The Hindu Business Line : In the game

The Entertainment Industry in India is currently in a consolidation phase, says Mohit Anand, Country Manager, Entertainment and Devices Division (EDD), Microsoft India. “The boundary lines between films, music and television are fast disappearing. Skills and resources are being pooled extensively,” he adds.

Besides adaptation to high-end digital technology, the entertainment industry is also witnessing an increase in R&D (research and development) by the companies, says Anand, during the course of a recent interaction with eWorld.“Companies are spending extensively to make customer-specific products which are a result of a thorough market and customer research. In terms of employment, an estimated 6 million people earn their livelihood from the entertainment industry and this number is all set to grow.”

Microsoft created EDD in September 2005 ‘to support the company’s software-based services vision and drive innovation in the digital entertainment space.’ It is one of the seven business groups within Microsoft Corporation and the key retail and consumer facing division.

EDD has four main businesses, viz. interactive entertainment (e.g. Xbox); entertainment (focusing on digital entertainment efforts in music, TV and video and includes the MSTV and the Windows XP Media Centre Edition products); consumer productivity experiences (including the mice and keyboards business, the Macintosh Business Unit, and consumer productivity applications including Encarta, Money and Digital Image Suite); and mobile and embedded business (‘which drives the Windows Mobile-based devices business and focuses on the embedded market for Windows CE, Windows XP Embedded and the Automotive Business Unit’.)

At $1.159 billion, EDD’s revenue for the quarter ended June 30, 2007, is double that of ‘online services business’, and about half of what’s booked under ‘server and tools’. But EDD ends up with a loss of $1.199 billion.

How much of MS’ R&D budget is allocated to EDD work? And what is the share of India in the global MS pie? How many Xbox units were sold in India, since launch? To these questions, however, Anand doesn’t offer answers. “We don’t give out country-specific numbers. Only global figures,” he argues. Be that as it may, Anand takes time off to answer, over e-mail, a few questions.

Excerpts from the interview:

What is the potential of the entertainment industry that EDD is banking on?

With changing lifestyles, accompanied by increasing stress, people are looking for avenues to relax, through movies, vacations, and sports. Gaming, both of console and PC (personal computer), is fast catching up as an entertainment option with the Indian consumer.

According to an estimate by FICCI (Federation of Indian Chambers of Commerce and Industry) and Ernst & Young, the Indian entertainment industry would be worth more than $300 million in 2008. Better skilled labour force, booming economy, increase in the standard of living, global competence and the use of digital technology in all spheres of entertainment have contributed to the growth of this sector.

Prospects for the Indian entertainment industry look extremely good. Also, as India’s profile rises on the global stage outside interest in India’s culture and entertainment industry is also bound to grow

Talking about devices, is there an Indian involvement, in terms of components or manufacture, IP or design?

All the Microsoft Hardware products sold in India are imported.

However, all our products are uniquely designed to meet the evolving needs of the Indian consumer. The average Indian customer today spends a lot more time on his computer and does a lot more with his computer. MS Hardware products, be it the wireless products or the ergonomic designs, are made keeping in mind the changing need propositions of the customer.

While the ergonomic designs ensure that the long computing hours are comfortable, the wireless products provide the convenience of mobility. MS Hardware products aim to take the customer’s computing experience from the ordinary to the extraordinary.

What are the winners and laggards among your products? Are you lining up any new launches in the next about six months, globally and in India?

We are seeing that our products are fast emerging as ‘products of preference’ with Indian computer users ranging from gamers to Web designers to working professionals to teenagers. We are targeting a growth rate of over 50 per cent for the next year.”

There are no laggards as such, but there are some products that will take some time for acceptance by the Indian customer. The basic reason behind the slow movement of some of our products is that the Indian market is in a nascent stage. Also, Indian customers are known worldwide as low risk-takers and switchers, so sometimes it takes time for the customers here to accept certain products. But we are sure that our quality products will touch the hearts of the customers.

Keeping in mind the fast changing lifestyle and the evolving preferences of the Indian customer, MS Hardware is unveiling a series of products namely — Wireless entertainment desktop 7000, Natural ergonomic desktop 7000, Reclusa wired gaming keyboard, Sidewinder gaming mouse and the Wireless laser mouse 8000, Mobile Memory Mouse 8000, and Wireless Xbox 360 gaming controller.

Why is not Microsoft hardware able to garner a good market share despite being in the field for more than two decades? Is it the position in other markets too, across the globe?

Microsoft Hardware is the leader in India and across the world, for that matter in our fiscal year (July 2007-June 2008) we will ship more than one million units of our hardware products in India. This is despite the fact that a majority of the products sold in India, especially in the computer peripherals space, are in the unorganised space.

Has rupee appreciation meant lower prices for customers?

Yes it has, our distributors have been proactive in passing this benefit onto retailers and in turn to consumers.

On Xbox and its performance in the market, especially in India. What have been the top complaints about the product?

Since its launch in September last year, we have been committed to bringing the best advantages of the Xbox 360 console to the Indian market, with the latest and widest range of games as well as a value for money pricing. Xbox 360 offers great entertainment value, providing a selection of consoles and variety of games that appeal to the whole family. With an ever-expanding entertainment portfolio no other system delivers living room entertainment like Xbox 360.

One of the biggest complaints was of Xbox LIVE service not having come to India. But like all other markets, after a year of launch of Xbox 360, Xbox LIVE has been launched in India (in November 2007). The service adds depth to console gaming, as it is the ultimate broadband gaming experience! It enables online multi-player gaming and Indians can now connect with over the 7 million members across the globe on Xbox LIVE. Xbox 360 and Xbox LIVE are truly leading the charge into the future of gaming and entertainment. There is no other existing service within the gaming genre in the world that is as comprehensive and wholesome as Xbox LIVE.

Price of the products has been another sore point, and this is something out of our control, due to very high import duties levied on this category.

Besides this, one other issue that our consumers have brought up to us is the lack of latest games, especially from third party publishers. We are continuing to work with leading publishers for Xbox 360 games and show them the massive opportunity that the Indian market represents.

We have been very consistent on delivering on our promises to the Indian market on a whole.

Price, you have mentioned, is a sore point. Are you bargaining for tax cuts?

Yes. Price is of course a constraint. But we are steadfast in providing Indian consumers the best possible service at the best possible price. It will be relevant to highlight the high import tariffs that exist today on consoles and games. Import duty reduction can stimulate growth in the gaming market like it has done for the mobile industry In India where the duty reduction catalysed a boom in mobile handset sales resulting in exponential increase in mobile penetration throughout the country.

Towards effecting this change, we are closely engaging with industry associations like iGITA who are championing the cause of import duty reduction for the benefit of the entire Indian gaming industry.

Are you providing entertainment content that is specific to Indian needs?

Yes, we have games such as Yuvraj Singh International that appeal to the Indian audiences on a large scale since its cricket! We also have games for Windows, such as ‘Age of Empire III: The Asian Dynasties’, which has a whole leg based on the Indian Civilisation. It features the 1857 revolt and the game lets you be a part of the revolt and fight the East India Company. An interesting game that also takes you on a history trail!

Also, Indian users will be able to log on to Xbox LIVE now and enjoy not only gaming, but also get their dose of entertainment with content from Indian partners – beginning with trailers of ‘Hanuman 2’ and ‘Love Story 2050’ available on Xbox LIVE India.

‘Hanuman 2’ is the sequel to the highly successful animation film based on Hindu mythological character Hanuman. The partnership with Percept D Mark for Hanuman 2 will include exclusive previews of the same on Xbox LIVE in India.

Partnership with United Television Studios, which is one of the leading movie production houses in the country, is for free Bollywood movie clips, which will be downloadable.

Another example is the Educomp tie-up that will for the first time ever enable interactive learning on the Xbox 360. Students can now have fun while learning, as the education content, based on CBSE and ICSE format provided on the Xbox 360, will ensure greater interactivity and visual appeal.

Considering that games can become addictive, how do you ensure that your products address these concerns?

Agreed that too much of anything can become addictive; the fact remains that this industry has to contend with negative parental perception. Gaming is not always about violence and does not, as perceived, hamper a child’s development. As a matter of fact, research world over has shown that students learn best with a multi-sensory approach. The best way to ensure that this genre of entertainment/edutainment is utilised to the maximum is by having parents understand its true impact on their children and their development.

There are ways of ensuring on both Xbox 360 and the LIVE service that children access as much as parents think necessary through parental controls on the device and other security checks such as password protection.

What are the interesting insights that the profile of Xbox customers reveals?

The core target group of Xbox is in the 10-25 year age group and mostly male. This is the key user community, but an influencer —such as elder sibling, parents, plays a key role in the choices they make.

Another interesting part about Xbox consumers is the propensity to buy original games; for that matter, Xbox in India has one of the highest ‘attach’ rates of games to consoles sold in the world. This clearly shows that Indian consumers are willing and able to buy original game content, provided it is made widely available at the right price.

You mentioned the education initiative as an Xbox application that is unique to India. Would you be promoting the product in rural schools too, as a CSR (corporate social responsibility) activity, or would the product remain a highly-priced one that only the rich can possibly afford?

The tie-up with Educomp will for the first time ever enable interactive learning on the Xbox 360. ‘Edutainment’ will finally be a reality for the first time in India, by enabling multimedia curriculum based content designed to help children learn in a smart way facilitating academic proficiency. The first product is expected to be available by February 2008 across India and will be affordably priced.

Anand, a science graduate with a post-graduate diploma in systems management, has been associated with the IT industry for over a decade. Prior to joining Microsoft, he worked with Iris Computers Ltd, Tangerine Informatique Ltd and Dave Thomson Associates. As EDD chief in India, his core job responsibilities include supervising the day-to-day functioning, marketing and product management for Microsoft’s Hardware products division (primarily input devices i.e. mice and keyboards), gaming and home productivity software. An avid gaming enthusiast, Anand’s favourite is ‘Age of Empires’.

dmurali@thehindu.co.in

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