India's Online Games Market To Top $200 Million By 2010

A new report by San Francisco-based analyst and consulting firm Pearl Research has forecasted the online games market in India will exceed $200 million in 2010, as part of a new “Online Games Market in India” report. A key finding from the report indicates that the online games market in India is being driven by the rapid adoption of the Internet with 39 million current users; increasing broadband penetration; growth in Internet cafes with more than 100,000 outlets; and a sizable middle-class with rising disposable income. Most importantly, game operators are promoting and educating consumers about online games including MMOGs. According to the report, there were 39 million Internet users in India in 2005, a 54% year on year increase. The number of Internet users could exceed 100 million by 2007, making India the second-largest Internet market in Asia after China. In addition, there were more than 100,000 Internet cafes in India in 2005. Internet cafes can derive 30% to 40% of revenues from users playing games. Games are a “sticky” activity, thus users tend to spend more time and money at Internet cafes that offer games, according to the report. The latest trend is the opening of gaming-oriented cafes such as Sify’s Gamedromes to satisfy the growing demand for games. Internet cafes with broadband connections and fast PCs are increasingly replacing many of India’s outdated Internet cafes that use dial-up. Finally, the report notes, both local and international publishers are increasingly investing in the Indian online games market, as online games represent one of the few viable publishing models in a country where software piracy rates exceed 85%. In 2006 and 2007, Pearl Research expects several prominent international publishers to enter the Indian online games market either through licensing agreements or joint-ventures. Certain online publishers believe it is critical to establish a presence in India, in order to capture consumer loyalty, develop brand equity and help define the market, before the market becomes saturated. Allison Luong, Managing Director of Pearl Research, commented, “While long dormant, the online games market in India is starting to heat up. Conservatively, Pearl Research expects the Indian online games market to exceed $200 million in 2010. India in 2006 is often compared to China in 2001, when China’s games market started to develop and an online games culture started to form. Within a decade, India has the potential to emerge as one of the top online markets in Asia, along with China, Korea and Taiwan.”