In India, where gambling is illegal in most states, people love to bet on social occasions. That’s turning into serious business.
Social card games teen patti (three-card poker), rummy and the likes are moving from physical tables to mobile phone screens at an “unprecedented” pace, according to a report by KPMG on the country’s media and entertainment sector. Online gaming, mostly through handheld devices, will become larger than radio and music industries combined in the next five years, growing 22 percent a year to Rs 11,880 crore.
“Card games have been part of the Indian tradition for generations,” Dhananjai Hari, vice president of marketing at online gaming site Mad Over Poker, was quoted as saying in the report. “Familiarity with the genre has translated into the massive popularity of online card games as well.”
Barring Goa and Sikkim, gambling is illegal in the rest of India. But the jury on real-money online card gaming is divided. Poker is allowed in West Bengal, Nagaland and Karnataka, but its legal status differs across states. “[Yet] card games such as teen patti and rummy enjoy social acceptance without the stigma attached to gambling, as a Supreme Court ruling declared them as games of skill rather than chance,” KPMG said. “Few games have such mass appeal.”
To overcome the legal hurdle, some gaming platforms permit play-money versions—users have to buy an in-game currency like online chips or coins to play. Companies like MoonFrog and Octro generate revenue when users buy chips, and this model has earned them a profit margin as high as 35 percent, KPMG said. According to an earlier joint report by EY-FICCI, online card games earn 90 percent of their revenue from such in-app purchases and subscriptions.
The industry is also “proactively” trying to self-regulate and promote responsible gaming practices, according to the KPMG report. “Such initiatives are likely to help improve transparency and credibility for the online card gaming industry in India, which appears poised for exciting times ahead.”
The gaming industry reported the fastest growth at 35.1 percent in 2017-18 in India’s media and entertainment sector. Aided by a booming smartphone market and deluge of cheap data, mobiles were behind the surge, contributing 89 percent of all gaming revenue in 2017, according to KPMG. “Mobile gaming dominates other devices—both in terms of revenue and number of gamers—and this is not expected to change.”
And it’s the card games, estimated to grow 50-100 percent year-on-year, that dominate. Four of the top 10 grossing applications on India’s Google Playstore are social card game apps, according to analytics and market insight firm App Annie. Two of them—Teen Patti by Octro and Teen Patti Gold by MoonFrog—were among the top five by consumer spending in 2017. They together have nearly 60 million downloads, according to KPMG, with almost 3.7 million users playing every day.
KPMG had a sobering insight though: initial conversion of a user to mobile gaming may occur quickly over the next five years but it will take longer for them to actually shell out money. “The market could only witness higher spends when these casual gamers increase their engagement over time.”
Yet, the opportunity is not lost on investors, mostly from China, the world’s largest mobile gaming market.
Alibaba-backed firms Paytm and AGTech have partnered to launch a mobile gaming venture Gamepind Entertainment where they have infused $16 million. Tencent, the world’s biggest gaming firm, is also building a core India team around gaming and plans to invest up to $200 million, the Economic Times and Techcircle reported. Tencent has yet to respond to BloombergQuint’s emailed queries. Last year, Chinese game developer Youzu Interactive also set up shop with plans to launch casual strategy games in India.
As money starts flowing in and mobile gaming sees bigger adoption, one thing is certain: localisation will be the key to success, KPMG said. “Games with an Indian context could prove to be the wild card, quite literally.”