How to increase global revenues of the nation’s growing gaming sector

Updated on Jul 19, 2022 08:23 PM IST

Self-regulatory bodies for online gaming could simulate realistic environments for gameplay testing based on transparent thresholds to quantify skill and chance

Gaming is no child’s play. It is an industry that has come to exemplify the cutting edge of technology and represents around $200 billion global market, buoyed by digitalisation (AFP) PREMIUM
Gaming is no child’s play. It is an industry that has come to exemplify the cutting edge of technology and represents around $200 billion global market, buoyed by digitalisation (AFP)
ByArvind Gupta and Vivan Sharan

Gaming is no child’s play. It is an industry that has come to exemplify the cutting edge of technology and represents around $200 billion global market, buoyed by digitalisation. It is the largest and most profitable use case for emerging technologies such as Artificial Intelligence (AI); augmented, virtual and extended reality; and even blockchain. However, while India’s gaming industry is growing at a spectacular rate of around 40% and the country has the second highest number of gamers — second only to China — it accounts for only around 1% of global revenues.

There are no quick fixes for scaling any industry, even in the digital world. But, for industries such as gaming, India can learn from its experience in information technology services, where growth was driven by a combination of innovation, policy certainty and access to advanced markets. With the first two ingredients, it would only be a matter of time before Indian gaming companies reach global markets. Imminent free-trade agreements may be an effective additional lever to help local industry go global.

The minister of state for electronics and information technology has spoken several times this year of the Union government’s intent to govern the burgeoning digital market segment, in a bid to balance the interests of millions of gamers, thousands of gaming businesses, society at large, and the State. However, online gaming presents a unique set of governance challenges.

The foremost is to differentiate between games of skill and chance, particularly when player money is involved. Naturally, any government’s duty is to ensure that citizens don’t mistake one for the other. Moreover, Indian courts have regularly reiterated the centrality of this differentiation, to allow games such as poker, rummy, and fantasy sports to operate across states that disallowed them from time to time under gambling laws.

The problem is that even the most “objective” tests of skill and chance are context-dependent. For instance, the well-known critical repetition frequency (CRF) test provides a threshold value of repetitions at which a game becomes predominantly influenced by skill. That is, it is theoretically possible to measure the CRF for any game, and, therefore, to analyse the preponderance of skill over chance.

But consider this: When players spend time on a game, they achieve a higher absolute skill level. This means that if multiple players are spending time, there is an overall convergence in their skill level. Conversely, this can change dramatically with the introduction of new players, who may be at much lower skill levels. Therefore, the expected values from a CRF test are only stable in a static gaming environment, not a constantly evolving one as is par for the course online.

Complex digital market dynamics necessitate a new nimbleness in governance. It is precisely for this reason that the Union government introduced a three-tier governance structure for digital media in 2021, based on self-regulation at the first two tiers and government oversight at the third. While no governance model is flawless, their evolution is natural. And, this framework has provided India’s creative economy with a solid-yet-responsive structure around which to build global prowess. A similar co-regulatory structure is well suited for online gaming.

In fact, the foundation of India’s digital ecosystem is built on the principles of self-regulation. The evidence lies in the growth of the software industry and its self-regulatory charters and bodies, built on principles such as trust, inclusion and innovation. Similarly, self-regulatory bodies for online gaming could simulate realistic environments for gameplay testing based on transparent thresholds to quantify skill and chance. And rigorous application of such AI-driven processes can be overseen by the State, helping align incentives and cement a new form of a public-private partnership for agile governance in the 21st century.

Arvind Gupta is founder, Digital India Foundation, and Vivan Sharan is secretary, Esya Centre The views expressed are personal

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