Don’t let the sun set on the online gaming sector

Prime Minister Narendra Modi, discussing 5G, vRAN and digital transformation with industry leaders during his current visit to the US, highlighted the Government’s ambition and forward-looking approach to mark the path of a truly tech first, fully connected and digitally empowered India. That Blackstone intends to invest $40 billion in India over the next five years is a testament to the efficacy of that approach and to the progress we are making as a country.

With the second highest number of start-ups in the world and twice as many as the third placed United Kingdom, twice this year, the Prime Minister has called for more home-grown start-ups and better youth innovation. This hunger for innovation and progress is certainly being noticed internationally as investors are looking forward to investing in India across sectors.

One such sector which has stood out with phenomenal growth during the pandemic is online gaming and gamification in education, learning and skilling. Showing 43 per cent CAGR and a consistent booming of game designers, gamers and indie game developers makes this truly the sunrise sector of India.

A favoured choice

The Covid-19 pandemic changed the world as we know it. Online gaming, in particular, became the choice of entertainment for most people as it is interactive, keeps your mind and reflexes agile, offers fair competition and provides the excitement of a real sport as well. This coupled with the affordability of smartphones and access to cheap data saw a hundredfold increase in the number of gamers.

Online gaming grew the fastest in the M&E space and became a sunrise sector for India. A promise of two lakh new jobs and around $4 billion market opportunity in India by 2025.

Akin to the arrival of computers and smartphones, online gaming has seen a mixed response from people. The young and the progressive have been early adopters, while those resistant to change have opposed this trend, blaming the innovation rather than focussing on finding the best solutions for the best results.

Two things have come out of the several court cases, in the Supreme Court and several High Courts. First, not all forms of online gaming are gambling and, second, if it is a game of skill, it is perfectly legal. And there is a clear distinction between the two. The Madras High Court recently opined on the lack of adequate research, distinction of facts from opinion, distinguishing morality from law and upholding article 19 and article 14 where online games of mere skill are concerned.

The Karnataka Government’s decision to ban all forms of online games involving transactions comes at an inopportune time. As a country, we are at the verge of sending mixed signals to investors across the world. Courts across India, including the Supreme Court, have officially recognised games of skill to be distinct from gambling, betting and such nefarious activities.

The Karnataka Police (Amendment) Compliance Act, 2021, as it currently stands, will effectively end up even banning the games found legal by several courts which may or not be the intent of the government. In an effort to prevent gambling, banning all online games with monetary transactions will be throwing the baby out with the bathwater.

Karnataka, being a State known for its progressive ecosystem for start-ups, technology, entrepreneurship and investments, should have led by example and served as a model law for the regulation of the online gaming industry. Instead, the ban will force around 90 gaming companies to shut shop and move. Around 10,000 direct and thousands of indirect jobs will be affected.

Don’t sell the sun to buy a candle

The online gaming industry has the potential to make India a hub for innovation and talent, similar to the software industry in the late 1990s. Gamification, for example, can transform learning, and have applications across industries and online gaming companies will be expected to lead in this field.

However, by cutting off the oxygen in the most crucial phase of growth in the name of putting out the fire, we will end up suffocating the innovators, the entrepreneurs and the investors in one fell swoop. Pegged to reach $3.8 billion by 2025 with over 600 million gamers and many looking to go professional, India truly has a chance to be a global leader and not miss the bus on this tech-first innovation.

The need of the hour is not rejecting innovation and change, rather, it is embracing it in the best possible manner. A central, ubiquitous and progressive policy framework will ensure clarity throughout the country while a light touch regulatory framework will ensure innovation without unnecessary impediments.

With online gaming, we find ourselves in a similar situation. However, over the years, we have learned that it is not the technology or the innovation that is either good or bad. It is the way it is put to use.

The writer is a distinguished public policy professional, and a former member of the United Nations, Internet Governance Forum, MAG.

Steve Liem

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