Playing Angry Birds is Sandeep Sharma's favourite pastime while travelling. The 38-year-old marketing manager at Noida-based petrochemical company India Glycols Ltd, is on the road for up to 15 days a month. He finds it most annoying, however, when ads pop up on his Samsung Galaxy S2 touch-screen smartphone. "Even if I happen to touch an ad by mistake it leads me to another website, disturbing my game," he says.
While Sharma may return to demolishing the defences of the greedy pigs who stole the birds' eggs, others may not do so at all to particular games if they find the ads alongside an irritant. That is why Alok Kejriwal, founder and CEO of online gaming company Games2Win, refuses to have ads in most of his applications. "An acne cream being advertised to an eight-year-old is very irritating," says Kejriwal. Once, not long ago, he was making Rs 1 lakh a day from the advertisements that dotted 'Parking Frenzy', one of the more popular among the 40 games his company has developed - which has so far seen 11 million downloads. But looking at the long term, he chose to forgo this revenue. He now makes money from his apps, by charging a download fee of 99 cents from users who want to upgrade to the advertisement-free premium version of the game with extra features after they have played the basic version.
An acne cream advertised to an eight-year-old can be very irritating: Alok Kejriwal
is set to become a big market in India, a country of 35 to 50 million passionate gamers. Its size is likely to balloon to Rs 1,430 crore by 2014 from Rs 240 crore in 2010, according to a joint report by KPMG and the Federation of Indian Chambers of Commerce and Industry.
And gaming app developers are trying out novel ways to make money from their products. Some pack in ads, while others like Kejriwal shun them but charge users to download games. Those choosing the latter option also have to decide where to display their games: on operators' sites such as Vodafone Live or Airtel Live or at app stores such as The Nokia Store or Google Play.
"The ad-funded model is not gaining much scale," says Samir Bangara, Managing Director, Digital, Disney UTV. His company charges users to download the premium versions of its games and earned Rs 54.5 crore in revenue for 2010/2011, mobile games being the largest contributor to its top line. But not everyone agrees with him.
Indore-based Twist Mobile, for instance, banks solely on ads for its revenue while keeping all versions of its games free. It has 30 games, of which the most popular is Zulux, with seven million downloads. Besides India, it targets Indonesia, Vietnam and Philippines where basic 'feature phones', much cheaper than smartphones, still dominate the market. "These are largely pre-paid markets where the average balance in consumers' phones is as low as Rs 9. We see no sense in expecting people to pay for playing games on their mobiles," says CEO Virat Khutal.
The jury is still out on whether telecom operators' sites or app stores make for savvier distribution. There is a huge difference in the charges: the former provide better display but keep back around 70 per cent of the download fee, while app stores charge only 30 per cent. Thus smaller players such as Twist Mobile are reluctant to approach operators.
Some operators are even tardy about parting with the remaining 30 per cent. "There were times when we didn't hear from the operators for more than eight months," says Khutal. But app stores present other problems. Getting noticed on them is not easy.
Samir Bangara, MD, Digital Disney UTV
"With over half a million apps in Google's Android market, your game will get lost in the crowd even if it is very interesting," says Nitish Mittersain, CEO of mobile games developer Nazara Technologies.
Of the two, Bangara of Indiagames prefers the operators and has tie ups with all the major ones. "They are indispensable as they give the customer a convenient payment model," he says.
Paying online for apps can be cumbersome as it requires registering at the app store and entering credit card details, which many gamers may not want to. Operators, in contrast, can simply debit the amount from the pre-paid balance of the customer or bill it to his post-paid account.
Of course, operators and app stores need not be mutually exclusive, and developers such as IndiaGames and Nazara have also put their games up at app stores, especially those of handset makers. "App stores are driving a lot of new traffic," says Bangara.
Indeed, some feel they may be the future. "For smartphone users, app stores which have millions of top-quality apps are a better shopping destination," says Bala Parathasarathy, founder of startup incubator Angel Prime. "Power will move away from the operators as the feature-phone market diminishes." An Ernst and Young study says the smartphone market in India grew 250 per cent annually between 2009 and 2011. Operators are already offering better incentives to games' developers: Vodafone, for instance, recently decided to charge only 30 per cent of the fee for downloaded apps, as opposed to 70 per cent earlier. "We are betting big on increasing revenues from data charges. That is possible only if we continue to drive traffic on our portal," says Jonathan Bill, Senior Vice President for Innovation and Business Development at Vodafone India Ltd.
The gaming business has also seen a new breed of agent emerge: the ad network companies. An ad network links games' developers to advertisers and places ads within apps. Twist Mobile, for instance, works with Vserv, a mobile ad network with 10,000 apps in its fold. The network usually takes 40 per cent of the amount earned, the developer getting the rest. Typically, a developer is paid around Rs 2 if a user actually clicks on the ad, or Rs 150 to 200 for every 1,000 hits on the page that carries the link.
Advertising budgets for mobile ads are still low, around two to four per cent of the total, but they are growing. E&Y expects the Indian mobile advertising industry to expand to Rs 200 crore in the next few years, from Rs 25 to 30 crore in 2011. "Mobile is scoring on reach and penetration, but advertisers are waiting for faster adoption of 3G services, which will allow betterquality video and audio advertisements, thus driving conversion rates for advertisers," says Raghav Anand, Segment Champion, New Media, E&Y. India had only one million 3G subscribers in 2011.