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A PROJECT REPORT ON Potential of online and PC gaming in Pune City

For Faxtel India Pvt. Ltd.

UNDER THE GUIDANCE OF Miss Benazir Faxtel India (P) Ltd. TOWARDS PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF POST GRADUATE DIPLOMA IN MANAGEMENT

SUBMITTED BY Prashant Pramod Agrawal

Shivalik Institute of Management Education and Research Durg- 491001 2008-10

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CONTENTS Acknowledgement Executive Summary 1. Introduction Types of Gaming 2. Drivers of Online Gaming in India 3. Issues facing the online gaming industry 4. Research Design & Methodology adopted Objective of Research Source of Data Finding and Analysis 5. 6. 7. 8. Conclusion Limitation Reference Appendix

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Acknowledgments

We are grateful to the survey respondents who participated in our questionnaires and interviews. First of all, I would like sincerely thankful to MR. Thomas Abraham (MD, FAXTEL System (India) Pvt. Ltd.) for giving us the opportunity to do this project. We are pleased for the support by all participating gaming cafs, their employees and the gamers of Pune. Special thanks to management of FAXTEL System (India) Pvt. Ltd for providing all kind of support for completion of this project for collecting survey data. Our genuine thanks to Ms. Benazir Akbar (Project Head) & Mr. Ruprao Dhole (Reporting Authority) for suggestions in every aspect of this project from time to time. We are also thankful to SiMER, for providing all the direct & indirect support for completion of this project.

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Executive Summary

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Video Games have been a popular pastime across the world since the 1970s. The popularity of video games has grown with the advancements in digital technology, mobile communications and the Internet in the 1990s. With an ever growing number of PC, Internet and mobile users, the Indian gaming industry seems to have tremendous growth potential. Presently India has a little contribution in world gaming industry and still untapped market. With the increased penetration of mobile phones and personal computers in small towns and cities, industry experts estimate the gaming market to grow in the near future. In India, mobile gaming and console gaming are the most popular forms of games followed by PC gaming and Massive Multiplayer Online Role playing Games (MMORPG). The Indian gaming market is very small when compared to other developed countries such as the US and India is also lacking in professional gamers like Korea, Taiwan and China. This is because the awareness for gaming has been primarily limited to urban areas. Gaming is the new genre of entertainment and is making its presence felt in the Indian landscape aggressively. The current market for gaming in India is lead by mobile gaming with increase number of mobile subscriber and introduction of 3G followed by PC gaming and online gaming. With high growth in sectors like communication and entertainment, gaming as a medium of entertainment is being well accepted by the Indian youth. The PC gaming segment in India mainly consists of youth having age between 17-28 years. India also has great potential to become an attractive destination for outsourcing of gaming development activities due to its low wages and world class facilities. Steel Series a Denmark based conglomerate manufactures gaming peripheral & accessories having foot hold on more than 75 countries. They provide mutual aid with world top game leaders like Fanatic, Made in Brazil. Since 2001 they has been working to helped them to continue, create & innovate products as per the professional gaming standard resulting steel series partner to generate some extra revenue for their teams. Since 1986 FAXTEL System India Pvt. Ltd. by strategic tie up globally with world leaders HP, Vantage Point, Panasonic, Word, Steel Series & Jabra has been fetching new technology savvy product in India in the field of office automation, IT & telecommunication, now in retail bracket. I am conducting research to find out the potential of gaming in Pune city by visiting all the organized & unorganized gaming cafes. I have to fill 300 questionnaires. The task is assigned by FAXTEL System (India) Pvt. Ltd., Bangalore under Steel Series division which is known for its world class gaming accessories. While visiting various gaming/Internet cafs, interaction with many caf owner & users I found that Indian gaming industry is still untapped potential market because of low awareness. The online gaming sector in India is being driven by the increasing number of Internet users and very soon the Indian gaming market is going to convert from unorganized to organized one. With the help of this research project under the guidance of Miss Benazir Akbar (Project Head, Bangalore) & Mr. Ruprao Dhole (Reporting Authority, Pune) I are going to find out the status of the gaming cafes , facilities provided by them and problem faced and focus on revenue model.

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Introduction

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India is a new destination for gaming industry because of its low wages and world class infrastructure. India gamming market is still untapped. But with the rise in broadband connection, PC penetration and increasing mobile subscriber in the time of globalization despite of recent recession Indian entertainment industry is not that much affected and created new ways to generate revenue and jobs. India having 1.1 bn populations having more than 40% youth with scalable middle class and growing economy more than 7%. But still Indian market is not as big as US, China because of still PC and console gaming is out of the range of average Indian house hold and low awareness. Now India is becoming a favored destination for developing games. Benefits such as reduced costs, and improved quality, associated with outsourcing business processes have built confidence among global gaming production houses to outsource their work in India. Gaming can be classified into PC gaming, Console gaming, Wireless gaming, Multiplayer gaming and Massive Multiplayer Online Role playing Games (MMORPG). Games can be played using storage devices such as CDs, DVDs or online (with a fast and stable internet connection). Types of Gamming: It can be classified on the basis of the number of players, based on the level of involvement of the players and based on technology as given follows. Based on Technology: Wireless Gaming It refers to the games played using handheld devices such as mobile phones, personal digital assistant (PDAs) etc. Console Gaming It requires an output device such as a computer monitor or a television and an input device called controller. Like Sony play station. PC Gaming It involves gaming in PCs having multimedia, advance graphic cards and high RAM. Based on number of players: Single Player - Single player games are where the user plays against the system. Multi-Player- Multi Player games are based on the bandwidth and the type of the game, many players can play it simultaneously, where their geographic location does not pose a constraint on playing against others i.e. it is playing in LAN or internet. Massively Multi Player Games (MMOGs) - MMOG is an extension of Multi-Player online games, these games can be played by hundreds often thousands of players at the same time which is depend upon capability of that server.

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Massively Multiplayer Online Role Playing Games (MMORPGs) - MMORPGs is extension of MMOGs. These games are designed to go on and are not dependent on who comes and who leaves. These games are complex virtual worlds where each player assumes a virtual character often called an Avatar- An online role. Players band together and forms clans and exhibit all the characteristics of the real world. Based on level of involvement It is categorized into Casual gamers & Core gamers. As per International Game Developers Association 2005 Casual Games White Paper, Casual web games are launched via a web page with no prior installation of software required and are on an average less than 500kb. These do not include games that are downloaded to the users hard drive and run outside of the web browser. Causal Gamers - This genre of gamers constitutes of those who play for the sake of having fun or for a quick break. When they are in office, they find time in short intervals to play for 10-15 minutes, when in Caf, based on the time left for their session to complete, they get on to gaming. Casual games typically include games such as Chess, Poker, and Sudoku. Casual Games may be further classified into Action, Racing/ Driving, Puzzles, Sports games. Core Gamers - This genre of gamers constitutes of those who play at least 4-6 hours a week gaming and play LAN based, MMOGs & MMORPGs. A community based gamers, who generally have a stare group into gaming; they prefer multi-player games over single-player games. The core gamers are further segregate on the basis of motive for playing game. These are: 1. Subjugator - The first category of serious gamers believes that there is a challenge in a game to triumph over and feel they can master everything. 2. Net worker They are the social interacting genre of serious gamers. The main motive of gaming is to have a good bonding experience with people and feel it an opportunity to meet people and develop relationships through multi player. 3. Escapist These types of gamer had faced difficult situations and challenges in their real life or are contented. They game to face and overcome artificial challenges; to satisfy themselves by being completely opposite of their original self. 4. Learner - Their main purpose to game is to explore different environments and conditions with a motive to learn something from their experience and then progress and excel in it. Their main aim to hone their skills in everything possible.

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Drivers of Online Gaming in India

[Type text] 2. Driver of online gaming in India: The factors that will drive the growth of online gaming market in India can be broadly classified as : 1) Consumer Poll 2) Game development activities by market incumbents 2.1 Consumer Pull Size of youth segment- The youth segment, which is the biggest segment on the Internet, is driving the demand for games on multiple platforms like PC, mobile handsets and consoles. The gaming market in India comprise mainly of young men and college going students falling within the age group of 1725 years. They form the largest segment of the active internet user base; are more technology savvy and most of all carry an attitude to try everything new. Increasing broadband penetration- In Indian households will drive usage of online gaming and vice-versa as the gaming experience is enhanced due to higher speed and bandwidth when compared to Dial-up connections. Increase in Mobile gamers: Mobile gaming has grown many-fold in India and downloads of mobile games is a fast growing component in the overall Mobile market. Mobile gaming is serving to introduce a large base to gaming. 2.2 Game development activities In India the focus in online gaming has traditionally been on content development for the overseas market. Now to grow the domestic market several companies are taking various initiatives such as: Localization of games/content: To better address the gaming needs of the target audience. Till most of the development work is being done for overseas market, however, in future the focus would shift to the domestic market. Currently several Indian companies are starting to focus on customizing content for the Indian market using local themes, icons & games. Now Kreeda.com & Games2win.com both the companies focused on customizing the online gaming experience for the Indian market. Games Testing Company: Many companies who are in the production line of gaming dont have gaming test centre. This draw back has generated a new employment area called Gaming Test Centre where usually games developing company make tie-ups with them to test their developed games software. Here software tester should have full knowledge of software testing tool like WIN Runner, RAR etc.

Creation of gaming zones/ organized cyber caf chains: They play a critical role in online gaming ecosystem and various companies are doing different things to maximize this opportunity.

[Type text] Some are opening their own gaming zones like ZAPAK while others are tying up with existing caf and helping them upgrade to gaming zones by providing marketing support. 2.3 About IAMAI & iGITA The Internet & Mobile Association of India (IAMAI) is specialized industry body in India representing the interests of online and mobile value added services industry and a not-for-profit industry body registered under the Societies Act, 1896, Founded in January 2004 by leading portals in India. It is dedicated to presenting a unified voice of the businesses and it represents to the government, investors, consumers and other stakeholders. The association addresses the issues, concerns and challenges of the Internet and Mobile economy and takes a leading role in its development. The associations activities include promoting the inherent strengths of the digital economy, evaluating and recommending standards and practices to the industry, conducting research, creating platforms for its members, communicating on behalf of the industry and creating a favorable business environment for the industry. iGITA is the first gaming industry alliance that channelizing its efforts towards growing and nurturing the skill and expertise available in the country. Founded in Jan, 2006 .It is playing a critical role in promoting games as a form of entertainment and in placing the Indian gaming industry on the global map. iGITA is trying collaboration with various foreign Entertainment & Media industry, various government & private bodies in US, UK, France & BRIC countries etc. to expand their presence in globe & create more opportunities for the domestic players as well gaming industries for providing a platform for interaction between international and local gaming companies and associations, which in turn is bringing global knowledge and recognition to India. The founding members of this association include: Microsoft India (Entertainment & Devices Division), Dhruva Interactive, Mobile2Win, Paradox Studios, Small Device and Tinfo Mobile , Electronic Arts, Hungama, Indiagames, Mauj.

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Issue facing Online Gaming in India

[Type text] 3. Issues facing the online gaming industry in India In current factor conditions, online gaming has a huge potential in the country, but there are various barrier so that the industry may not achieving its full potential. Each of these barriers is concern with various aspects of the market and the environment conditions. I believe that the content being developed by the domestic player lacks quality and innovation and most games are copies of famous overseas games. And the major challenges in the online gaming space are issues like PC, Internet and Broadband penetration. 3.1 Prevalence of anti-gaming culture: Unlike other developed markets, playing electronic games is not a part of the Indian culture. In India great importance is placed on academics. Parents do not prefer their children to play for long time and especially not online. They fear of addiction or adverse health consequences. Online gaming companies would have to work against this well entrenched perception. Recently China banned Cyber caf for a year on account of similar concerns. In India IIT Bombay banned Internet at late hours in the student hostels as students where see to be getting addicted to gaming & blogging leading to reclusive social behavior. 3.2 Creating the online factor: With the increasing no. of mobile user and PC penetration for the average Indian users there are enough opportunities to play games offline or on mobiles. There may not be strong Reason to Believe to induce trials for online gaming. Online gaming portals would need to get a strong factor in online gaming to induce trials & retain users. They would need to strongly differentiate online gaming from other formats for gaming.

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Research Design & Methodology

[Type text] 4. Objective of research The Objective of research is to find the potential of pc and online gaming in pune a Tier II city. To find out the answer we targeted gaming organized and unorganized cafes and IT-retailers. Primary goal of research is to find how they are performing, competition held, about their average customers, there condition, about their future plan, any USP if possible and revenue model for gaming companies. Secondary goal of research is to find authorized dealer of gaming accessories in pune, most selling accessories by retailers along with price range, best moving brand & price range of accessories customers generally do prefer and terms on which retailers promote any particular brand. 4.1 Sources of data To collect information regarding what our research required we got from questionnaire from FAXTEL system India Pvt. Ltd., Bangalore by our Project head. We need to fill the 300 questionnaire for gaming cafes & 150 retailers information. But I got only 5 organized gaming cafs after visiting Pune which is ZAPAK and Reliance and rest are Unorganized gaming cafs which provides gaming on demand & internet facility. My research is based on the primary data and secondary data that we have collected through our set of questionnaires. Our questionnaire comprises of two parts for gaming cafes. Part-I consist 19 questions related to the cafes performance, status, brand of accessories e, marketing & promotional activity. While Part-II consists three questions related to our own analysis Second questionnaire comprises of Retailer Informations which is full address, best moving gaming accessories in market, price range & most demanded brand for gaming accessories like Mice, Surface, Keyboard & Headset by gamers, terms to promote a particular brand & retailers interest in selling gaming accessories. Secondary data is as important as the primary one. Through my secondary data survey I came to know about the articles which indicate, what is the present status, marketing & promotional campaign of organized gaming cafes & their future plan. My secondary survey helped me to set my objective. By these we could know History of the Indian gaming Industry, The past research activity, The revenue model for gaming companies Market scenario at International & national level, Who are the top gamers? Marketing , Promotional, Sponsorship activity Franchise terms & condition.

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4.2 From Cyber Cafes Cyber cafes are usually the point where typically internet user generally starts his internet journey. Cyber cafe have remained the most prominent access points despite increasing prominence of home access as the overall PC penetration in households is negligible and availability of high speed Internet connection in these households is not a common phenomenon. Other reasons which drive access from cyber cafe are limited need for access; need for privacy while surfing Internet, cyber cafe proximity and facilities provided, especially air conditioner in summers. Even I analyzed that most customers (gamers) of unorganized cafes are not very much keen to play games often play for time pass only. The total market of pune gaming cafes is dominated by the unorganized cyber caf which account for 92.1% of the market. These are typically low investment entities which depend on multiple revenue streams to sustain their business (PCOs, Printing etc.). Most of this unorganized cafe has poor infrastructure & connectivity. Out of 134 cyber cafes surveyed 46% of the Cyber Cafe own less than 10 PCs and rest 54 % of the Cyber Cafe own more than 10 PCs.

As per type of cyber cafe i.e on the basis of average no. of gamers per day only 21% cyber cafe has Type A i.e. the average no. of gamers in a particular cafe is more than 20

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Out of 134 only 53 cafes has a gaming facilities and the time spent by gamers is: 1. Less than 1 hours- 10% 2. 1-2 hours- 75%s 3. 2-5 hours- 15%

Potential Areas/ Cafs for Probable USP: From my analysis after visiting pune . I found that only 4-5 cyber cafes have an average customer range from 25-50/day. During my surveyed I came to know that many caf owners & gamers dont have knowledge about the customized gaming accessories in market; no body knows Steel Series except Zapak because they have tie-up with FAXTEL System for the POD (point of display) of steel Series products.

[Type text] These cafes having good average numbers of customer out of which major belongs to upper middle class family and the cafes are in good location, hence there would be probable customer in near future. As I already said that there is lake of awareness so for that company can sponsor competition and youth festivals to create awareness. My analysis says following points after spending time in different cyber cafes No power back up in most of the cyber cafes Only few of the cyber cafes has updated version of games. Only few no. of games .They do not have different types of game. Systems are not updated as required to play a game. Most of the cyber cafes run games only for getting customers. People find games as a good entertainment.

4.3 From Retailers Retailers play vital role in any market, because they are point of display of product and directly touch with the customers. They plat a critical role in significant change in the market share for a particular brand or a company.Through my survey I try tobfind the actual status of the gaming market in Pune. I surveyed total 34 retailers in Pune. Out of these visited shops 50% shops have almost 2-5 year market experience while rest have made strong position in market from 5-10yrs.

[Type text] 1. More than 90% of retailers says that they PCs / laptops on customer demands while rest are stick to particular brand including some exclusive retail shop of HP, HCL etc.

2. Only 18% retailers say their customer enquiry about gaming products but percentage is very low not more than 5%. Only few retailers say their 10% customer ask about gaming accessories.

Best movingGamingAccessoryin market (In Retailerspoint of view) 18 20

10 0 10 3 0 1

None of the dealer exactly says that which one is the best moving gaming accessory in market. 3. Terms to promote a particular brand by Retailers: Most of the retailers in Pune retailers generally promote that brand which gives warranty & replacement procedure is easy because after purchasing customer face problem regarding spoil or damage or not functioning properly under warranty period & getting too much time for the replacement. In Pune. Only few retailer push product on profit margin basis.

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T ermsto Promotea Particular Brand

30 20 27

59.4%
Terms to Promote a Particular Brand

No. of Retaliers Says

10 0

37.5% 4
As per customer demand

2 0

As per Warranty scheme

Basis of Price Margin

6%
Not given details

3%

4.4 Price Range Preferred by Customer for Products: Through my surveyed came to know that more than 95% of the retailers has surface ranges from Rs. 20-Rs. 120. The maximum price for surface is Rs. 200. For keyboard and Mice 79% retailers says Logitech is the most preferred brand. Microsoft is the second preferred brand for both keyboard and Mice. Generally retailer has price range ranges from Rs. 175 to Rs. 500, only Croma has the highest price range for Keyboard, Mice and Headset Rs. 6000, Rs. 5000 and Rs. 500 respectively. Near about 90% retailer say that their customer preferred local brand for headsets. This segment is dominated by i-ball followed by Logitech as a third preference. 5. Conclusion: Indian online gaming market is at base level only. From this research I came to know that gaming industry in India is still an untapped market & industry. Its because of three major factor lack of awareness, lack of quality education & lack of poor infrastructure. Even govt. has also ignored this field, I should say only private firms & exponential raise in PC, Mobile & Internet user are the key drivers of Indian gaming industry. But increase in outsourcing, collaboration of Private Indian firms with foreign subsidiary & proper marketing & advertising will definitely propel the professional gaming in next 3 to5yrs which in turn will lead to increase the professional gamers population in India.

6. Limitation: There is certain limitation like My research is restricted to only a particular geographic area i.e. Pune. Whole market in Pune is dominated by unorganized cafs.

[Type text] Almost 12% caf owners/ employee & retailers not responded properly.

7. References: http://www.animationxpress.com/index.php?file=story&id=6221

[Type text] http://www.startupdunia.com/india-gaming/online-gaming-industry-in-india-is-itreally-a-goldmine-328 http://www.businessinsights.biz/Business%20Reports/Industry%20Reports/Computers%20%20IT%20and%20ITeS/Report%20on%20Gaming%20Industry%20in%20Indiacontents.htm http://www.pluggd.in/indian-gaming-industry/indian-gaming-industry-corporatesembrace-traders-trade-1258/ http://www.pluggd.in/india-digital-media/online-gaming-market-indiahtml-395/ http://www.expresscomputeronline.com/20061002/market01.shtml http://www.outsource2india.com/why_india/articles/game-development.asp http://www.pluggd.in/indian-gaming-industry/indian-gaming-industry-xbox-liveplaystation-prices-online-games-mobile-gaming-in-india-808/ http://iamai.org

8. Appendix A.) Retail Information

[Type text] Name : _________________ Date : ___________ 1. Name of the Retailer: 2. Address: Address 1: _______________________________________ Address 2: _______________________________________ City: __________ Pin: __________ Phone No: ____________ Mobile No: __________________ Email ID: _______________________________________ 3. Years spent in the computer hardware/software retail industry: a. less than 2 b. 2-5 c. 5-10 d. above 10 4. Which brand of PC/Laptop do you want sell in your outlet? a. Asus b. Microsoft c. HP d. Dell e. All f. Others, Specify____________________ 5. Do you deal or sell IT accessories? If no, specify why? a. Yes b. No, ___________ 6. If yes, which brand do you promote? a. Senheisser b. Microsoft c. Logitech d. Philips e. Others, specify_________ 7. According to you, what is the price preferred by the customers for the following products? Mice a. 500-1000 b. 1000- 2000 c. 2000- 4000 d. above 4000 e. Others, Specify Surfaces a. < 100 b. 100 - 200 c. 200 500 d. 500 - 1000 e. above 1000 Keyboards a. 1500 - 2000 b. 2000 - 3000 c. 3000 - 5000 d. 5000 - 7000 e. above 7000 Headsets a. 500- 1000 b. 1000- 2000 c. 2000- 3000 d. 3000- 5000 e. Others, specify _______ 8. Do you get any enquiries from the customers about gaming CDs or gaming accessories? a. Yes b. No 9. If yes, what percentage of your total customers enquire about gaming accessories? a. 5% b. 10 % c. 20% d. 25% 10. Are you a dealer of gaming accessories? a. Yes b. No 11. If, what is the best moving gaming accessory in the market? a. Mice b. Headsets c. Surfaces Gaming CDs 12. Which is the popular one for Keyboards? a. Razer b. SteelSeries c. Logitech e. Others, specify _________ 13. Which is the popular one for Mice? a. Razer b. SteelSeries c. Logitech e. Others, specify _________ 14. Which is the popular one for Surfaces? a. Razer b. SteelSeries c. Logitech e. Others, specify____

e. Keyboards d. Microsoft d. Microsoft d. Microsoft

f.

[Type text] e. Others, specify _________ 15. Which is the popular one for Headsets? a. Razer b. SteelSeries c. Logitech e. Others, specify _________ 16. What are the terms on which you promote a brand?

d. Microsoft

17. Do you want to sell Gaming accessories? a. Yes b. No