Google is upsetting India’s online gaming applecart

Google is giving sleepless nights for India’s online gaming industry.

It has set the cat among the pigeons by allowing only fantasy and rummy apps in its Play Store, and this ‘discrimination’ has added to the trust deficit among major players operating in the real money gaming space.

How big is the online gaming business? A recent KPMG report has projected that the online gaming business to generate a revenue of over Rs 25,000 crore by 2025, with an active user base of 650 million.  India currently have an active user base of 420 million and with 5G coming in, the country will become the world’s largest gaming hotspot.

An Opportune Time

Google’s ambitious one-year pilot project to allow Real Money Games (RMG) apps it once banned from its Play Store— the sanctum sanctorum for legitimate applications — is certainly a major turnaround. It may have driven a wedge among online gaming operators in India, but it has also opened a window of opportunity for operators running games with a preponderance of skill.

In terms of monetisation, Google has envisaged a shrewd business model and will always be at a win-win situation with the operators. Given the regulatory and legal conundrum in the Indian gaming space, Google has struck at an opportune time.

Regulation Void

Google has shown enormous foresight in allowing only fantasy games and rummy as they are two of the most popular online casual games played with stakes, and approximately account for 50 percent of the gaming revenue, currently estimated at Rs 14,000 crore, and projected to grow at a CAGR of 29 percent over FY 2021-2025.

In spite of such massive potential, there are no uniform regulations, and the law is either too archaic or weak to pin down operators who run games of skill or skilfully operate games of chance or prediction-based games where luck or guesswork determines who takes the jackpot.

While the debate between skill versus chance continues to rage in the corridors of law and high offices, the absence of a proper law has allowed platforms to exploit the gullible. Meanwhile, what has become a cause for concern is the mushrooming of several offshore gambling sites, some of them using the names of famous Indian businessmen to evoke a sense of reliability and solidity.

Endorsed by some of India’s top sportspersons, these betting apps have thrown a serious challenge to Indian operators. Industry insiders say that some of these offshore sites, which are advertising with impunity, are minting close to Rs 200 crore per month during the Indian Premier League season. Interestingly, such operators have managed to stay under the government radar.

Google’s Game

Google’s move will certainly impact operational dynamics. Although it is difficult to estimate the total number of rummy and fantasy only apps in India, it is expected that at least a dozen major operators such as A23, Rummy Circle, Dream11, My11Circle, My Team 11, and Junglee Rummy will be in a position to take advantage when Google opens up its Play Store from September 28.

Being a search engine, Google will be able to exploit its ‘ranking’ system and tempt operators to go for keyword bidding. It is no secret that rankings are sold, and the top ones get the maximum exposure (read: downloads). There will be additional sources of income for Google from downloads. A revenue share model can win Google anything upwards of 30 percent per download. Plus, Google ads will bring in more moolah from third-party sites. It is habit-forming exercise, and once that happens, Google can ask subscribers to use its Google Pay digital payment option.

Uncertain Times

Google has its critics, and opposition as well. Social gaming platform Winzo has taken Google to court. Winzo, which sponsors the IPL team Kolkata Knight Riders, may not be too popular in the industry for their aggressive mannerisms, but this time the young platform has stood up for all those who are not going to be in Play Store.

At a time when the industry is facing uncertain times in terms of GST and lack of one fit-all, government-approved regulations, major platform owners, already under financial pressure, have to look at new ways to win, and retain subscribers. For a multi-game platform, customer acquisition is a major cost. A big platform like MPL, which has 80 million subscribers, spends roughly Rs 200 to acquire a customer. It will now have to spend more. On the flip side, those on Play Store will pay less than half that amount to win/retain customers.

This imbalance will now force multi-game platform owners to go back to the drawing board. An MPL can now segregate its apps and have standalone ones for rummy, and fantasy. That will mean additional development work. Projections are surely made on the basis of business trends, but why is there so much of uncertainly and one-upmanship? Online gaming has been seen as a sunshine sector, but with so much negativity surrounding it, there are dark clouds looming too.