India has become home to a booming online gaming industry, fostering an attractive domestic market, and an ecosystem of creators. The online gaming market grew 28 per cent in 2021 and is expected to generate revenues of over ₹29,000 crore in FY 2025.
A far cry from the days of Contra and Mario, today's immersive, multiplayer games are the gateway into the metaverse enabled future. The industry has moved from a pastime/entertainment into becoming the core identity of digital-native users. Online gaming is one of the fastest growing job creators, generating high-value employment for thousands across India, and has elevated Indian gaming companies in investor league tables globally.
But the gaming industry in India suffers from inherent perception challenges (often wrongly conflated with gambling) and lacks regulatory clarity.
Moreover, certain State governments have identified gaming as gambling, and the Supreme Court has had to get involved. The potent mix of (a) perception challenges and (b) regulatory confusion had led to losses to the exchequer, and is impacting the investment climate.
As a response, the Centre is exploring self-regulation with the industry. However, some stakeholders suggest that self-regulation may bring its own set of challenges.
Age ratings for games in Europe and the US are monitored by their Self-Regulatory Organizations (SRO) PEGI and ESRB. There are numerous examples of self-regulated industries, both with and without substantial regulatory oversight. On the other hand, India has seen questionable enforcement efficiency of SROs.
The FICCI survey on Advertising Standards showed that ASCI (Advertising Standards Council of India), a voluntary self-regulation council, has not been able to regulate effectively. India is not alone in this challenge.
The big question, therefore, is who protects public interest? Perhaps the industry may want to offer a tiered redressal mechanism, a pre-emptive olive-branch of sorts, to resolve issues internally and later escalate issues to regulators that it cannot resolve within.
Conflict of interest
Others allege that SROs allow industry members to scuttle competition “creatively” (restricting interoperability, issuing-in-game currency, using psychological tools to “hook” users, price controls, etc). Technology enabled platforms allow for a much lower threshold to engage in anti-trust behaviour.
The breakup of AT&T into Baby Bells in 1984, and the (in)famous Microsoft antitrust case a decade later have set the tone for a globally shared understanding of this challenge. As India finds its space on the global podium of economic superpowers, it would be under pressure to align to global norms.
Is the online gaming industry entertainment? Is it sports? Is it technology? Most likely it is none-of-the-above, and -all-of-the-above simultaneously. While the industry collaborates internally to find the answer, we could expect competing-industries (movies, music, software, etc) that are highly regulated, demanding a level playing field. This demand could either present itself through parliamentary, governmental, or judicial channels. This is even more likely to happen once the gaming industry grows to challenge the might of existing entertainment/content providers (like it has in the US) and provokes an existential response from them.
The online-gaming industry primarily faces off with the Ministry of Electronics and Information Technology (MeitY). At this stage of its evolution, it is unlikely to show up on the radar of other ministries. As the industry grows exponentially, data with gaming companies (user behaviour, location, financial transactions, wallets, etc) may be seen from a data localisation lens, a geo-political issue. Reports of terror-outfits using game chats to communicate may make it a national security concern. Given the upside potential of the industry, the Finance Ministry would involve itself more closely. The game-of-skill/game-of-chance debate may spark Centre versus State pulls and stresses.
To sum up the challenge, the online gaming industry may be able to self-regulate now. However, when it escalates to questions of geo-politics, national security, exchequer, and federalism, the SRO model may be seem inadequate.
So how does the industry level up? As the online gaming industry grows and evolves, it is unlikely that a simple SRO model would suffice. It is not just risky from the public-interest perspective, but one that may hurt the industry itself, and prevent India from achieving pole position globally.
It is time perhaps the online gaming took a page from Silicon Valley’s playbook, and asked the government to build that “walled garden” within which they bloom.
The writer is a board advisor, public affairs expert, and a columnist