The Evolution of Indiagames: An Interview with CEO Vishal Gondal

He is not only a hard working executive for the largest games development company in India, but an avid gamer as well. Vishal Gondal, CEO of Indiagames, has found tremendous success over the past two years in the mobile games space. His company, Indiagames, has forged ahead of the competition with numerous titles in development of pc and mobile games worldwide. They have built strategic partnerships with numerous manufacturers and carriers. So, who is Vishal Gondal? How did Indiagames evolve? How was it different from other developers? In this exclusive interview we get the inside scoop from the Indiagames CEO himself.

Vishal Gondal was a child wonder. He started developing algorithms at the age of 14 and founded his first company, FACT Interactive, at the age of 16. Gondal comes from a family of Punjabi entrepreneurs. His grandfather was the owner of a jewelry business and his father owned a cable manufacturing company. It was his exposure and fascination with computers and games that lead young Gondal to begin his operation from his father’s basement.

“I used to play games like any other Indian gamers. I was lucky to get access to the latest hardware, the Sinclair. My dad bought one. Primary reason of buying that was to play games. Sinclair used audio cassettes to play games. I stored and loaded data from cassettes, that’s how early I was in the games business. Sinclair allowed you to program in Basic as well. So Sinclair had the whole Basic programs. So I started learning Basic.

I bought another PC called the Sinclair QL which had 128 KB of RAM. Then I graduated to my first PC, which had two disks, then to XT. I am one of the few guys that could claim to have worked on PCs with all kinds of processing speeds, memories, and hard disk space.”

So what kind of games did Vishal Gondal begin programming? “It was the Space Invaders kind of stuff.”

For Gondal, programming games was a hobby. He split his time between school, sports, and computers. Interestingly enough, Gondal was less interested in studies, dedicating much of his time to volleyball. He played for his school, city, and district. Eventually he even played at the State and National level.

Gondal’s first business involvement was in a software-training institute while in his 10th standard. For two years he taught people everything software related, from the DOS operating system to word processor software packages. Eventually, Gondal decided to switch ventures and follow his passion for doing animation and games.

“I was very interested in doing animation and games because that is what I used to love doing and I got my hands on 3D Studio, which at that time was probably the most advanced 3D software. I started doing 3D graphics and started a company called FACT Interactive, which used to do 3D animation, logo designing, and titles.

The programmer and I always wanted to program those graphics into games. That’s what started the whole experience with games. The first software that we used for programming games was Macromedia Director. When I started creating games the real challenge was, ‘how do we get someone to pay us?’

That was in 1996 or 1997. I found an interesting model where I went to companies like Pepsi and I made a game where you can shoot a Coke can. Pepsi was delighted to have it and they paid me money to buy the game and installed it on every employee’s machine. They ran a contest where you go to your PC and shoot the Coke and win prizes from Pepsi.”

After successfully doing similar products for the likes of Kellogg’s, Colgate, and others, FACT Interactive moved into the online space. Gondal’s team developed India’s first online game, ‘I Love India’. This game was developed during the Kargil War of 1999. Players could shoot at Pakistani intruders. Within a short period of time, ‘I Love India’ had been downloaded 100,000 times, garnering a tremendous amount of press coverage and this game single-handedly put Gondal and his company on the map.

Not long after, executives from the international accounting and consulting firm, Price Waterhouse Coopers, came knocking on Gondal’s door. The inexperienced Gondal was unprepared and tells us an amusing anecdote of the encounter.

“At that time I thought Price Waterhouse Coopers was supplying water or something. They said they were investment bankers. I said that I already had a bank account. These guys said, ‘Just meet us once.’

They came in and they told me all about capital and that they have a good idea for a company that could make money. Of course, initially I didn’t understand anything. In fact even today, lots of people don’t understand venture capitalism in India. What they finally told me is it is capital, which I am not supposed to return back to anyone. It’s like a bank loan, which you don’t return back. I was like, ‘Wow! That makes sense!’ And I can raise as much money as I want to do whatever I want. That actually rang a bell. I started working for them on a business plan. Of course, I didn’t even know what a business plan was. So it’s kind of funny to be leading this very company out of nothing.

In a very short amount of time we went to meet a number of investors. And by the end of 1999 we actually closed our investment round of about $750,000 U.S. dollar (3.25 Crores), which was a lot of money at that time from two Indian VCs (venture capitalists). They finally invested that money in my company in 2000. And that is actually the real big thing because we were just 5 or 6 people at that point of time.”

During this time, Indiagames was formed. Indiagames was India’s first gaming site targeted solely on online games. Unfortunately, this was the era of the dot-com boom and bust. Indiagames was a dot-com site and the bust hit them hard. Gondal had to change the focus of the company and move away from the online realm. Like many other game development studios in India, Indiagames was heavily immersed with work-for-hire development subcontracts for larger western publishers.

Around 2003, Indiagames strategically decided to move into the mobile games space. Indiagames worked closely with mobile phone manufacturer, Nokia. At the time, Nokia was creating new, more powerful camera-enabled handsets. Being early entrants, Indiagames had an advantage over the competition and began receiving good response on the games they released. Indiagames began working with the major carriers, Sprint, Verizon, Vodafone, etc. and received worldwide distribution for their games. However, Gondal began to realize how the services sector of his business was simply not scalable.

“At the same time… Disney, in the U.S., and Sony Pictures started giving business to Indiagames and we had a development team who were developing games on solely a work-for-hire basis. That was starting to give us good revenues but we soon realized that we could keep doing work-for-hire, but that isn’t really the scalable model because there were not sets of trained people in India. And the only way to increase your revenue is by hiring more people and the business could collapse.

In fact, other game development companies in India are seeing a big problem because they are in a services business and they cannot build that business. And, even though, more and more people want to give them work they cannot take that and in return they cannot increase their revenues and their profits because it’s all stuck.

I am actually very proud to tell you that while in 2003, over 80% of our revenue were coming from our services business, today only 0% of our revenue comes from that business. We were able to completely migrate out of services.”

In 2003, Indiagames decided to take the largest gamble it had ever taken. Vishal Gondal understood the importance of brand recognition. Games with the likes of a Superman or Spider-man catch the attention of consumers’ eyes and wallets regardless of the developer behind it. Knowing full well that the Indiagames brand was not a globally recognized name, Indiagames chose to go after the biggest licenses in the world for their games. The potential return could be huge, however, if blundered, it could cost the company its future.

“Through our luck we came across Marvel Comics who, at that point in time, were looking for a publisher for their Spider-man mobile game. And we were pretty lucky at that point of time because we had created fantastic games for Disney and Sony. And we had a very good reputation for quality.
So, Marvel eventually gave us the rights to do that. And thanks to Nokia we had the distribution relationship with all the carriers that mattered. And because we were a combination of a company, which has in-house development and in-house distribution, we were the only company that could deliver the game on a particular date that Marvel wanted us to deliver.

For Marvel, these dates were very critical because Spider-man 2, the movie, was ready for release and the game had to be launched before the movie. So we took the challenge, which was a very big thing for us because, as a company, we were very weak. We had pretty much invested all of the company’s money into this product. We had to give a decent amount of royalties and guarantees to Marvel comics. So it was probably the biggest risk we took and if that project had failed, we would have been nowhere. But as luck would have had it, we were able to create a fantastic product and that product was released in 25 countries in about 16 languages. And it certainly became one of the best selling mobile games at that time (end of 2003).”

A large chunk of games development cost and time is actually in the final phase of development where games are ported onto as few as fifty to well over a hundred handsets. In fact, the porting process can take up 50%, if not more, of development time and cost. Not having to go to outside parties for the development, testing, or porting of games gave Gondal’s company a major leg up on the competition in terms of its products’ time-to-market. And the success of Spider-man 2 skyrocketed Indiagames into mobile games stardom leading to further opportunities.

“And just because of our success with Spiderman other studios began looking at Indiagames in a very positive way. We then went to studios like 20th Century Fox and signed up global rights for brands like Predator, Buffy the Vampire Slayer, the Day after Tomorrow. We went to Universal and signed up Jurassic Park, Mummy, Bruce Lee, and recently, the movie Serenity.”

Indiagames was swelling at such a fast rate that their investors couldn’t handle the growth. So in 2004, Indiagames went searching for a new international partner, looking to expand their global presence.

“So we appointed Ernst & Young as our investment banker to help us. In a few months we were able to line up a number of investors who were interested in investment in Indiagames. After a number of negotiations we selected TOM Online from China.

We had a number of opportunities from Europe and U.S. but we decided to choose China because all the U.S. and Europe companies are looking at India and China as a good market. So ultimately, even if we had to work with an American or European company, there are too many people competing for space in America and Europe. They ultimately have to go back to India and China to do their business.

So we adopted a different approach and went ahead with TOM Online, which is public on NASDAQ and the number one wireless in China, and suddenly Indiagames became a very strong company with probably the strongest Chinese presence anybody could have and thanks to our own presence in India we were very strong here anyway. In fact today, in the wireless gaming business we enjoy almost 65% market share.

When TOM Online came in and acquired our investors, at the valuation, which gave them a return on investment of about 17 times our investors were a very happy lot and I am happy for them. The success of Indiagames was very critical because not many companies in India which started at the seed stage were able to give returns at very high multiples.”

Recently, Indiagames had investments from two more U.S. based companies. Combined, Macromedia Inc., known for its multimedia authoring program, Flash, and Cisco Systems Inc., the leader in IT, have a combined stake of 18.2% in Indiagames. The additional capital has allowed Indiagames to expand into other realms of games development. They are currently delving into online games, 3D games and multiplayer games. The company has also grown to house 270 employees with offices in both the United States and Europe. Their goal is to expand to around500 and 800 employees over the next few years.

Interestingly enough, Indiagames has done all it’s training in-house due to lack of experienced games industry veterans in India. Indiagames focused a large part of their income early on into improving their internal teams. Gondal cannot propound enough about how important it is for game developers to begin training potential talent.

“The Indian game development scene is very poor. Primarily, because all companies are complaining that they don’t have trained people, but no one is trying to train people because it costs money and takes time. If Indiagames had the same approach, it would have not been able to scale. We invested in training and that cost money and time. Companies, who are serious, will ultimately have to start training themselves. The biggest problem has been training. I can tell you that every person who is working here had no prior games background. They all came here and started learning games.”

To further training, all the major industry players, including Indiagames, Dhruva Interactive, and Paradox Studios, are formalizing plans to create India’s first games development association, which has been kept secret until now. When asked about the association, Gondal provided few details; however, he emphasized the need for such an organization.

“The first thing we actually have to do is get all of the gaming companies together, have workshops, conferences, etc. To give you a sense of something, the number of people that are directly involved in the gaming business, are according to our estimates, not more than five to six hundred.”

Gondal is proud that his company’s accomplishment are instilling confidence in other Indian games development houses. Indiagames is now working towards the day when India will be globally recognized as a powerhouse for games development.

“We are now working hard to establish India as the premiere base for games development because lots of companies who come to India are scared on how they will scale their businesses. They know India will be a big base for games development like it is for IBM in software. It’s a no-brainer that India can do it. But, because foreign publishers haven’t seen any success story is why they are hesitant since most Indian games development companies are not able to grow beyond 60 people.

If you look at EA, Ubisoft, THQ, they are all looking for centers where there is evidence where they can scale operations. Indiagames has been able to demonstrate that very successfully. The second thing we have been able to do is prove everyone wrong that India is just a place for sweatshops and doing services. We are now completely mainstream with all international players. We are completely on quality. Our games get rated pretty much like everyone else on IGN.com and Gamespot.com.

We have now become the role model for game development companies in India. And I am glad to see many more companies are setting up and saying ‘If Indiagames can do it so can we.’ We are actually happy to encourage more of these companies because it helps the gaming industry grow in the country. We want to encourage more media talk about and hype about games because it would get more companies to start and more people to train. And in short, grow the business all together, which would benefit everyone of us.

Marketing and awareness of the product is a problem actually. And I’m glad that a site like GamersIndia.com is coming up. We are looking forward to companies coming up similar to Gamespot.com and IGN.com. The only way consumers are currently learning about new products is by word of mouth.”

So why isn’t India a games development powerhouse yet? Why aren’t Indian developers developing blockbuster titles for PC and console? Gondal explains that the industry just isn’t there yet. It barely even exists. The mobile space is where games are currently thriving, yet only 6% of India’s population even has a mobile phone. And an even smaller percentage of that 6% actually have phones that can play the current batch of games available. Of course that number is growing at a tremendous rate. Over 2 million new mobile subscribers start services each month. Yet, on the PC and Console front, there is little to no real consumer install-base.

“There is no local market in India. Let’s give you an example. The PC penetration is itself very low since most homes don’t have PCs. PCs are normally at the office and none of them are high end. Even among the people who play games in India 90% of them use pirated stuff because the games are too expensive.

To give you an idea, an average pc game sells at about Rs.1200. A mobile game is Rs.50-Rs.150. This is about what you would spend when going to a movie theater. Whereas, in the U.S. it costs consumers $5-$20 dollars (Rs.225-Rs.900) if you go to a theater and buy a ticket and popcorn etc. So the problem really is the parity is not there. No average person can afford to spend $27 (Rs.1200) for a game, but everyone can spend $1-$2 (Rs.45-Rs.90) for sure.

The same problem with PC games being far too expensive, consoles are even bigger because you have to buy the Sony Playstation, which itself, is very expensive. While it is subsidized in the U.S., in India they are not subsidizing it and saying buy it at Rs.500. In India, the subsidized price is still way too expensive and it doesn’t work. That’s the reason why PC or console can never be big.”

When asked what Gondal would consider as gaming gone mainstream in India his answer is quick and decisive.

“I think Mobile games would pretty much bring gaming into the mainstream. I would say that when we start seeing 5 to 10 million downloads a month. Today we are at 600,000. We need to grow at least ten times and the good thing is that it’s quite possible because right now the mobile penetration itself is so low, we just have 65 million phones compared to 300 million in China.

The second thing is that, a lot of mobile phones used in India are black and white handsets, or handsets that do not have GPRS settings. So, currently only 1 percent of the base is actually using games. However, this will change as people get more advanced phones.

It’s a matter of time when there will be 65 million consoles. I mean, why should I call these phones? These could eventually be mini-handheld consoles with their ability to download games that are inexpensive. So, I actually see that happening and I have already said openly that gaming will certainly surpass ring tones, and who knows, it can even surpass our Bollywood box office collection.”

Video games still have a stigma in India as being time wasters. Gondal believes the solution to the cultural problem is developing localized content catered specifically to Indians. However, it can prove difficult at times because there is very little market research available for key demographics in this newly developing industry, forcing game developers to play the trial-and-error game.

“There will be some games that will work which are international but a lot of it has to be Indian and has to made to Indian tastes. The best example I can give is Indian television. All the Star TVs and everybody came to India and tried all kinds of content but what really works are the serials and the songs and dances. While there is a market for international products, ultimately our people would like to see what is really local.”

Indiagames produces numerous licensed games exclusive to the Indian market, typically cricket based games or licenses of popular Bollywood films. Gondal informs that all the titles that Indiagames produces for international markets are released in India as well, no matter how expensive the license. Gondal explains that they have the worldwide rights to all of their licenses and the IP (Intellectual Property) owners understand that each market will carry its own pricing structure. For example, in the United States, a mobile game may retail for $6 (Rs.270), whereas the same title will be priced at between Rs.50 and Rs.150 ($1-$3) in India.

Licensed IP game titles versus original IP game titles is one of those hot topics gamers are talking about right now. Many publishers are quick to point out how risky it is to create original IP. Licensed IP games are easy to spot and consumers are more likely to find familiarity with names and faces they see everywhere. The mobile space has its own set of problems. The “deck,” which is the list of game offerings a carrier is providing consumers on a particular handset, usually does not have much detail on each game. Typically, the consumer will see a text listing of titles and perhaps a brief description of the game play or plot. Beyond this, there is no packaging to look at, no screen shots, no reviews! Also, the carrier is less likely to carry a title, on its very selective list, which is unknown and unproven. So, it becomes more risky to develop original IP titles because carriers and consumer may not have faith in a newly branded product. Gondal while confirming this elaborates why Indiagames seeks a majority of licensed IP, while still offering a few original IP games in the mix.

“Creating original IPs is like pretty much hitting the lottery. After a thousand games comes a Lara Croft. I can tell you that there are a number of people trying to create another one, but ultimately have failed. So the strategy we have adopted is that, we definitely have our own titles along with the, so called, licensed titles. Licensed titles gave us liquidity and the distribution and now that we have it, along with that we are going to push our own IP products. Who knows, we may be able to develop the next Tetris.”

Many mobile gamers around the world are very excited with the Indiagames sponsored World Cyber Games Competition for mobile phones. Vishal Gondal elaborated on the details of this much-anticipated event.

“We have the global rights to this [World Cyber Games Competition for mobile phones]. We are organizing WCG in 12 countries. Next year we will be going even further. It will be a simple thing. There will be four games. Each country will have its own champions and then they will go and play on the global scale.

We also organize the Indian Championship of World Cyber Games. This is the 5th year and we continue to see big growth coming on the PC side. And now for the first time with the mobile side, we are very excited.”

Vishal Gondal also has a few words for all of you wannabe games enthusiasts who wish to get into the games development scene but don’t know how.

“You know the simplest thing they can do is that today QA (Quality Assurance) is really a good place. In fact, a lot of people that join our QA teams eventually get into graphics and other area. Today they need to talk to companies like Dhruva, Indiagames, etc. if they have openings and look at that. Unfortunately, there are no dedicated schools that teach people gaming but it looks like Indiagames and other companies like us are going to be fixing that problem too, especially to do training. But, currently, the only serious option people would have is to come in and be interviewed at place like us and pass all of our tests. At least at Indiagames, we take people at the trainee levels.”

So what is Indiagames going to be producing in the near future? They are currently in development of a massively online title called Ashoka that is going to be on PC and Console. Ashoka is based on the life of the emperor who conquered most of India some 2500 years ago. Indiagames will also be a heavy supporter of the 3G services for mobile phones. They are already underway developing a number of titles.

“We are going to adopt 3G in a big way. We will be seeing a lot of connected games, a lot of 3D games. We will continue to get bigger and better licenses. We will continue to grow as a successful publisher.

3G in India is a few years away but we already working in Europe and U.S. on 3G networks. I think next year and the year after that is going to be extremely critical for connected gaming because 3G networks can give you extremely good speeds and low latency which will be very good for network gaming. Can you imagine what MMORPGs (Massively Multiplayer Online Role Playing Games) are like? I think Wireless MMORPGS are going to be the next killer apps.”

Vishal Gondal concludes the interview with comments on what he thinks is necessary for the games industry to grow and thrive.

“I would say four things. One is localization. It has to be local. You can’t keep giving people Sex in the City, Baywatch, and all of that. You need to create Indian content. The second thing is connectivity. Why do you think SMS is really blown out of proportion? People just love to connect. It’s like instant messaging. The third thing is quality. There are many shitty games in India. Consumers are experiencing games of this form of entertainment for the first time. And if they get a bad experience, they can pretty much never come back. Lastly, is price point.”

Vishal Gondal continues to expand his business. But, when there are moments of idleness, he always has his handy Sony Playstation Portable available. What games is the head of Indiagames playing? Metal Gear Acid and Mercury are his current favorites. However, as a full-time executive, there is always an underlying reason for even playing games. Gondal is always, “getting ideas for what other people are doing.” One game that received rave reviews by the press for its psychedelic puzzler elements, Lumines, does not sit well with the CEO, “I found Lumines too distracting! Too many things on the screen. ” Ever the executive, ever the critic, ever the avid gamer.

Kyn Chaturvedi