The Hindu Business Line : Aiming higher

Indian players are gearing up to garner a sizeable share of the $29-billion global gaming market. And they are seeking to do this by showcasing firepower to turn into co-producers of high-end games rather than being mere associates for ‘grunt work’.

The transition, from small time work such as porting and texturing to tech-intensive 3D asset creation, graphic designing and testing, has begun to take place, say industry watchers. (Porting is the process of adapting software so that a program can be created for a computing environment different from that for which it was designed. The term also refers to changing of software/hardware to make them usable in different environments. Texturing or Texture mapping is a method to add detail, surface texture, or colour to a computer-generated graphic or 3D model.)

While Forza Motorsport 2 and Maria Sharapova tennis are some of the games that Indian players have worked on, firms in the business are tight-lipped about revealing more, for obvious reasons.

Case for outsourcing

Game development is one of the most complicated parts of software development. Unlike ordinary applications, game development requires completely updated resources that include state-of-the-art infrastructure and workforce, thereby making it a costly affair.

Intense competition to reach the marketplace faster, coupled with rising production costs, has propelled international gaming companies to look at the outsourcing model, says Tapaas Chakravarti, Chairman and Managing Director, DQ Entertainment Ltd. The Hyderabad-based company develops games for consoles such as Xbox and Playstation.

Developing a game in the wireless space could warrant a budget anywhere between $5 million and $20 million. “Globally, budgets in the console game development space are upwards of $20-25 million, which is four times what it was a few years ago,” says K. Rajesh Rao, CEO of Dhruva Interactive, a Bangalore-based gaming content provider. Dhruva has a tie-up with Microsoft to develop games.

The growth of games and their budgets has upped manpower requirements multi-fold. Team sizes across the globe have been growing sharply. Big budget games have 100-plus dedicated personnel working for 18-24 months.

“Global game companies are hence searching for new production paradigms, and most recognise outsourcing as an effective way to reduce cost and to maintain flexibility as they can scale up teams on demand,” says Rao.

Requirements from India

According to a Federation of Indian Chambers of Commerce and Industry (FICCI) report, animation, gaming and virtual special effects are the biggest export revenue generators for India after software. Game exports could include both providing outsourcing services and delivering the final product to global audiences.

“Both models have tremendous potential for India to earn in foreign currency terms if we move up the value chain,” the report says.

“Clients are definitely looking for end-to-end solutions from India companies, where the major work is for art and animation and then move on to game development, which is high-end software programming along with art skills,” says Salil Bhargava, Chairman and Executive Officer, Jump Games, a Mumbai-based wireless games provider.

There are five main departments in a game company: Art, Design, Programming, Sound, and Support.

Indian gaming companies so far have been doing small time work, such as porting for online games and character building, and texturing for the console space. “Outsourcing the graphics designing component of mobile and wireless games has picked up due to higher usage of animation in games. Companies have also started outsourcing game testing and 3D asset creation in the online space,” says an analyst. This is also happening in games that require specific platforms or are device-specific and need a high degree of customisation. The forecast, for now, is: Online, PC as well as Console game outsourcing, will be major growth engines for the industry; the mobile is expected to catch on in a few years’ time.

Huge market potential

The scenario looks very encouraging given the international gaming market is valued at $29 billion annually and is set to touch $50 billion by 2011, according to research from PricewaterhouseCoopers.

Outsourcing to destinations such as India will be a $2.49-billion marketplace by 2010 from the current value of $1.1 billion, according to media firm Screendigest. It pegs the percentage of global development expenditure outsourced to rise to 37.1 per cent in 2010. Video games are predicted to hit $42 billion in revenue by 2010, and game outsourcing will be a significant part of that. Nick Gibson, author of the Screendigest report, says that the value of the outsourced art sector alone is set to soar to over $600 million by 2008.

Indian gaming companies have managed to scratch only 5-8 per cent of this ever expanding pie, according to Rajiv Hiranandani, Country Head-India, Mobile2win, which has developed games for Freemantle and the Turner Group. “India’s share of this market could grow to 20-30 per cent in the next couple of years,” says Rao.

Japan, which provides 40 per cent of the gaming content to the US, is a leading player in the business. Third party services, which have all along been sought by the US and the UK, are now seeing new entrants from new geographies, says Chakravarti. There is significant traction in North America, South Africa, Australia and different parts of Europe owing to the unique value proposition Indian companies bring to the table.

Salim Mobani, Chief Operating Officer, Hungama Mobile, believes that India is only a few years away from being a full- fledged co-producer for international game developers.

InterServ, Synapse India, Gateway Technolabs are some other companies strongly focused on providing outsourcing services.

Skilled manpower shortage

Overseas players may have begun pampering Indian vendors, but the domestic firms have to contend with rising shortage of skilled manpower.

The FICCI report says animation, gaming and special effects are areas where manpower demand far outstrips supply. “It is estimated that in the next few years, India will require more than 30,000 trained animators and gaming professionals.” A good game needs an exciting blend of creativity, design, and programming. Building teams with such talents is no easy task. And to compound the issue, attrition rates in the gaming industry are as high as 22-25 per cent.

Even though fresh talent is in abundance, the high attrition rate within the small pool of quality talented manpower is a major hurdle, says Chakravarti. Hiranandani of mobile2win blames the attrition on the segment not still getting adequate exposure as an industry. Also, manpower costs are on an upward spiral. “Currently we are seeing a 15-30 per cent annual rise in manpower costs, which is not good for the industry,” he says.

Government support

Another bottleneck is the lack of recognition and support from the government. Asian competitors such as Korea, China, Japan and the Philippines receive tremendous impetus from the government by way of finance and infrastructure. Hence these countries have developed very strong domestic markets.

India’s domestic gaming market was only worth $13 million in 2006, according to analyst group iSuppli. FICCI believes that once the domestic market receives enough consumable content, the same can be routed for outsourcing and exports.

As Rao puts it: “We have to create a model that will ensure tighter collaboration between the government, industry and gaming institutions for this space.”

The future looks bright as schools focused on game design, programming, and art are appearing everywhere in India. Institutions such as Arena Multimedia and Sage Infolabs provide education in the concepts of animation, game development, game content design, game engines-driven development and other aspects.

Even though developing games for GenNext needs specialised domain knowledge, Indian companies will have wake up to the fact that there is intense competition from China and Eastern Europe round the corner. And, there is no room for mediocrity.

Keeping this in mind, DQ Entertainment has earmarked $25 million for the next six months for additional infrastructure, skill enhancement and manpower. “Most companies will have to invest heavily in training and bear the capital risk of doing so. Some companies are even looking at starting their own schools to tackle this problem,” says Rao.

To establish a position of supremacy, it is imperative for Indian game providers to make large dollops of investments in building end-to-end solutions and putting together a sizeable manpower base. And the rest, as they say, will fall in place.

adith@thehindu.co.in