PUBG’s Comeback In India And its Effect On the Indian Gaming Landscape

Diwali came two days early for Indian gamers this year as PUBG announced on November 12th its plans to relaunch in India, formerly its biggest market.

PUBG Corporation announced that it intends to reincarnate itself as “PUBG Mobile India”, a format created specifically for Indian users and designed to disassociate with China. In addition, it plans to invest $100m in the country to “boost” its e-sports culture and the mobile gaming industry at large.

PUBG 2.0

On September 2nd 2020, India banned all workable formats of the game in the country (PUBG Mobile Nordic App: Livik and PUBG Mobile Lite) along with 100 other apps associated with China amid a stiff diplomatic standoff with the country. China-based Tencent, a 10% shareholder of PUBG’s parent company Bluehole, lost $14bn in market cap the following day, underlining the importance of the Indian market to the game’s overall economics.

The game went off the grid on October 30th.

(Fun Fact: The app was reportedly still able to retain almost 90% of its users in India who figured how to work around the bans having the game already pre-installed on their devices.)

Last week, PUBG signed a deal with Microsoft to move all server data to Azure, the latter’s cloud computing platform.

This was likely done to reassure the users and authorities in India of the dissociation between PUBG and its former Chinese publishing partner Tencent, specifically for Indian markets.

Although the relaunch date hasn’t been released yet, the company is planning to advance on changes like in-app design overhaul, routine audits around storage systems, virtual simulation training, controlled playtime for younger players etc. There are also plans to set up local offices in India with a 100-strong workforce to begin with, and aid in communication and user services.

Simmer Down, Please?

The Times of India reported that despite the proposed changes and data-security assurances, the Government seems firm on its decision to stay the ban. This could relate from the fact that the MEITY, in its clarification on the app-ban highlighted the “violent nature” of PUBG being as much a concern as its “threat to sovereignty and integrity” of India.

Which means, distancing itself from Chinese affiliation by cutting ties with Tencent probably didn’t work as intended.

In case the ban is lifted, there are many questions on the reboot. For instance, how would simply changing the agent of outsourced data enable data security measures? Even if the company is breaking ties with China, Tencent still technically remains a significant shareholder and is therefore privy to all major changes in future that could alter its configuration in India notwithstanding the removal of its role as the game publisher in India.

Other Players

In the days following the ban on PUBG, a host of gamers in India shifted to Call of Duty.

NCore Games, a Bangalore-based firm launched FAU:G, a domestic multiplayer action game, promoted by Bollywood actor Akshay Kumar.

Another game that rivalled PUBG was Fortnite, which never gained the same popularity in India because of limited availability and direct payment dispute with AppStore and Google Play.

Fortnite has been attempting to fill the PUBG-void by organising multiple eSports tournaments to engage with gamers in India and usher a comeback in the Indian gaming scene.

Indian Gaming Scene still in its infancy

India is home to a rapidly-expanding gaming industry with total revenues amounting to ₹8,000cr ($1.17bn), claiming the 16th spot in the global eSports market. The industry is still very much in its infancy with smartphone and internet penetration on the up.

Key tailwinds in the Indian gaming landscape:

• Young demography: Over 75% of the population falls in the sub-45 years bracket presenting a meaningfully large potential market of mobile-first gamers.
• Growing active internet usage: With over 500m active internet users in the country which is expected to tick up sharply…gaming companies are ideally positioned to gain traction.
• Smartphone penetration on the rise: Smartphone penetration in India is still sub 35% but growing sharply y/y presenting a long growth runway. A rapid uptick in penetration should bode well for all mobile-centric businesses.
• Ubiquitous digital payments: The ease and rise of digital payments are central to the myriad of monetizing strategies deployed by gaming companies. India’s rapid progress in the payments space de-risks the path to recurring monetization.
• Evolving gaming ecosystem: Number of game development companies rose from about 10 in 2010 to a few hundreds now. With a robust VC market alongside, the overall ecosystem is ripe for sharp upswing in growth.Total VC funding in gaming startups is estimated at $350m over the last five years and growing at 20%+ CAGR.

Gaming Terrain Forecast

However, apart from a handful of local publishers (Gametion, Words Mobile, Moonton etc.), Indian developers are yet to capitalise on this expanding market.

Less than 7% of the top 15 mobile games in India are from Indian publishers. Only 3% of Indian publishers get paid for their mobile games, lower than the global average of 5%. Moreover, surprising 86% of Indian games have advertisements which can easily put off gamer interest in the long run.

Nevertheless, the age of experimentation in the Indian gaming community continues. Last month, former organisers of PUBG’s mobile gaming leagues held an online event called India Plays which registered enthusiastic participation from the fraternity.

Similarly, Esports Club initiated the Counter Strike Dell TEC Pro League (playable on both PCs and consoles) with a ₹15L ($20,137) cash prize, that is expected to last five months.

Not counting before the chickens hatch, but the saga around PUBG’s departure (and the subsequent re-emergence) may just turn out to be the beginning of domestic gaming renaissance in India.

(Originally published November 19th 2020 in transfin.in)