Indian skill gaming founders and industry associations have welcomed Google’s pilot to permit daily fantasy sports and rummy apps in its app marketplace Google Play, although some have raised concerns that it could potentially cause market distortion in the long term.
On September 8, Google announced that it would begin a one-year pilot to offer daily fantasy sports and rummy apps to users in India by developers incorporated within the country. The pilot programme will start from September 28, 2022 and enable the distribution of these apps within the country.
The move is expected to be a huge shot in the arm for these apps since it will likely reduce the friction faced by users in installing these games on their smartphones, thereby enabling them to attract a much broader audience. Currently, users have to manually sideload these apps on their smartphones by downloading the Android Package (APK) file of these games from alternate distribution sources, which can be quite a cumbersome process.
Deepak Gullapalli, founder and CEO of skill-based gaming firm Head Digital Works, said the step will help improve the unit economics for these games due to better clickthrough rates on their ad campaigns.
"Once the customer clicks on our ad, and he gets to download (our app), the number of downloads will definitely go up. This means that we spend the same amount of dollars but get more downloads, which will improve our acquisition costs," he said.
Besides this, it will also improve app discoverability for users to play these games on their phones and increase the level of security on customer transactions, thereby improving consumer trust in these companies, he said.
"If you look at India (market) today, there are many apps that are illegal offshore gambling companies marketing in the country and making customers play on their apps, with the money mostly going out of the country without being taxed by the government. This move will help us send the right message to consumers to play only on apps that are from Indian companies, with the money being properly taxed and staying within India," he said.
Sameer Barde, CEO of the E-Gaming Federation, also echoed this sentiment, saying this step would allow players to essentially play on platforms that follow best practices.
"Google’s measured approach to a safer user experience will encourage responsible gaming and help legitimate skill gaming operators grow while eliminating unscrupulous fly-by-night operators," he said.
Joy Bhattacharya, director-general of Federation of Indian Fantasy Sports (FIFS) also said they welcome this pilot to allow apps on Google Play Store "that are recognised by the Supreme Court of India as regular business activities"
That said, the step could disadvantage startups offering other categories of skill games that are currently excluded from the pilot.
"It will have a massive impact on our unit economics. Through this pilot, Google has effectively reduced the marketing cost for select companies in this ecosystem to 1/4th of their earlier spend. If you could have done that for all of us, we could have invested that capital into various things, be it investing in technology, innovation, or getting more talent rather than paying significantly more to distribute it outside the Play Store," the founder of a prominent gaming platform told Moneycontrol, on condition of anonymity.
Read: Google extends third-party in-app billing pilot to India, four more markets
Growing popularity of skill-based games
Google’s pilot launch comes amid the rising popularity of real-money gaming apps in the country in recent years, which has led to several startups such as Dream11, Mobile Premier League and Games24x7 building billion-dollar businesses without having a presence on the Play Store.
Dream11, which was last valued at $8 billion, claims to have over 135 million users, while Games24x7 claims to have 100 million users. MPL has over 90 million registered users across Asia, Europe and North America, with India being its biggest market in terms of users.
Real money gaming (RMG) contributed about 70% of the country’s gaming industry revenue, which touched Rs 10,100 crore in 2021, registering a 28% year-on-year increase, per a recent EY-FICCI report. Fantasy Sports saw 26% revenue growth while Rummy witnessed 28% revenue growth in 2021, the report said.
Neil Shah, vice president of research at Counterpoint, said Google’s plan to conditionally allow these gaming apps into its largest Android market, which has more than 580 million users, was a welcome move.
"Google’s stance earlier was the right one to protect its user base and itself from potential fraud and be directly or indirectly liable. However, the Supreme Court’s ruling, heavy lobbying as well as the hanging sword from CCI is forcing Google’s hand to meet somewhere in the middle. It is allowing these gaming apps but not directly offering its platform billing or ads system yet and maintaining some distance as this could easily become a legal as well as regulatory nightmare with one rogue case," he said.
Bhavin Pandya, co-founder and co-CEO of skill-based gaming company Games24x7, said this development will give a "further impetus to an industry that is already making strides towards realising the Prime Minister’s vision of making India a trillion-dollar digital economy by 2025."
This pilot programme could open up the potential for new players to disrupt daily fantasy gaming and hopefully open the path to more "games of skill" being approved for RMG domestically", said Justin Sriram Keeling, general founding partner at gaming-focused fund Lumikai. "We will keep a close eye on what kind of innovation this encourages in the broader market," he said.
Long-term market distortion
However, not everyone is thrilled about Google’s pilot programme, since some founders and executives claim the selective exclusion of other categories of skill games from the pilot is clearly discriminatory and is yet another example of the company’s arbitrary platform policies.
Per the terms of the pilot, only daily fantasy sports and rummy apps are allowed to participate. The tech giant will not allow aggregators of other real money gaming and gaming products or services that are owned or operated by themselves or third parties or contain any functionality enabling access to these products or services.
"The Supreme Court has settled precedent on games of skill. It has been held that success in these games depends upon a substantial degree of skill. So, players’ knowledge, training, attention, and experience, determine their success in such games. It is unreasonable for Google to only allow Rummy and Fantasy games while foreclosing the door on all other skill-based games that cumulatively form a bigger user base of over 500 million users in India," said Saumya Singh Rathore, co-founder of WinZO, a social gaming and interactive entertainment platform.
Rathore said Google must rethink this decision as it could cause long-term market distortion in "favour of already entrenched players and discourage innovation". The pilot could also boost apps that are permitted over those that aren’t "to the extent of 70-75%", she added.
Puneet Singh, co-founder and COO at Baazi Games, which runs the online poker platform PokerBaazi, also urged Google to consider and bring all skill-based games "at par" on its platform.
"We believe that Google should include all skill-based games, especially the game of Poker, which has been recognised as a skill game by multiple High Courts, States and also the Law Commission of India. Not being challenged in the Supreme Court of India should not be a reason for not including Poker" he said.
Sudhanshu Gupta, COO of Paytm First Games, said the company is hopeful that this is the first step among many to come as many more skill-based games could benefit from the distribution and reach of the Play Store.
Google’s statement
In a statement on September 8, a Google spokesperson said that the company is constantly exploring ways for local developers to "build successful businesses and offer delightful experiences on Google Play".
"Through this pilot program, we are taking a measured approach that will help us collate learnings and retain an enjoyable and safe experience for our users" the spokesperson said.
Suraj Chokhani, managing director of real-money gaming platform Ability Games, said more clarity is needed on the payment gateways that the apps listed on Play Store can use, the criteria for listing, and whether other skill-based gaming apps will be allowed.
Google should come up with a "clear, transparent, non-arbitrary and permanent policy for listing gaming apps on Playstore and clearly define a fair revenue sharing mechanism between Play Store and the developer from the payments made for such games," said Jay Sayta, a technology and gaming lawyer.
Google mentioned in a support page that apps participating in the pilot should not use the company’s in-app billing system or be available as a paid app on the Play Store.
From what we understand, they will be allowed to use external payment systems and Google will not be levying any commission on participating players during the pilot. Moneycontrol has asked Google for more details on this matter.
