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Game Studios in India Need to Look Beyond Outsourcing, Says Ian Livingstone

Game Studios in India Need to Look Beyond Outsourcing, Says Ian Livingstone

By Gopal Sathe | Updated: 15 October 2014 12:03 IST

Ian Livingstone is perhaps best known as the author of the Fighting Fantasy gamebooks, and one of the founders of Games Workshop - the company behind some of the most popular tabletop games. Livingstone is also closely associated with Eidos - he was a board member of the videogame company, and was the only one retained when Eidos was acquired by Square Enix.

You might not recognise his name, but you have probably heard of games like Tomb Raider, Hitman, Deus Ex, and Thief - all games released by Eidos.

Livingstone was in India in association with the British Council to talk about the games industry in conferences and summits. We got a chance to meet him after one of his talks, to sit down and discuss the changing face of game development and his thoughts on the gaming industry in India.

On his fifth visit to India, Livingstone's trying to get people to recognise the scope for growth and potential for investment in the country's gaming industry. He believes the industry is ready to take the next step, with local players getting ready to change gears into building their own IP.

"[I have] met a lot of studios - most recently Dhruva, a large studio in Bangalore - and historically, a lot of studios here have relied on work for hire opportunities," said Livingstone. "They've been an outsourcing centre for Western publishers creating art assets and animation, but not doing the full production."

"I think that their time has come now [and] Dhruva and a number of other game companies in India [have started to] create their own concepts," he continued. "They are moving from less risky work for hire business to a more risky IP generating model, which is ultimately the best way to go because the value you create from owning your own IP is far greater than the revenue you get from being a work for hire studio."

The catch is risk. Indian studios have been working piecemeal, making the rear view mirror and side panels of a car for games, and animating the characters for others, which means that there is a fixed income to be made for each game they work on, but on the other hand, there's a fixed income for each game they work on.

Even though the video game industry as a whole is making huge amounts of money (a report from June by research firm DFC Intelligence says the industry could reach revenues of $100 billion by 2018) even companies that deliver hits can easily go bankrupt. That's easy to see when you look at this list of game studios which closed during the last console generation.

Livingstone acknowledged this but pointed out that at this stage the Indian industry is still small enough that the studios are only as good as their last project, which in itself is a fair amount of risk.

"Perhaps as a mitigating risk you can have feet in both camps where you are funding the basic studio through work for hire work, and then you retain profits to build up a portfolio for other intellectual property," said Livingstone. "[developers can] find global markets because you are able to do that through the App Store or through Android, there are no barriers to entry now. The traditional gatekeepers to distribution are no longer there in the digital world. You don't have to build physical media, building optical discs, incurring cost of manufacture or distribution costs."

For this to work however, Livingstone believes that the government in India needs to take a more active interest in promoting the industry, something he has lobbied for in the UK as well.

"The government has to do a lot to support the industry in India," he said. "There are my 5 Ps - Perception, (intellectual) Property, Pipes (high speed Internet access), Pounds (access to finance) and People (a skilled workforce)."

Some of these, such as improved Internet access and computer literacy for the masses (which should also lead to a larger pool of people for the industry to draw on) are in theory at least, on the roadmap for India. But speaking as an outsider, Livingstone says that he has not seen much change from the government.

"I don't think that the government in India has seen the value, beyond cultural, of creativity," said Livingstone. They are yet to recognise the economic and social impact of creative industries and games in particular. These are powerful industries that create fantastic value and as the world becomes more digital, they [government] will begin to see the value."

More government recognition will spur greater investment he believes, and he believes that this is the time to really focus on computer education - a cause that he has been lobbying for in the UK as well, to "turn children from consumers to creators."

Despite his history in the console business, Livingstone is associated with mobile games now, and this is an industry he believes has great potential in countries like India as well. Livingstone is also associated with Plunder Pirates, a new iOS game which was released with iOS 8, using Apple's new gaming technology called Metal.

"We made the game with a very small team, and it had 3.5 million downloads in 10 days," said Livingstone. "Small teams can do big things now. This is an extraordinary opportunity for casual games creators to reach fantastic new audiences. There are something like 85 million daily active users for Candy Crush, for example [Editor: King's IPO states that there are 128 million]. Clash of Clans is generating over a million and a half dollars a day in In-App Purchases."

"There is an extraordinary arc of opportunities now, from the graphically intense cinematic Hollywood style games like Grand Theft Auto, Destiny and Tomb Raider," he continued, "which cost in the 20s, 30s, and sometimes 100s of millions of dollars to produce, down to the small one or two person micro-studio generating lots of games, serving them, these games on the app stores, and seeing which have traction."

The established games industry has matured to the point where innovation is very difficult on consoles, and is led by technology instead. Mobile on the other hand is still evolving, and makes it possible for creators to focus on what he calls the three most important pillars of making a game: "gameplay, gameplay, gameplay."

"There's an explosion of content on the app store and it's allowed new ways of playing, new ways of finding the audiences, new gameplay," said Livingstone. "[Big hits like Angry Birds] have all been very original ideas. You can iterate and experiment very easily at a pretty low cost on mobile, while you can't do that on console. So that's allowed that sort of innovation."

And it's exactly this period of change that he thinks Indian companies should be looking at as well. "The games industry is going through constant transition and the business model is completely changing to games as a service," said Livingstone. "I think there is an opportunity for new independent developers to do well and find their own market, which they couldn't have done in the before."

But aside from gameplay, designers today need to learn about managing business models as well. The App Store has also changed the way people consume games, and when Livingstone talks about games as a service, he's essentially making a case for In-App Purchases.

"The perception of value on the App Store has clearly been eroded compared to console, and that's why the business model has sort of changed from the premium model to a freemium model," said Livingstone. "And 95 percent of the people playing don't pay, only 5 percent who are impatient or want to pay to win do. The rest are effectively marketers of the game."

(Also see: In Defence of Games With In-App Purchases)

But he recognises the problems with the model as well.

"I had some negativity because some games made it almost impossible for players to advance without spending money," he said. "I think that goes against the concept of free to play."

Livingstone brings up the Clash of Clans again, this time as an example of how to integrate business and gameplay, while maintaining the balance.

"I think that a good example that worked successfully is Clash of Clans," said Livingstone. "Over 95% of the people who play Clash of Clans are happy to grind through the process of levelling up their defences and weapons and they're happy to do that. They're attacked and they don't care, they just wait for tomorrow for their cannon to be upgraded."

"But the five people who want to be leaders and control the clans are desperate to spend their money, and that's been successful for Supercell and they've optimised their monetisation," he said. This process led to daily earnings of Supercell in millions, but the process of iteration and innovation that made it happen in the first place is one Livingstone believes needs to happen first in India for the games industry to go beyond just outsourced work.

Whether the game developers are able to raise support from investors and the government to be able to take the risks Livingstone mentioned is really the million dollar question.

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