Emerging Markets: India

“Indians are typically very, very value conscious in that we don’t mind paying extra for a piece of hardware, as long as we don’t have to pay anything for the software,” Sharma says, echoing Kreeda and Chayowo’s comments regarding micro-transactions. “We pay more for a diesel car, because the cost of fuel is cheaper than for a petrol engine.”

The problem is the black market. a cheap imitation of virtually any high-end consumer item can be found on the streets of India’s big cities. Traditionally, if you weren’t in the upper class and wanted access to Western pop culture the black market was your only option. Even for those in the vast emerging middle class – around 350 million people – it remains something of an institution.

“You can get any Xbox title for $1 in the market, and then you’re good to go. The same thing is happening with PS3 also,” says Version 2 Games’ Rajat Ojha. “Piracy is definitely big, and especially with gaming, people take it for granted.”

“Games, by Indian standards, are still very expensive. In fact, we have been suggesting to Sony India to produce the games here… that would actually cut down the whole cost to probably one third. but they are importing all the games, and that works out, for most of the people, to be one-fifth of their salary for one game – that kind of thing. They don’t mind going down to the market and playing $1 for an Xbox 360 game. you can get a [retail] Xbox 360 modded for $30.”

For Sharma, the solution lies with another rapidly evolving aspect of Indian society: retail. “India is at the early stages of that mall culture,” he says. “In the last six to eight years we’ve had a lot of new malls and new shopping centres open up, where every store that retails games will have to trade in legitimate product. I can say that 1200 to 1400 stores across the country will continue to carry legal product.”

And that number is increasing, not least because of Game4u, Milestone Interactive’s burgeoning retail chain, created when Sony’s decision to internalise distribution left Sharma with a sizeable hole in his business. Milestone enjoyed great success as India’s premier distributor of gaming products, but it relied on major Western companies like Sony, Microsoft, EA and Activision keeping their distance.

Sharma, like everyone else we spoke to for this article, believes that their arrival is only a matter of time, and a move to legitimise game retail in the country would both speed up that process while establishing a reliable partner in the shopping centres.

“Retail, in time, will probably become the larger piece of our business,” he says. “We’ve been fortunate in terms of our timing. Considering what Game and Gamestop are facing, and seeing their strategies shift, we are able – to some degree and in an educated manner – to pre-empt that situation here and build that into our model at the early stage.”

“India is at the early stages of that mall culture. In the last six years we’ve had a lot of new malls open up, where every store that retails games will have to trade in legitimate product

Jayont Sharma, Milestone Interactive

Game4u’s physical and digital presence are being developed concurrently. The stores are bright, vibrant, family-friendly spaces with numerous free console units and a staff directed to be knowledgeable and engage the consumer. when we spoke to Sharma at the end of last year he was just preparing to open Game4u’s sixth outlet, with another four due by the end of this month. Indian retailers caused Sharma a great many problems when Milestone was focused on distribution and marketing; in many cases, those experiences taught Sharma what not to do.

More importantly, with broadband connectivity only now beginning to spread across the country, high-street retail in India has never been under threat from online trade. as hard as it is to imagine with GAME swaying dizzily on the ropes, it is on course to enter a boom period.

“I’m fully convinced that we’ve still got a minimum of 10 years before some of these other challenges start affecting us,” says Sharma. “It will be another three years by the time we open our 50th store, and we will only be touching the top 25 or 30 cities. and I can still go to another 30 cities. The top 60 cities are close to a million population and above.”

“The caveat here is that I think the key stakeholders need to come in and participate in growing the market a lot more. while as Milestone I may fear what will happen to my distribution business, in time retail will be the bigger piece of the pie. we can’t worry about that. as long as we own the consumer the publishers will partner with us.”

Emerging Markets: India


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