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For India’s gaming industry, homegrown AAA titles remain the ultimate boss fight


The Indian gaming industry’s quest to break into the coveted AAA game market has three daunting hurdles: development costs, investor skepticism, and tax. 

AAA games are high-budget and high-profile games distributed and developed by major game publishers with extensive marketing and a broad appeal.

Take-Two Interactive’s Grand Theft Auto series, one of the most popular AAA games, for example, has sold over 430 million units while France-based Ubisoft’s Assassin’s Creed series sold 200 million copies as of September 2022. 

Made in India games like Nodding Heads’ critically acclaimed Raji: An Ancient Epic and Bengaluru-based nCORE Games’ Fearless and United Guards (FAU-G) have tried to attract gamers, but haven’t quite made a mark compared to global titles. 

“We are now learning to walk. So, AAA, metaphorically speaking, is flying 40,000 feet above ground. So, we cannot make that jump right out of the gate,” Harish Chengaiah, founder of Chennai-based Outlier Games, told YourStory.

Breaking bank

Unlike other startups, game developers do not sell their products every day and usually have long development cycles to develop a single game.  

“To make a great game, you need almost ten years,” Roby Job, Co-founder of Pune-based SuperGaming said.

Take for example the first installment of Assassin’s Creed, whose cost of development was $15-$20 million and took four years to complete, according to reports. 

For most venture capital funds, this is too long a wait. So, passionate developers in India often bootstrap their way through the capital-intensive development cycle. 

SuperGaming is currently testing the beta version of its biggest game yet, Indus-Battle Royale. However, this is not Job’s first rodeo. 

His involvement in the development of MaskGun, a player vs player first-person shooting game, helped him show investors that his team was capable of delivering what they claimed. 

Investors also look for a proven track record before signing cheques. 

However, new game creators often do not have a portfolio to show which often discourages investment. 

According to multiple founders, they approach investors after developing a vertical slice—a segment of the game that has been fully developed and polished which represents the core of its gameplay. 

Karan Shroff, Founder of LightFury Games said that there are always two sides to every coin. “There are believers, there are people who believe in your vision, and there are people who don’t. You need to find the right people,” he says. 

Bengaluru-based LightFury Games raised $8.5 million in a seed round led by Blume Ventures and also saw participation from Japanese mobile entertainment company Mixi and angel investors such as CRED’s Kunal Shah and Unacademy’s Gaurav Munjal. 

Shroff was previously the Chief Marketing Officer at Unacademy.  

“The newness of an industry has nothing to do with venture scale outcomes, especially in the games industry. If you find a white space, if you innovate on games, you’re able to understand the distribution, user acquisition, effectively, you can build really large outcomes,” Saloni Sehgal, Founding General Partner at Lumikai Fund told YourStory.

Lumikai Fund is a venture capital fund dedicated to gaming and interactive media. The fund, early this year, invested an undisclosed amount in Mayhem Studios which is currently developing India’s first AAA Battle Royale. 

Regulatory conundrum 

India’s current framework broadly classifies real money games and skill-based games under the broad term of “online games”. Amid widespread confusion during the GST amendment that came into effect in October 2023, with online games existing in both the 18% and 28% GST brackets, the government took steps to separate the two. Real money games were moved to the 28% GST bracket while video games remained at 18%. 

However, according to startup founders in the space, this bracket is too high for the nascent industry. 

In comparison, countries that have released high-profile games such as Poland benefit from low taxes. Poland, with a tax of 12%, has seen the emergence of the fantasy game The Witcher, which has sold 75 million copies. Germany, the home of Crytek Kiev’s first-person shooter game Warface, levies a tax as low as 5.3%, The Times of India earlier reported. 

In a list of recommendations sent by the video game industry before the Union Budget 2024-2025, around 70 Indian companies requested the government to establish a distinction between real money games and video games. 

State laws have also posed a challenge for companies.

Abraham K of Ayelet Studio said that his company had to pay Rs 2 lakh to the Tamil Nadu Online Gaming Authority to get an approval even before it began developing the game. 

The studio is completely bootstrapped and is currently developing Unsung Empires: The Cholas II Legacy of Rajendra Chola, a game that is set in Thanjavur and aims to showcase Tamil culture. 

“We are developing a game around history and Indian culture. It actually creates tourism and a lot of other opportunities as well for the government. And if the government can come in and support on that front as well, that would be a huge help too,” he adds. 

The Indian government is in the process of implementing the AVGC-XR (Animation, Visual Effects, Gaming, Comics and Extended Reality) Policy which looks to boost development in the space. 

The Karnataka cabinet, in February, approved the revised AVGC-XR Policy 3.0 for the period 2024 to 2029. 

Ashish Daga, founder of Psypher Interactive, says that implementing the AVGC policy will help foreign investors trust the sector. 

“Right now, there is a lot of confusion between games for entertainment versus games for money,” Daga says. “People are scared to invest in India.”

Engineering success 

India’s gaming industry also lacks game engines. 

Currently, some of the most commonly used game engines are Unreal Engine, developed by Epic Games and Unity, developed by Unity Software Inc. Both companies are based in the US. 

Game engines refer to a software framework that is designed to help create video games and provide the foundation for its development. 

“Established engines like Unreal and Unity have been developed and have been developing their libraries and systems for a few decades now and that’s why they have evolved to this finish today. Also similar to a game, this would take tons of dollars to develop an engine that is so good that it can replace the current giants and could be adapted by the developer community globally,” says Vaibhav Chavan, founder of UnderDogs Studio. 

The studio is currently creating a first-person exploration game, Mukti, that revolves around the topic of human trafficking and is using the Unreal game engine. 

Additionally, finding the right people to operate these engines is also a challenge, according to Shroff. 

Engineers who are recruited by video game studios have to go through a rigorous training process to get equipped with an understanding of these game engines. 

The road ahead

The country currently has 442 million online gamers, per a report by Grant Thornton Bharat and the E-Gaming Federation (EGF).

According to India Gaming Report 2024, released by the Interactive Entertainment and Innovation Council (IEIC) and WinZO, the Indian gaming market is anticipated to reach a valuation of $6 billion by 2028. 

Amrit Kiran Singh, Founder and President of Skill Online Games Institute (SOGI), believes India’s online gaming industry is filled with potential. However, the lack of resources and regulatory support to help grow this potential is lacking. 

The biggest hurdle remains money. 

“The work is happening, but not enough. And that’s sad because AAA games require a lot of money,” he says.





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