The Need for Game Publisher Ecosystem in India
Hi there!
This week on Eximius Echo, we're exploring the Gaming industry in India, talking about the need for a Game Publisher ecosystem in India. We outline how publishers aid developers in overcoming distribution challenges and reaching target audiences effectively. Delving into the global landscape, we discuss the evolution of publishers from first-party to third-party developers, highlighting their pivotal role in the era of free-to-play (FTP) games. Join us as we navigate the exciting world of gaming, where publishers emerge as linchpins of success for developers worldwide.
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Publishers and their Need
The number of game developers globally is more than 1.2 billion, as per Newzoo. With these many developers looking to promote their games to players worldwide, distribution is often the biggest challenge they end up facing. Attaining the right distribution is extremely important for games. The inability to reach the right audience optimally and efficiently is often the biggest reason why a vast majority of games that enter production end up failing (4% as per Electronic Entertainment Design and Research).
Simply put, publishers help make this situation easier for developers worldwide. Often extremely successful developers themselves, publishers leverage their extensive financial resources, industry connections, and sector expertise to distribute games successfully and help them reach the right audience with precision. Several large publishers also operate their own publishing platforms like Origin by EA and Steam by Valve. This provides more direct access to their audience.
Most publishers work with external developers to publish their games in exchange for a commission from the revenue (typically 20-40%) or control over the IP (Sony owns Ratchet and Clank rather than the developer – Insomniac). Larger publishers look to acquire multiple smaller developers to have more control over games.
It is important to note that publishers don’t just help with the distribution, but also aid immensely during the game’s development. Developers tend to provide financial backing during production and also lend their creative know-how to shape the game. This makes them a valuable partnership for any developer.
The Global Landscape of Publishers
Initially, the ecosystem was only comprised of first-party publishers. Within the arcade era and the early retail era, platforms only contained games that were developed by their manufacturers, and thus self-published. This would go on until the advent of swappable game cartridges that allowed third-party developers to emerge and develop their games for these platforms. Activision in 1979 became the first third-party developer as it developed games for the Atari 2600 console. While Atari did dispute it, it chose to settle as Activision agreed to pay a portion of their sales as a license fee to Atari. This agreement laid the foundation for publishers.
This model proved to be highly successful with several large outcomes like Electronic Arts (EA) which have enabled developers to create lasting titles. EA, in particular, was popular due to its developer-friendly approach. EA gave developers photo credits in their games and published full-page magazine ads to promote them. This consideration in relationship and a detail-oriented review process made them industry leaders.
Even today, especially with the predominance of the mobile market, publishers are playing an increasingly important role for developers. With the rise of free-to-play games, the competition for amassing users is higher than ever. The Play Store and the App Store command the most users and put together a house of over 800,000 games (as per Business of Apps). Grabbing relevant eyeballs in these platforms in particular is arduous for any independent developer.
This has also brought about a great change in how publishers tend to function. What used to be driven by meticulous care on every game published, has now turned to a volume-first model where publishers aim to release a high quantum of games to dominate the market. As a result, the degree of support that they can offer to each developer is also more restricted than in previous generations.
In the modern era of gaming, we have seen several large publishers like Voodoo (>6 billion downloads), Kwalee (>1 billion downloads), Azur Games (>3 billion downloads), Lion Studios (>3 billion downloads), etc. emerge who have changed the market dynamics. Alongside providing critical help in distribution and user acquisition, they also help developers figure out the right monetisation model for the game which helps them design it better.
Taking the example of Voodoo in particular, which tests up to 1,500 prototypes a year, they have been at the forefront of the hypercasual revolution on mobile. Since 2016, they’ve published more than 15 games which have reached the top 20 in the App Store charts. Voodoo provides its developers operations support in the form of an SDK package for their prototypes, a publishing dashboard that allows them to test their prototypes and attain key benchmarks, extensive tutorials and other information repositories for upskilling, co-production support through internal developers, and several other perks that can enable them to make the game of their dreams.
Such aid can be invaluable in a field as competitive as game development.
The Indian Landscape of Publishers
The Indian publisher ecosystem is still at a rather nascent stage. While we do have case studies like Jio Games, MPL, and Winzo, the industry still feels deprived due to a lack of genre expertise amongst publishers, particularly for mid-core games. This is why a vast majority of developers domestically feel almost compelled to produce hypercasual and casual games. This problem statement is well-highlighted in the below graphic.
Only 6% of Indian customers’ spend in 2022 went to domestic producers. India, as a market, is dominated by publishers based out of the USA and China who cumulatively receive 41% of the customer spend. This is at odds with most developed gaming markets in the world. Taking the example of the USA and China specifically, the former retains 44% of its customer spend while the latter retains a massive 97%.
Further, the share of Indian publishers in the domestic market has seen a tumble recently from 11% in 2020 to 6% in 2022. This showcases the size of the whitespace available in this category.
What to expect from India
The previous few years have seen Indian developers grow from strength to strength. With several large studios like EA and Ubisoft opening studios in India and several large precedents like Raji and Asura, the Indian game development landscape stands at a once-in-a-lifetime inflexion point. To propel the industry forward, local publishers must emerge who possess the needed understanding of customer psychology to take bolder bets in India.
Such publishers can also help create new monetisation models specifically calibrated to the Indian audience keeping in mind our value-driven mindset. This can be pivotal in creating globally competitive gaming IPs from Indian soil and successfully exporting the Indian culture through games globally.
If you're venturing into Gaming or have innovative ideas in this space, we're eager to hear from you. Reach out to us at pitches@eximiusvc.com.