Turnaround #6: A new podcast for you & more

I just got back to Bangalore after a week-long trip to Las Vegas where Freshworks hosted its annual user conference. I went straight to Kerala for Onam after that and then straight to Chennai after that for a few days. Honestly, that’s a bit too much travel for my liking. But I figure I’m only going to be traveling more now. The plan is now to learn how to travel well. If I ever get good at it, I’ll write about that journey here.

We hit 200 subscribers just a few days from launching this newsletter. And I’ve been feeling like maybe there’s scope to add more value here than just talking about my itinerary. It so happened that my friend Ravish Bhatia, a Yenching Scholar from Peking University and one of the smartest people I’ve met recently, has been looking to launch a podcast. I sold him hard to get on to this newsletter. And he agreed! 

☝️☝️☝️Meet Ravish ☝️☝️☝️

🙌So from now on, you’ll have a good long podcast every fortnight on this newsletter and of course my itinerary😊.

The podcast is called Use Case. The idea is to deep dive into sectors, entrepreneurship and so on and glean lessons from the best of the best for our listeners. You can listen to the podcast on iTunes/ Spotify now. It will be on other platforms soon. This newsletter is where we’ll share behind the scenes stuff.

For this episode, Ravish interviewed Ankush Gera, the CEO of Junglee Games, one of the fastest-growing gaming companies from India. He’s also written up a bit about what to expect on this podcast. So what you read from here on, is his words. The podcast is at the end of this post. Hope you like it. 

Blessed be the modern times when the horrors of slow internet and the forces that restrain downloads be no more and Lord Jio sanctifies our phones with cheap data. 

The Jio-boom brought in many first time users which sowed the seeds for new internet-based industries in the country that were unimaginable a few years ago.

It’s a bit like how Reagan built highways in the cold war era to quickly evacuate people in the event of a nuclear attack but unwittingly spurred on the automobile boom in the United States. 

The Indian mobile gaming sector is riding strong on the new internet highway and some serious venture capital is beginning to flow in. So for our first episodes on the Use Case podcast, we decided to sit down with Ankush Gera, CEO of Junglee games.

Gera started Junglee Games in 2012 and it’s been growing nearly 100% year on year for the last few years even after going past the seed stage. 

So, in this newsletter, I’m sharing some of those learnings, but seriously – subscribe to the podcast on iTunes/ Spotify. It’s going to be good.

📱What does the Indian gaming sector look like? 

Massive multiplayer online gaming, or MMO, is growing rapidly. But there are a lot of numbers floating on the internet about the sector. Most estimates I came across project the mobile gaming industry in India to reach ~ $ 1 Bn by 2020. 

A new report from KPMG and Indian Federation of Sports Gaming estimates a CAGR of 22% for the online gaming industry between FY18-23. But after recording the episode, I have come to take these numbers less at face value and more as representative of a trend– because to start with these numbers vary too much depending on the type of game. For instance, games like Rummy and Teen Patti have had a ~70-75% growth. 

When I asked Ankush about his estimates of the industry growth, his approximations were a lot higher. It makes sense – Junglee alongside a few other big names own a major share of the market and all of them put their annual growth rate at least 40-50%. 

While measuring market size isn’t going to lead us to specific insights in a diverse space, it’s clear that the sector per se has finally gotten the validation it deserves. It shows in how VCs, who once didn’t think much of investing in India’s gaming scene, are warming up to the idea. 

There are also some legal and policy nuances to the market – According to the Supreme Court, skill-based games, like Fantasy Sports or Rummy, do not amount to gambling, though 2 states (Telangana and Kerala) are challenging it. But those don’t seem to be a deterrent and one of the states seems to be pulling back. The whole ‘skill-based games’ sector is more of an opportunity than a regulatory restriction, really. 

What I enjoyed the most from my conversation with Ankush – is the high that I get from speaking to successful entrepreneurs and getting that dose of hustle motivation. Side note on getting high: I did call the whole gaming sector as the marijuana industry of the start-up world (a reference to the game design characteristics that get users hooked) and it was not at all awkward. 

But in that, I learned an important thing. You see, when thinking about the product design itself, I had Nir Eyal’s book ‘Hooked’ in mind - with the greatest driver of user growth and retention, being the ability for game developers and story builders to keep coming up with hooks that get that continuous serotonin and dopamine released in the brain (see screenshot from the book below). JPK has written about the hooked model before here.

But Ankush was thinking differently. According to him, the biggest driver was the sense of competition – which differentiates the gaming sector from other subsets of the entertainment industry. Successful game designs are made not only to tap that serotonin and dopamine release with that extra 1UP but the adrenaline, testosterone, and estradiol that comes from the innate sense of competition. To think of it, those are also the hormones most commonly associated with high-pressure stock market trading. 

In fact, Ankush classified his user segments in 2 broad kinds– one that plays for that innate sense of competition and those that do it to just pass the time. Now the question is, for those playing games just to pass time – will the user ever pay when they have so many other apps to “just pass time” on? Those game types are perhaps better monetized by the freemium and ad-based models.

For the rest, users are beginning, albeit slowly, to pay. The average revenue per user of the Indian mobile gamers is $ 0.78, far below the global average of $ 26.28 and again, the lowest among BRIC markets with Brazil at $ 5.96 and China at $ 25.17. The reason for that is perhaps that ~59% of users in India, as Kanan Rai from Google Play India said in a panel, are under 24 years of age and have low disposable incomes. 

The next segment of 25-40-year-olds is where users have disposable income and willing to pay. So the long term strategy for the industry is to get the < 24-year-olds turn into mature gamers which as they grow and have more disposable income, they become experienced customers who are willing to pay – even if that is in the form of sachet pricing and not subscriptions (which is being buoyed by the improving micropayments infrastructure in India)

📈So where do we think the sector might go? 

Making exact market predictions is as scientific as fortune-telling gets. So we’ll leave that to the soothsayers. Or not. 

🔮First prediction: You are going to be super successful, rich and do so well if life! We know you will. So, please subscribe to the newsletter and the podcast (where you ask? Well, iTunes/ Spotify. Coming soon on: Google Podcasts/ Sticher).

🔮Second one: Remember how when user growth in China for social media apps began to saturate, we started seeing a huge influx of Chinese social media companies in India? 

Where else can you find a country with a market as big as that in Zhongguo? The same could potentially happen for gaming. Friends and acquaintances in the Chinese VC/ start-up world have already begun exploring the Indian gaming market. 

The only thing keeping companies (and not just investors) from entering with guns blazing (I have zero cultural sensitivity- I’ll retract ‘guns’) is the prevalence of culturally relevant mobile games which gives Indian game developers an edge (think Fantasy Cricket, Rummy, and Teen Patti). But the question remains - if the big Chinese game companies started placing big bets backed by big wallets, how well could homegrown companies compete?

🔮Third: There is a whole up and coming market around the primary products itself, which shouldn’t be ignored. Tons of creator and live streaming tools, in-game events, platforms where gamers are getting involved in the game creation process itself and the whole secondary market for servicing pre-existing games –are all ancillary areas that come along with the big game. A good example of companies servicing pre-existing games (mostly free to play ones, to which new content and thrills are added) is the Tokyo based Mynet which IPO’ed in 2015.

Also, yeah – the whole blockchain-based gaming, VR gaming and obviously, something to do with AI…

Check out more on the Use Case podcast and let us know what you think! We crave for social acceptance. Just give it to us. We love you. 

🔥Until we figure out how to embed the podcast here, here’s a direct link for you to download the episode.