The Indian video game industry is just beginning its journey, but could become the foundation of entertainment for the next generation of consumers, JetSynthesys founder Rajan Navani told Moneycontrol, signalling the country's future potential to become a major player in the global video games market.
"The potential of India is a lot more than being 1 percent of the global market. Today, the entire gamer community is fed with products which are global. We don't even have Indian sensibilities or sensitivities to any size and scale," Navani said in an interview
"Now with what has been defined as online gaming... which, I think, is now a conversation that will build up on the differentiation between real money gaming and the video game industry," he said.
The government recently notified the Central Goods and Services Tax (Amendment) Act, 2023, which defines real-money games where the transfer of money is involved as "online money gaming". This separates them from video games played for entertainment.
The recent gaming-related amendments to the IT Rules 2021, introduced earlier this year, also create a distinction between video games, real-money games, and games where wagering is involved. Globally, real-money games are categorised as iGaming and regulated separately from video games.
"There should not have been a need to do this, but real money (gaming firms) came out and said they are online gaming to gain legitimacy. So they changed the definition. I can't stop what somebody else is going to say. So the clutter began and we never really voiced our opinion because it was a given that this (video games) is the gaming industry. However, companies were pumping money to define it and my voice was small compared to theirs," Navani said.
"It's not that we couldn't do those things but we chose not to do it and we stand on some basis of values. Whoever is associated with us from the gaming industry, they all come from the same ethos of building this video game industry," he added.
As reported earlier by Moneycontrol, both free-to-play and paid video games in the country continue to be taxed at an 18 percent GST rate on app sales and in-app purchases, as they do not involve a staking or wagering element. However, real-money games are now subject to new tax rates of 28 percent GST on player deposits.
JetSynthesys, which is backed by Infosys co-founder Kris Gopalakrishnan, Serum Institute of India CEO Adar Poonawalla, and cricket icon Sachin Tendulkar, has built and invested in a range of gaming businesses over the past few years. These businesses are what Navani refers to as "building blocks to help grow the gaming ecosystem."
This includes an internal game studio that has developed mobile games, such as Sachin Saga, Being Salman, Super Ludo, Cooking Clash, and others. It also includes a global business partnerships and publishing wing, a grassroots esports tournament organiser Skyesports that was acquired in August 2021, and a gaming and payment processing company Nova Play.
The company claims to have a catalogue of over 300 games across multiple platforms including Android, iOS, HTML and Java. It has offices in Japan, Singapore, Europe, the United Kingdom, and the United States.
Read: Indian gaming studios see big action in 2022; take bolder, ambitious bets
In September 2020, JetSynthesys acquired game development studio Nautilus Mobile, which had developed a simulation-based cricket gaming franchise called Real Cricket. Prior to this, JetSynthesys had incubated esports firm Nodwin Gaming and still owns a significant minority stake in the company, which is now owned by Nazara Technologies.
In June 2022, JetSynthesys launched Jetapult, a venture with a corpus of $100 million to acquire gaming studios in India and other emerging markets on an invest-and-operate model over the next couple of years. Navani said that this will help them access the best creative talent across the world, as India still lacks a similar talent pool at present.
"You have to play a long-term game in the video game industry. There are no short-term games here," said Anuj Tandon, CEO-Gaming at JetSynthesys.
Navani said that financial investors are wary of backing video gaming businesses, as it is still a hits-driven business, similar to the movie industry, and therefore lacks predictability. Additionally, as the market is still nascent, companies are currently focused on building their capabilities.
"Does that capability necessarily derive financial benefits the first time around or a second time? No. Hence, financial investors are not willing to take that risk today. That journey will take time," he said. "Unfortunately, in this chase for financial returns, whatever money came into gaming, has gone into real-money gaming," he added.
India's gaming sector has given rise to three startup unicorns so far: Dream11, Mobile Premier League, and Games24x7, all of which operate in the real-money gaming segment.
However, the country's rising potential as a global video gaming hub is drawing interest from international gaming giants and game-focused funds.
Earlier this month, Japanese mobile entertainment company Mixi launched a $50 million corporate venture capital fund dedicated to the Indian market. Meanwhile, South Korean gaming giant Krafton has pledged to invest $150 million in Indian gaming and interactive entertainment startups over the next two to three years, bringing the company's total investment corpus in the country to about $290 million.
Bandai Namco Entertainment, the Japanese gaming giant behind titles such as Pac-Man, Tekken, and Elden Ring, recently backed Pune-based game development studio SuperGaming.
"The gaming industry has traditionally been a cash-flow generating industry, so it does not typically need big-ticket investments. However, there needs to be more strategics (investors and gaming companies) coming and investing in the country. It creates a local talent pool and benefits the entire ecosystem," Tandon said.
India has been dubbed as the fastest-growing games market in Asia, both in terms of revenue and gamers, with its mobile and PC gaming revenue projected to reach $704.5 million in 2022, according to Niko Partners, a market research and consulting firm that covers video games, e-sports, and streaming in the continent.
This is set to grow at a five-year compound annual growth rate of 21.1 percent to touch $1.4 billion in 2026. This does not include revenue generated by real money games. About 34 percent of gamers in India spent money on non-RMG titles in 2022, the firm said.
This growth is being driven by the increasingly maturing gaming habits of consumers in India who are seeking games that offer deeper, complex experiences and are ready to spend more money on mobile games. This has led to domestic gaming studios attempting to build ambitious and complex games that can compete with their global counterparts.
While the majority of the Indian games are still monetised by ads, in-app purchases are emerging as a key revenue stream, Tandon said. The next few years will see made-in-India games start to monetise not just in India but across the world through in-app purchases, he said.
For JetSynthesys, taking gaming-led entertainment as a global play out of India will be the key focus area for the next 3-5 years, Navani said.
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