The Indian gaming industry is growing by leaps and bounds. A recent Lumikai report said the industry has passed the half-billion mark, with 507 million gamers in the country at present.
With over 15 billion downloads and becoming the largest consumer of mobile games in the world, India has certainly caught the attention of several global players in the industry.
ETBrandEquity.com caught up with one of these gaming industry veterans and Lila Games CEO Joseph Kim at the Game Developers Conference India.
How do you perceive the Indian game market compared to the West, currently?
I think there are two ways to look at the Indian gaming market. The first part is to think about the Indian market itself and what we know is that India is the fastest growing economy in terms of GDP. And that the future potential of the Indian market is getting stronger and stronger. So we are very excited about the Indian gaming market.
At the same time, our business is actually not geared around the gaming market. But the second aspect of India, which is the Indian game development ecosystem.
And from that perspective, if you look at the historical context of India, what you realize is that a lot of the history of gaming in India comes from some of the early pioneers like Zynga, EA. But the story of that has largely been about taking existing games and then having the team in India run those games live with a lower cost structure.
So the way I would characterize India today is that there has been the historical context of live operations. But now he has to learn how to develop new games. And the difference between live operations and developing new games actually requires different kinds of skills.
So, in terms of game development, what are the key things to keep in mind to ensure flawless distribution and marketing?
So I think the main thing for developing new games is just understanding the differences. What kinds of skills do you need for live ops versus developing your game. And there are a lot of nuances behind that.
But also, secondly, I think the way a lot of games have been operated live here in India has been more of a “revenue-based model”.
It’s like, okay, here’s the game, here’s the code, here’s the instructions, here’s the events, here’s the things you need to do. And so I think the other thing that a lot of teams here in India are going to have to learn is basically learn the fundamentals of the games.
Because if you’re trying to make a new game there won’t be a Zynga SanFrancisco it tells you okay do XY and Z. And so I think that’s the part where we need that more people really stop looking for the recipe from the West, but then learn things very fundamentally. And then to rely on this fundamental knowledge.
With so many users, how should a gaming platform ensure retention?
So the best way to retain players is this very tricky concept called Fun! If you do something really fun, you get retention.
The second way you can think of engaging players is by coercion. So this requires understanding how you design base loops and constraint loops in the game.
Could you clarify what constraint loops are?
It was a concept that had its roots with a guy named BF Skinner. He conducted studies on rats, where he found that if you introduce variable rewards, rats become much more compelled to do certain actions.
And what we find today is that when you think about things like slot machines, the whole notion of hitting that slot machine and getting variable rewards creates that kind of compulsion. Now, I think game designers also have to be careful not to go overboard.
There probably has to be a good balance between really fun gameplay and the ability to build systems with compulsion loops that aren’t too predatory.
Along with constraint loops and engagement, does end-user experience also play a role in user retention?
I would say yes, but I would say it also depends.
So, for example, if you’re making a game in an existing market, where there are a lot of competitors and it’s a well-known market, then the player experience has to be amazing. Because now you are competing, based on value and quality of production.
But if you’re creating something, it’s a completely different experience, and there aren’t any other games in space, then the player experience itself doesn’t need to be so awesome. But it’s like this innovative thing that you offer, this unique and fascinating gaming experience. If you’re able to deliver that without the best art style, without the best production value, you can still be successful.
What about in-game ads? Do you think they tend to harm the user experience?
In-game ads for casual and hyper-casual games are core to their business model. So yes, they may be necessary because the economics of the business may not work unless you have ads.
But for a lot of mid core and hardcore games that are more conditioned to spend tons of money, if you add ads in those games it most often ends up being cannibalistic because the exchange of value is- i.e. the amount of currency you give to watch the ad versus what players spend on it is usually a big gap.
So yes, ads can harm the gaming experience, having a ton of ads is a bad experience. But I would also say that even beyond that, it could hurt player monetization.
So instead of a player spending $10, if they just watch a bunch of ads, in this exchange of value, you might only receive $1 instead of $10. .
Can you explain the value exchange gap when it comes to monetizing players using ads?
Let’s say for a rewarded video ad, you get a penny. But let’s say you sell 30 jumps for 1 USD. Being able to entice someone to watch an advertisement is generally not what you would normally pay through IAP (In-App Purchases).
So when you introduce ads, you are actually adding a form of monetization to get the same Indian products but at a considerably lower discount.
So it’s almost like a huge sale against your products!
Do you think tech buzzwords such as Web3, metaverse, AI/ML add value to providing immersive experiences in games?
I don’t think Web3 would really allow you to have a more immersive experience. There are no specifics to work through this.
I think from a Metaverse perspective, though, that’s the goal, isn’t it? Metaverse’s goal is to provide a highly immersive experience so people can truly experience a highly differentiated and more engaging entertainment experience.
So I know people are working there. Personally, I don’t feel like the technology is there yet.
Granted, that will probably happen sometime in the future. But I haven’t seen any examples yet. I would say that if some kind of technology or trend is moving towards more immersive experiences, it’s more of a metaverse than anything.
Is there any chance these terms are probably just the hype of the moment for the gaming industry?
I think of the terms you described, the most real is AI. AI is for real.
We’re already seeing a lot of people in the gaming industry leveraging a lot of procedurally generated art for concept art and a lot of game design mood boards.
I would say there is going to be a 10 to 15 year boom, behind AI creating incredible opportunities for new entrepreneurs. What if I wasn’t doing my business right now, if I was a young person, which I’m not, but if I was, I would be looking for opportunities in AI because I think that’s a huge boom.
I’m probably a bit more pessimistic in terms of Web3 and metaverse, because there are so many definitions of metaverse.
But I would say the amount of progress that’s being developed in AI, the potential to create, to automate some of the work in game design to be able to create different types of art or levels or other things that help games and game development considerably, I think we’re in the very early stages.
And again, I think we’re on a boom of at least 10 to 15 years in AI.
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