Payal Aher Interview
December 16, 2021
James
Thanks so much for the time Payal, I really appreciate it. I'm glad that we can make this time zone power play from the Pacific to India work and excited to hear your thoughts about the Indian games industry and Telcos, it's a pretty new world coming from a Canadian perspective and a lot larger in a lot of ways than Canada. Maybe a great place to start is an introduction about yourself and your professional experience.
Payal
Yeah, thanks for having me and for sharing this interview. I'm very glad to speak about the Indian gaming industry.
My name is Payal Aher, I have been working with the gaming industry for six to seven years, I've been associated directly with the Telcos in India, and I’ve seen a massive growth in this industry since I started working with them. It's been a great journey in India of seeing the gaming industry scaling up and it's good to know that a lot of new investments are coming up in India and the user base is really growing and we are seeing potential startups coming up into the gaming industry. The users are increasing. We have very good players, very good minds who are creating very good games. So, we are excited to speak about it.
James
For sure. More broadly, India, as a country has just been economically booming, and in so many different ways, rising middle class, smartphone adoption, there's a lot of sort tailwinds, rather that are pushing India forward. But gaming specifically has really done well. It's even outpaced growth in video consumption and a lot of other things like e-commerce. What are you think are some of the forces that make India as a gaming market grow so fast in recent years?
Payal
The first one would be, we have the second largest gaming market, and I'll tell you why. It is because most of our population are below 45 years of age. So, we have a lot of young people who are mostly interested in gaming at an early age. Gaming was a luxury, it is still a luxury for many people, due to accessibility to a lot of platforms. Now, a lot of players are interested, we are seeing a boom. We see a lot of people using consuming games, there's consumption happening on a lot of odd platforms and apps coming up than usual and people are consuming it. So, this has made a rise in gaming. So, if you can now see unusual gaming platforms like our telco, Jio, offering it as a subscription model where you can download premium games.
It’s important for customers to access gaming, there are a lot of people who can’t game because they don't have good smartphones. They do not have the capability or the hardware to adapt to the gaming platforms. So, first, that was one of the key markets.
But then after more products we became an OEM and launched lower end phones, making it available to a broader audience, people are able to buy the smartphones and they were accessible to gaming Jio up with a strategy, to make this platform accessible. They offer HTML5 games on those handsets, for those not able to buy a smartphone. We were able to engage them with games even if it was a cheaper version, it doesn't matter which engine they work on, they want to play games in their free time or their children want to play game.
Now currently, they have 50 million user base out there for the cheapest phone - the cheapest phone in the world called the Jiophone. We are also offering a lot of gaming on that platform and then then of course there are subscription models on all the smartphones.
So, what Jio did is they gave a lot of internet services for free in their initial state when they launched it so people could build a habit using the internet and so that they were able to afford gaming services like subscription services or play HTML5 games, or of course how to use Google which was one of the very important factors which made the internet accessible and scalable.
Jio has an investment from Facebook and Google to scale up these gaming markets - they are generating their own platforms, or doing some kind of partnership, which is escalating the industry right now. So, the point was to make each and every audience from the lower middle class to upper middle class to high end classes to have accessibility to this platform so they can play games.
So, this was the idea and that started the boom in the industry. Since then, people are consuming games and now people’s mindsets are changing towards gaming.
In India, people do not buy games or do not purchase it, because they are afraid of giving their credit cards to untrusted companies. So, they believe in an ad-supported model. They're open to see the ads and not pay for the games.
This led to a boom in the ad network industry as well, they started looking into gaming industry in different way as a money-making platform. This is why the Telco’s also have played a major role doing partnership with Airtel. This huge investment from different countries has given a potential to start ups in India, to make their own Android games, their own PC games, all these platforms have grown thanks accessibility playing a major role in booming the Indian gaming industry.
James
Yes, there have been a ton of forces there. There are 10, different things moving in the right direction, because you've got this really developing ecosystem where you're engaging gamers across the value chain from something as elementary as a Jiophone, HTML5 games for Low ARPU customers. I guess ideally, Jio looks to graduate those customers up the value chain to higher ARPU, higher margin handsets like dedicated smartphones?
Then you have Google and Facebook on the fringes putting capital into this, and probably pushing their “next billion users” initiative, which is big, not only in India, but in a lot of rural Southeast Asia, getting people into the Android ecosystem.
Then, of course, your last point, there's this push the Indian Gaming markets maturing a bit and there's a desire to stand up domestic production, domestic publishing.
Payal
We had 300 million users, which has risen to 500 million users. So, many people are consuming gaming and looking at it very differently. The accessibility and platforms we do currently are focusing are bringing devices plus platforms to the masses. Similarly, other platforms are also coming up with this approach such as Tata Sky, DTH, Airtel. If these things (accessibility and payment faith) are solved, you can tap the Indian market, you can have users playing your game on the platform.
James
To expand on your earlier point, the ad model seems to be a pretty great way of doing things. Where as in-app monetization and app payments are still a bit held back because of the lack of institutional faith that the Indian consumer has in payment processing. Even for established companies like Google or Apple. Is there a hesitancy from Indian gamers to hand over credit card information?
Payal
Yes, it's a bit of an issue I would say in any store and people do not believe in giving their credit card - it would be easier to use wallet money. So, what Jio did was, they introduced their own payment platform, they introduced their own wallets so people might be comfortable in putting some money in that wallet and then it would be deducted. So, this is one of the things that a lot of third-party wallets like Paytm, try to focus on – penetrating the gaming market. Then they have been continuously partnering up with a lot of gaming platforms making sure people could deposit the money in the wallet and they can purchase it but of course, Indian in-game spenders are hardcore gamers. They are young and they know how to use credit cards or maybe even how to use their parents credit card!
So, there is potential of course, but the thing is, in Indian culture, we do still have some issues with paying upfront for things, more like a trial system.
We would like to play it and then if we like it, we’ll buy. So, I'll tell you one thing. Jio recently launched a premium game services for people to download premium games, and we’re seeing a lot of transactions from the age group of 14 to 20 years and below. So, these games are really high-end games, we are offering it on TV on the DTS services in certain boxes. Why? Because in India, people are not able to afford Xbox, there is only 10% of the market who could afford and Xbox or PS4 are similar services. So, we wanted to have a console services for those people who want to play such games with a hard controller or a soft controller.
So, currently, Jio has their own soft controller, which is like a substitute of a hard controller, it's a gaming app, and you can use it as a hard controller which has an XY buttons and then you can connect it to your TV and you can play arcade games, casual games etc. You can also download Android games, and people who can afford the controller or who have it in their home already, they can also connect their hard controller, to the Bluetooth and they can access their service.
So, in India, the cost is only to buy a hard controller, of course, the game also is from purchase point. But once you pay and around what it is, it's very affordable, it's starts around $10 USD to $15 USD and you can just play that again and again
James
Interesting. So, I think one thing that I'm picking up from these all these points around Jio, India's largest Telco, is that they have the monthly active users scale to justify building out entire platforms to overcome market obstacles. The fact that you can just create a payment platform just to accommodate the lack of faith in payment platforms, or the fact that let's just create a gaming platform on TV, because there's so many customers that would use it - I think that's a very uniquely Indian thing. Maybe you might see that in China, but in a place like Canada, for example, where a telco might have the equivalent of 5% of Jio’s customer base. It's pretty crazy.
Maybe you can shed some light on the economics of this. The business case surrounding your eSports organization, for example, I think the Jio eSports program is really interesting, it allows people to sign up for amateur eSports competitions, right, moving away from this professional idea that you have to be a professional to play sports and democratizing it is a really cool idea. I really like it. Tell me more.
Payal
Accessibility is the most important thing in India. Jio launched three to four years back on their Android set top box the console services which allow it to be used to play games as well as watch channels on your TV, as you can watch OTT. But accessibility is a major issue. For example, why are people not paying for these services? So, the Jio wallet comes into the place and if users aren’t using it, maybe we will offer a subscription service. But in what cases? Which games? We were playing with the pricing strategy in India. So, we came up with an HTML5 games. We knew in the Indian market that people are not going to pay for games without trust.
So, they come up with an ads model, they like to see ads in between and you can play it, that's one of the few things people who are comfortable with in games monetization.
We launched a game subscription service where you can have a bundle of games - 150 rupees and you can access up to 200 games. This was an experiment to see what people were comfortable paying for. Well, if you're not comfortable, we introduced payment wallets. If you're not comfortable buying an Xbox, we're offering a cheaper version of console services, if you're not able to convince your parents to buy a hard controller by yourself, you're given an app like a smart controller, and then you can play games.
So, we are solving all these accessibility and product issues which are unique to India. So, I think the industry is scaling up in terms of user base and in terms of game developers, they're seeing new a platform which they can launch it on other than the Google Play Store or any other Facebook or service or any other platform, they have seen other third-party app store they are making games for.
James
Got it! So, between something like the Jiophone on your entry level, consumer base, all the way up to gaming on set, top box, and premium pricing, it sounds like the strategy is all about having really good customer lifetime value, engaging customers, developing a low churn relationship as they graduate up the value chain, and increasingly have a higher monthly recurring bills.
This seem very capital intensive, very high cost upfront and the accessibility business cases, although a very noble one - bringing technology to the masses, at the end of the day, from a financial perspective is the business case based on churn reduction loyalty, and long customer relationship lifetime value?
Payal
Regarding – financials, the people from the beginning did not see gaming as a potential market. So, they were not investing heavily into the market. There were a lot of up and coming platforms that had to be shut down after a couple of years, because lack of investment or lack. But now we are seeing some good potential investments since the pandemic. It's a good opportunity, people are looking into it, and a lot of foreign investors are investing it in India heavily to scale this up to tap this market to tap users, the massive huge user base we have in India, and how to monetize these users and how to give them a better platform to play, how to give them better servers, how to give them better devices etc.
Even from the smartphone perspective, a lot of phones are available with good hardware at a cheap price. For example, PUBG can’t be played on any phone, you have to have a high-end device for that. So, in the multiplayer sense, you need a high-end phone but if you see currently in the Indian market, there are a lot of smartphones at very cheap prices.
Payal
Currently, we have a lot of multiplayer games, real money-making games with strong social media integration. In India, people are very socially active. The massive hit game in India currently is Ludo. You can play with your friends and was the number one game in India, because social multiplayer aspects.
People are not able to connect but they were able to play with their friends because it’s not like they can get together and play outside. So, it's like giving a massive consumer division, you can see a lot of games with real money making or they're having a great games you can play with your friends. You can put some money. You can get some money back. That's how the Indian mindset is, you should play, and you should get some money back which you are putting on it. So, yes, that's the thing we have seen in rise in multiplayer games.
These factors are very important than what kind of games are actually booming in the Indian market. If you go with Telcos, they have a lot of hyper casual games. If you go with consoles, there are a lot of good Android games with soft or hard controller. Finally if you look at smartphones, you know in smartphone, there are real money-making games, social multiplayer games etc.
James
Yeah, certainly. So when we zoom out globally about gaming and Telcos, it's this tough nut to crack. All these Telcos are seeing incredible numbers. Look at India, for example, and they go, “wow, hundreds of millions of users and gaming is really high ARPU segment”. How can we “get into gaming” - a very broad question.
Payal, when you look at the world, and you see Telcos trying to figure out how to get into it, are there any things that they're missing, anything holding Telcos back or things that they're may be overlooking when it comes to effectively entering the gaming market as a Telco?
Payal
I'll speak about India and what I've seen with their Telcos. They're trying their best to increase user content consumption. They're bringing gaming into their websites, they're bringing gaming into TVs, they're bringing gaming onto the smartphone or wherever spaces are available. That's the question of investing heavily, getting investments there. They are doing their best in India to make this platform accessible for all Telcos. I would say they would really focus on how the users can benefit from that, how it is easily accessible, and how it's gaming is more like a habit. How you make customers trust your payment gateway is the biggest hurdle.
James
Yeah, there's so much there.
Payal
There's one more thing that’s having good quality content as well, people need to focus on good quality content.
James
Yeah, with video in general, like the catalogue of any OTT service, whether that be video, or something like Xbox games or anything for that matter, it's huge. Last question and then I'll let you go. In Telcos at large, gaming in India, where do you see it going? It's 2021 and we are heading to 2022 and COVID, still a bit of a question mark around the world. But when you think of the future of India gaming, and the way Jio might interface with it, where does your mind go? Anything in the future that you're excited about?
Payal
I would say, the party is just starting. People see a large market, people really work for a couple of years, the foreign companies, they come and go, that's just to wait and watch us doing a lot of big things, even the other gaming partners and the other gaming studios, the platforms, and they're doing a lot of good partnerships. They are coming into eSports, they're coming into Cloud, Jio is coming into Cloud, and Jio is coming into eSports. They're being focused on users and game developers.
We've been focused on users and make things fun and accessible to them. It's also about the content creators as well. So, they should be able to monetize so that they can support us with good quality content. So, they have been continuously focused on those things. Of course, there are a lot of studios and platforms and a lot of other foreign companies coming into India, to leverage the audience, to leverage the game developers who are creating good content, so they can create a good opportunity for both of them, it's going to be a huge thing by 2025.
Of course, users are going to rise, the opportunity is going to be big, the platforms are going to be big, - it’s just a matter of time. So, currently, if you see from 2019, it was only just 200 million users, and it has risen up to 500 million users.
James
Only a few 200 million? (Laughing)
Payal
We want people from around the world to see India as a potential market and we want them to make their content available to the Telcos, we are creating very huge things in India. But as we scale up, it also takes time for habits to change around in game payments and subscription payments. But when they do - It's going to be massive.
It's going to be very different from now what we talk. If you have this interview recorded, and then we see it again in the future, it's going to be very different in terms of users, in terms of content, in terms of platforms. We are going to be the largest market in the future from what I see down the line.
James
I think it's an interesting take and I think a lot of data would support that. India is doing so well. I think the world is really watching it excitedly. Payal, I think that's all I have and thank you so much for the time and the thoughts.
I'll be keenly watching Jio and what the rest of what India's up to so thanks so much for your thoughts on the Telco and in the gaming scene. I really appreciate it.
Payal
Yeah, thank you, James, for having me and having this conversation. Thank you so much!