Rising urban disposable income: With 8-10 per cent economic growth, consumers - especially teens and young adults - are spending more on consumer electronic and entertainment devices. Look at the rapid growth in sales of high end smart phones, LCD TVs, iPods, PCs and laptops. We already see signs of this spending extending to gaming devices like mid range PCs and consoles.

Hunger for entertainment - Indians have a huge appetite – FICCI estimates that the Indian Media & Entertainment market is worth USD 5 billion (Rs 20,000 crore). It’s realistic to see that even if 5 per cent gets diverted to gaming it would be a huge market of USD 250 million (Rs 1,000 crore). In fact, according to the latest NASSCOM report the Indian gaming market will be at a huge USD 425 million in 2010!

Increase in hardware base – With an installed base of around 10 million home PCs and 500,000 consoles, growing at 30-35 per cent per annum, the hardware installed base will double every three years. Thanks to falling prices, an entry level console like the PS2 now costs as little as Rs 7,000 down from Rs 20,000 three years ago. That’s highly affordable for the non-gamer to pick up and play. Even next generation devices like the X360 and PS3, which appeal to the core gamer, have become cheaper. The Nintendo platform could launch in India, and will bring in another option for the, so far, non-gamers. There are also the 2.5 million new home PCs being sold every year. Each one of them is a potential gamer.

Increase in game software sales – As consumers become aware and start to understand more about gaming, many non-gamers who use their PCs and laptops only for email and web browsing, will start buying games. Existing console and PC gamers will buy more games for their hardware, attracted by new games launched simultaneously with global launches, by international publishers like EA. New casual games like Spore and Bloom Blox which appeal to a whole new genre of gamers like women, younger children and older adults will drive usage. With the expansion of modern retail, games will be widely available at arm’s-length from consumer’s homes, in a large number of towns across India. Supporting all this will be a number of exciting marketing events and promotions.

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There are a number of market realities that one needs to factor in, though. One of the biggest issues is that, because of high customs duties and sales taxes, legitimate console hardware and software is almost 40 per cent higher than grey market imports. High prices also encourage piracy. As a result the legal software market is only 20 per cent of the total sales, and the government is losing hundreds of crores in revenue.

By reducing duties and sales taxes the sales of game hardware and software increase, bringing more revenue to the government coffers. This will also allow the development of games based on local content, as developers would recover their investment in a much larger market.

Over time, with improved broadband penetration we see the emergence of online gaming and the convergence of console games with online gaming with downloadable content thorough platforms like Xbox Live and Playstation Network.

All in all, I predict India will be one of the largest markets for PC and console gaming in Asia within five years.

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