India’s gaming industry must play a multiplayer game
4 min read 18 Apr 2023, 10:44 PM ISTGaming rules have been announced but players should act on various fronts to secure their interests.
PremiumIndia’s ministry of electronics and information technology (MeitY) has announced regulations for the online gaming industry. This industry has been on the precipice of big-time success, but was bound by lack of regulatory clarity. From evolving self-regulatory structures to ensuring adequate measures for consumer protection, these rules have struck the right balance. Indian regulation has historically been Orwellian in its approach; it has been preventive, rather than facilitative. This is a welcome departure.
The opportunities: Online gaming presents India a rare opportunity to take a moonshot at global leadership of emerging technologies. Gaming is a gateway to frontier technologies like AR, VR, Web3, digital assets, and more. These technologies will find their use cases first in this industry before they go elsewhere. Vietnam-based Axie Infinity is pioneering the play-to-earn segment, scaling non-fungible tokens (NFTs) to a level unseen before. The company made $ 10 million in its first 3 years, after which it was making $10 million every 5 days. Games like Iluvium, Three Kingdoms and StarAtlas are leveraging smartchain technology to incentivize users across Asia. The massive multiplayer game Justice Online is launching a version that integrates ChatGPT. Artificial intelligence is used regularly for pathfinding and non-player character ‘conversations’. Gaming as a gateway for all manner of applications.
The Challenges: The battle is far from won and we primarily have four obstacles to clear. Take perception issues first. In Japan, GanGan Comics’ WataMote received a lot of flak for its treatment of social anxiety. Caught between Japanese traditionalism and modernism, those who foresaw dangers called for regulating comics altogether. The gaming industry faces a similar challenge, of being conflated with a “sin sector". Unless the industry invests in educating stakeholders, it could come to be viewed in the same light as alcohol, cigarettes and gambling.
Second, state governments enacting conflicting laws can be a threat. Each game might need to seek clearances at both central and state levels. In an industry premised on need-for-speed (requiring rapid innovation), a patchwork of compliance requirements may prove operationally cumbersome. States like Tamil Nadu, Kerala and Telangana have sought to ban online gaming under state laws.
Third, there is Thanos’s snap challenge. On one hand, the finance ministry is mulling over taxing online gaming at 28% of pot-value, which would discourage this industry. On the other, the sports ministry officially recognizes e-sports, hopefully for its potential to generate medals in global sports events. MeitY has been encouraging of the industry, allowing for self-regulation. The gaming industry and the government need to work together on reconciling all these positions to unlock the industry’s enterprise-value potential.
Finally, there is the reality of lawsuits and arbitration. Paradoxically, we are still pushing deliberations on the future (emerging tech) through systems of the past (archaic legal systems). The ongoing case between Dream11 and Mobile Premier League is likely to set a precedent for rights associated with NFTs and their permissible use. There are cases involving Ace2Three, Nazara, PayTM, etc, as well, and how they turn would matter to the industry.
The industry response: With the government positively inclined towards gaming, perhaps the industry should start seeing itself as one, playing a multiplayer online battle (MOBA) game. It could consider these moves:
One, engage in ‘co-opetition’, come up with a common minimum plan, and then approach regulators as a united front.
Two, support game de-addiction programmes and educate users on risks and responsibilities. Go beyond tokenism 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 provider of high-value employment, and more.
Four, create innovative models to monetize efforts beyond real money, and do so visibly as part of stated strategy.
Five, invest in domestic R&D and patents to accelerate the development of emerging technologies in India.
The Endgame: Gaming success may be more valuable than we realize. The nature of entertainment has evolved considerably. First, we had radio, and movies. TV brought movies home. OTT platforms made TV asynchronous and on-demand. Online gaming has made all of this interactive and immersive. We are literally witnessing an industry emerge here, one that India could actually become an Atmanirbhar world-leader in.
The industry understands that facing-off with regulators is a MOBA game. You may compete with other players on innovation, acquiring talent and customers, but need a united front while dealing with governments. For this, co-opetition is the only option.
The government is finally shedding its cynical lens and switching from preventive to facilitative legislation. The Centre has identified animation, visual effects, gaming and comics (AVGC) as a focus area, and quickly followed it up by setting up a task force for it, which is a significant beginning.
India missed the bus on global manufacturing in the 2000s and social media in the 2010s. Industry and governments have only just begun working closely. Hopefully, we will not miss the bus on online gaming and the second-order biomes and ecosystems that will mushroom around it.
Anuraag Saxena and Ravi Shankar Jha are, respectively, a chartered accountant and board advisor; and an independent lawyer and policy consultant. Jha also advises the online gaming industry.
