India’s gaming industry should play a multiplayer game

Opportunity: Online gaming presents a rare opportunity for India to aspire to global leadership of emerging technologies. Gaming is a gateway to cutting edge technologies like AR, VR, Web3, Digital Assets and more. These technologies will first find their use cases in this industry before going elsewhere. Vietnam-based Axi Infinity is a leader in the play-to-earn segment, growing non-fungible tokens (NFTs) to previously unseen levels. The company earned $10 million in its first 3 years, after which it was earning $10 million every 5 days. Games such as Illuvium, Three Kingdoms and StarAtlas are leveraging SmartChain technology to incentivize users across Asia. The massively multiplayer game Justice Online is launching a version that integrates ChatGPT. Artificial intelligence is regularly used for pathfinding and non-player character ‘interaction’. Gaming as a gateway to all kinds of applications.

Challenges: The battle is far from won and we have mainly four hurdles to overcome. Take the issues of perception first. In Japan, Gangan Comics’ Watamote received much criticism for its treatment of social anxiety. Torn between Japanese traditionalism and modernism, those who saw the dangers called for comics to be fully regulated. The gaming industry faces a similar challenge, juxtaposed with a “sin zone”. Unless the industry invests in educating stakeholders, it may be viewed in the same way as alcohol, cigarettes and gambling.

Second, state governments enacting conflicting laws can be a danger. Each sport may require approval at both the central and state levels. In an industry based on the need for speed (the need for rapid innovation), a patchwork of compliance requirements can prove operationally cumbersome. States such as Tamil Nadu, Kerala and Telangana have sought to ban online gaming under state laws.

Third, there’s Thanos’ Snap Challenge. On the one hand, the finance ministry is considering taxing online gaming at 28% of the pot-value, which will discourage the industry. On the other hand, the Sports Ministry officially recognizes e-sports, hoping for its potential to generate medals at global sporting events. MeitY has been encouraging the industry by allowing self-regulation. The gaming industry and government need to work together to reconcile all of these conditions in order to unlock the enterprise-value potential of the industry.

Finally, there is the reality of lawsuits and arbitrations. Paradoxically, we are still negotiating the future (emerging technology) through the systems of the past (archaic legal systems). The ongoing case between Dream11 and Mobile Premier League is likely to set a precedent for rights relating to NFTs and their permissible uses. There are also cases involving Ace2Three, Nazara, PayTM, etc., and how they turn out will matter for the industry.

Industry Response: With the government’s positive attitude towards gaming, perhaps the industry should start looking at itself as a multiplayer online battle (MOBA) game. It may consider these steps:

One, engage in ‘co-competition’, come up with a common minimum plan, and then approach regulators as a united front.

Two, support sports de-addiction programs and educate users about the risks and responsibilities. Go beyond semiotics to make a meaningful difference.

Three, contribute to the narrative. Highlight gaming as a medal winner, a tool for education, a contributor to the exchequer, a high-value employment provider, and more.

Four, create innovative models to monetize efforts beyond actual money, and do so as part of a clearly stated strategy.

Fifth, invest in domestic R&D and patents to accelerate the development of emerging technologies in India.

The Endgame: Gaming success can be worth a lot more than we realize. The nature of entertainment has evolved a lot. Earlier we had radio and movies. TV brought the movies home. OTT platforms have made TV asynchronous and on-demand. Online gaming has made all of these interactive and immersive. We are literally seeing an industry emerging here, one in which India can truly become a self-reliant world-leader.

The industry understands that going head-to-head with regulators is a MOBA game. You can compete with other players in getting innovation, talent and customers, but a united front is needed when dealing with governments. For this cooperation is the only option.

The government is finally shedding its cynical lens and switching from preventive to facilitative legislation. The Center has identified Animation, Visual Effects, Gaming and Comics (AVGC) as a focus area, and has promptly followed up by constituting a task force for the same, which is an important start.

India missed out on global manufacturing in the 2000s and social media in the 2010s. Industry and governments have only just begun to work together. Hopefully, we won’t obsess over online gaming and the second-order biomes and ecosystems that will mushroom around it.

Anurag Saxena and Ravi Shankar Jha are a Chartered Accountant and Board Advisor respectively; and an independent lawyer and policy consultant. Jha also advises the online gaming industry.