In today's Finshots we talk about Vi's tryst with gaming

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The Story

It’s no secret that Vi (formerly Vodafone Idea) has been struggling. It’s drowning in debt, it’s losing subscribers across the board. And in January, the company had to give up sizeable equity to the Indian government. It was a bailout of sorts just to keep the company alive.

And now, there’s only one way out for Vi. It needs to make money.

So it’s trying something radical — gaming.

On Monday, Vi announced that it was setting up Vi Games in partnership with gaming company Nazara Technologies. For the average Vi user, their proposition is simple. You’ll soon be able to play over 250 games for free. Or you could pay a subscription fee and get access to the more premium games too. The idea here is this— if Vi gets a decent chunk of the company’s 247 million users to pay up ₹26 monthly, it gets to pocket a little extra change.

But Vi isn’t exactly the first telco to have this brainwave in India. Last year, Reliance Jio announced a mega tie-up with Japanese gaming giant Sega to bring Sonic the Hedgehog and Streets of Rage to its network. You remember Sonic, don’t you? It’s the blue spiky-haired character that features in a game much like Super Mario. So if anything, Vi might be a little late to the telco-gaming party.

But why are telecom companies getting into the gaming business all of a sudden?

Well, over the years, telecom operators have spent boatloads of money to set up the infrastructure. But their margins are shrinking and revenue is stagnating. Revenue from SMS has all but disappeared. Voice calls are being replaced with Internet calls on apps like WhatsApp. Soon, they’ll only have data to hold on to. But alas, India has one of the lowest rates in the world.

So now they need to find new avenues to make money. And what better way to do that than by piggybacking on one of the fastest-growing sectors — gaming! India holds the crown for being the fastest growing gaming market in Asia. And annual revenues are expected to jump from $534 million in 2021 to $5 billion by 2025. Of course, it’s all happening on mobile phones. Out of the 560 million internet users India boasts right now, mobile users comprise 85%. And they’re spending 4 hours on average on gaming.

People are hooked.

So you can see why everyone is trying to get that extra mindshare by offering games on their platform.

But this relationship between telcos and the gaming industry isn’t something new. In fact, it’s a throwback to the past. Remember when telcos had something called “Value Added Service” (VAS)? They used to offer caller tunes, astrology predictions, cricket scores, and a bunch of other stuff for a fee. Well, some of the “other stuff” included games! And Nazara, in its earlier avatar, actually had a relationship that began with Vi’s rival Airtel. It courted Airtel and got the telco to bundle some of its games for a fee. For Airtel, it was a great proposition because of the whopping 40% margins it was expected to make.

But then Reliance Jio came along in 2016. And its free data plans decimated the VAS business. Now you could quickly Google the latest astrology forecast and not depend on your telco. So VAS went through quite a lull.

But the exponential rise in gaming could be the hook that telcos need to make VAS cool again.

So, will the revival of gaming-as-a-service work?

Well, Vi could take some heart from the success of its peer in southeast Asia. Indonesia’s Telkomsel caught the gaming bug early and launched the Dunia Games web portal in 2013. At the time it allowed customers to download games and added the extra charge directly to the phone bill. Then in 2017, Telkomsel partnered with global sensation PUBG and offered special in-game offers. But it was exclusively available only to those who’d subscribed for Telkomsel’s special games data package. And finally, it launched its own first-person shooter game, Shellfire in 2018. Put the hard work of 6 years together and by 2019, Telkomsel had captured a staggering 22% market share of Indonesia’s gaming industry!!!

But hold your horses. While Vi might be hoping to replicate some of that success, there’s a stark difference between the two. Telkomsel was already the largest telco in Southeast Asia and its gaming foray just cemented its spot further. Vi on the other hand is starting from the bottom and it’s facing an uphill battle.

For now, we’ll just have to wait and watch if a throwback to the past with gaming-as-a-service can change Vi’s fortunes.

Until then…

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