein of consumer brands from India, for India, and perhaps, even beyond.
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