Monday, July 16, 2007

Aiming higher

Source: Thehindubusinessline

Indian software players are going for high-end action in the global gaming market. Alongside opportunity, there are hurdles too.

Indian players are gearing up to garner a sizeable share of the $29-billion global gaming market. And they are seeking to do this by showcasing firepower to turn into co-producers of high-end games rather than being mere associates for ‘grunt work’.

The transition, from small time work such as porting and texturing to tech-intensive 3D asset creation, graphic designing and testing, has begun to take place, say industry watchers. (Porting is the process of adapting software so that a program can be created for a computing environment different from that for which it was designed. The term also refers to changing of software/hardware to make them usable in different environments. Texturing or Texture mapping is a method to add detail, surface texture, or colour to a computer-generated graphic or 3D model.)

Case for outsourcing

Game development is one of the most complicated parts of software development. Unlike ordinary applications, game development requires completely updated resources that include state-of-the-art infrastructure and workforce, thereby making it a costly affair.

Intense competition to reach the marketplace faster, coupled with rising production costs, has propelled international gaming companies to look at the outsourcing model, says Tapaas Chakravarti, Chairman and Managing Director, DQ Entertainment Ltd. The Hyderabad-based company develops games for consoles such as Xbox and Playstation.

Developing a game in the wireless space could warrant a budget anywhere between $5 million and $20 million. “Globally, budgets in the console game development space are upwards of $20-25 million, which is four times what it was a few years ago,” says K. Rajesh Rao, CEO of Dhruva Interactive, a Bangalore-based gaming content provider. Dhruva has a tie-up with Microsoft to develop games.

The growth of games and their budgets has upped manpower requirements multi-fold. Team sizes across the globe have been growing sharply. Big budget games have 100-plus dedicated personnel working for 18-24 months.

Requirements from India

According to a Federation of Indian Chambers of Commerce and Industry (FICCI) report, animation, gaming and virtual special effects are the biggest export revenue generators for India after software. Game exports could include both providing outsourcing services and delivering the final product to global audiences.

“Both models have tremendous potential for India to earn in foreign currency terms if we move up the value chain,” the report says.

There are five main departments in a game company: Art, Design, Programming, Sound, and Support.

Indian gaming companies so far have been doing small time work, such as porting for online games and character building, and texturing for the console space. “Outsourcing the graphics designing component of mobile and wireless games has picked up due to higher usage of animation in games. Companies have also started outsourcing game testing and 3D asset creation in the online space,” says an analyst. This is also happening in games that require specific platforms or are device-specific and need a high degree of customisation. The forecast, for now, is: Online, PC as well as Console game outsourcing, will be major growth engines for the industry; the mobile is expected to catch on in a few years’ time.

Huge market potential

The scenario looks very encouraging given the international gaming market is valued at $29 billion annually and is set to touch $50 billion by 2011, according to research from PricewaterhouseCoopers.

Outsourcing to destinations such as India will be a $2.49-billion marketplace by 2010 from the current value of $1.1 billion, according to media firm Screendigest. It pegs the percentage of global development expenditure outsourced to rise to 37.1 per cent in 2010. Video games are predicted to hit $42 billion in revenue by 2010, and game outsourcing will be a significant part of that. Nick Gibson, author of the Screendigest report, says that the value of the outsourced art sector alone is set to soar to over $600 million by 2008.

Indian gaming companies have managed to scratch only 5-8 per cent of this ever expanding pie, according to Rajiv Hiranandani, Country Head-India, Mobile2win, which has developed games for Freemantle and the Turner Group. “India’s share of this market could grow to 20-30 per cent in the next couple of years,” says Rao.

Skilled manpower shortage

Overseas players may have begun pampering Indian vendors, but the domestic firms have to contend with rising shortage of skilled manpower.

The FICCI report says animation, gaming and special effects are areas where manpower demand far outstrips supply. “It is estimated that in the next few years, India will require more than 30,000 trained animators and gaming professionals.” A good game needs an exciting blend of creativity, design, and programming. Building teams with such talents is no easy task. And to compound the issue, attrition rates in the gaming industry are as high as 22-25 per cent.

Government support

Another bottleneck is the lack of recognition and support from the government. Asian competitors such as Korea, China, Japan and the Philippines receive tremendous impetus from the government by way of finance and infrastructure. Hence these countries have developed very strong domestic markets.

India’s domestic gaming market was only worth $13 million in 2006, according to analyst group iSuppli. FICCI believes that once the domestic market receives enough consumable content, the same can be routed for outsourcing and exports.

As Rao puts it: “We have to create a model that will ensure tighter collaboration between the government, industry and gaming institutions for this space.”

The future looks bright as schools focused on game design, programming, and art are appearing everywhere in India. Institutions such as Arena Multimedia and Sage Infolabs provide education in the concepts of animation, game development, game content design, game engines-driven development and other aspects.

To establish a position of supremacy, it is imperative for Indian game providers to make large dollops of investments in building end-to-end solutions and putting together a sizeable manpower base. And the rest, as they say, will fall in place.