Gamers switching to mobiles are buying fewer games for their PC, hitting developers hard. Also, the fact that most games on offer through applications for mobiles are free for the initial stages— known as the "freemium model"— is adding to the hassles of these game developers.
As a result, many developers are now converting their existing development technology formats to suit mobile gaming platforms.
"Currently, we have a portfolio of 70% paid games and 30% freemium," said Reliance Entertainment Digital's chief executive Manish Agarwal.
"But every game from now would be 'freemium' and we will take this ratio to 100% in the coming years." In all, Reliance Entertainment—part of the Reliance Anil Dhirubhai Ambani Group—has some 600-odd games in its portfolio now.
But the segment is likely to expand rapidly. A KPMG-FICCI study forecasts the Indian gaming market—currently at aroundRs 1,500 crore—to nearly triple toRs 4,200 crore by 2017. The mobile gaming segment will more than triple to Rs 1,800 crore, from Rs 560 crore now, in the same period. Many game developers are now forging alliances with app stores of mobile handset manufacturers and operating system developers, including Google Play, Samsung Apps and Nokia's Ovi.
Gartner's principal research analyst Shalini Verma said even developers of AAA games—those that are high-budget and generally developed by a large studio—are exploring the freemium model.
Also, unfavourable conditions have forced many game developers to shrink operations. For instance, while French firm Gameloft closed its Indian operations in January, 7Seas Entertainment shut its US subsidiary this April.
Disney UTV's chief operations officer Sameer Ganapathy said the "freemium model" gives users more freedom. "The model is viable and lets users make a decision on whether they would like to pay for the game or not. India, which is a price sensitive market, is apt for this business model."
Game developers said they are likely to earn more from the "freemium model" in future than the existing model of selling games through CDs and DVDs.
"There are few challenges in the Indian market. While less than 1% of our users are ready to pay for use, it is about 7-8% in the developed world," said Reliance Entertainment's Agarwal, who pointed out that average spending on games per month in the US is at $8 (about Rs 470).
Rajiv Vaishnav, vice-president at software industry grouping Nasscom, said while "monetisation on mobile apps is a challenge for gaming companies, good quality games are finding eyeballs."
India currently has over 900 million mobile devices, comprising some 350-400 million devices connected to the internet and about 150 million smart phones.
According to the recent Flurry fiveyear report, games top the list of most-used apps and customers spent nearly 32% of their time on them on Android and iOS phones.
Disney UTV's Ganapathy said this has created "virtuous circle" in which the size of the opportunity attracts developers and the huge number of games attracts even more users to the platform.
Currently, hosts like Google Play get 50-60% of the revenues from the advertisements while the balance goes to the game developers. Though there are challenges like tracking the flow of advertisements in the games, the developers hope to save at least 10-15% of marketing costs by adopting the "freemium model".
L Maruti Shankar, nanaging director of 7Seas Entertainment, said his company was in the process of converting a few online games into mobile games. "We will be focusing more on mobile games now onwards." He, however, added that though "freemium games" offered cost savings on marketing, "converting online games to mobile games involves additional costs of 20-30%."
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