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Nov, 20 2009

Entertaining profits

With around 51 per cent of the population under 25, India shows greater propensity to entertain itself in the fun arena with amusements like gaming, home video, music etc, implying profits for the ones delivering these amusements.

Going gaga over growth

The 50-billion dollar gaming industry is the biggest segment in the entertainment industry worldwide and is a100-million dollar industry in India. According to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI), the home video industry witnessed 30 per cent growth in 2007 and is expected to be Rs15-billion industry by 2012, growing at the rate of 15 per cent.


Gaming sector

The advancements in digital technology, personal computer (PC) penetration, mobile communications and the Internet in the 1990s have led to the emergence of gaming industry. Gaming can be categorised into PC gaming, console gaming, wireless gaming, multiplayer gaming and massive multiplayer online role-playing games. Though gaming is most popular in urban areas, increased PC and mobile penetration has opened vistas for this sector in the semi-urban and rural areas as well. Though the sector is primarily unorganised, organised players like Zapak and Indiagames have ushered in a branded era in the gaming industry.

Rohit Sharma, COO, Zapak Digital Entertainment Limited, avers, “Our key customers are primarily males in the age group of 12-25 years.”

Since a major chunk of the Indian population comes in this bracket, the sector stands all the more promising for new entrants.


Vistas in video segment

With the increased penetration of DVD players, LCD players and home theatre systems, home video sector is gaining strong foothold. Industry sources indicate that the home video market in India is growing at 30-35 per cent year on year for at least five years. However, the segment had long been dominated by neighbourhood shops. Most of the organised players in this segment such as, Moviemart and Clixflix have taken up the franchise route to expand their presence.


Online to offline

As far as the organised sector is concerned, both gaming and home video segment graduate from online selling to offline centres. Zapak started its online venture three years back and after realising its scope, opened its offline gameplexes in 2008. Indiagames, which sells online mobile and PC games, started its operations in year 1999. also launched its Video-on-Demand service in August 2007 while its first retail store was launched in September 2007.


Fascinating franchise opportunities

Currently, Zapak has 40 operational franchise gameplexes and 150 more centres are expected by 2010. The area requirement to open its gameplex ranges from 400-700 sq.ft whereas the investment is between Rs 10 and 15 lakh.

Indiagames offers franchise of its online portal only, wherein the franchisee can sell online mobile and PC games. Games on Demand (GoD) is the most popular PC gaming solution. Presently, the company has five franchise stores and 15 more are expected by March 2010. The minimum area requirement to open a centre is 200 sq.ft. The franchise fee to take up the franchise of Indiagames centre is Rs 50,000 per year whereas the franchisee would incur Rs 1 lakh operational cost per month. also plans to operate through franchise retail store in a big way. Talking about the company’s expansion plans, Manosh Bhattacharya, Chief Lead, Retail Operations and Logistics,, says, “We see this as the growth and expansion engine for us over the next 18-20 months as we intend to put 150 plus franchisee outlets during this period.”

The area required to be a franchisee is 300 sq.ft and the investment required is Rs 13-16 lakh.


Not a mass phenomena yet

Counting the challenges in the gaming sector, Sharma states, “The biggest challenge for players in the gaming industry is the fact that gaming is still not a mass phenomena. Getting footfalls and generating better content are few other challenges in this business.”

Piracy is another major threat to the home video industry, as the unorganised players can easily produce and retail pirated versions of music and movies and sell them illegally at comparatively lower prices.

However, growth rate of the entertainment sector in the past few years assures a promising future for many more entrants, even amidst these challenges.

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