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'We are talking with global companies to set up a studio to develop content' : Rohit Sharma- Zapak Digital Entertainment COO

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With a war chest of $100 million (Rs 4 billion), Reliance Entertainment's online gaming portal Zapak is looking to invest in infrastructure and expand even beyond the frontiers of India. The portal is going to launch in China, Pakistan and the UAE.

In an interview with Indiantelevision.com's Ashwin Pinto, Zapak Digital Entertainment COO Rohit Sharma talks about the global plans of the gaming portal and the steps that are being taken to reach there.

Excerpts:

When George Soros picked up a 3 per cent stake in Reliance Entertainment for $100 million, how big was Zapak as a valuation attraction?

It was definitely a point of attraction as it is one of our oldest businesses. Since Zapak is one of the most successful internet companies in India, it gives value to investors. However, I cannot talk about valuations. The investment has helped us understand what our value is and how we can scale it up.

How much is Zapak going to invest and what is the breakeven period?

Since gaming is still at a nascent stage in this country, the breakeven will not happen before four to five years. We are investing $100 million over the next five years. In terms of operational expenditure, we have to invest in manpower, bandwidth and marketing activities. In terms of capital expenditure, we are investing in infrastructure as well as technology and content. Our costs will go up each year as the business grows.

What are the lines of synergy Zapak is drawing with the other verticals of Reliance Entertainment?

We have the movie business with Adlabs. A lot of content alliancing will happen here as we acquire content, produce and co-produce it. Zapak will also develop content based on these movies.

There are strong synergies between Big Flicks and Zapak as both are located in the internet space. Bigadda is our social networking site and the audience is similar. So we do a lot of cross-promotional activities. And with our FM radio business, we use it as an advertising medium.

Thus, if we take the gaming piece in the entertainment space, there is a lot of content syndication, retail syndication and advertising opportunities that are possible.

What are the trends being seen in online gaming in India?

Zapak is setting the trends here as there is no other online gaming player in India per se. We have a 70-75 per cent market share in terms of revenues and the number of users which is four million right now. We are also attracting good advertising and so we are witnessing an upwards trend.

The learning for us is that the user wants compelling content. Therefore, publishers/developers like us need to invest in the right kind of content. The content, whether global or local, has to be high-end in terms of graphics, artwork, game play and design.

'The kids genre has done well for us. Zapak Girls also does well as do our action oriented games. But cricket is our biggest property'

Who comprises your TG?

Surprisingly consumers have an equal ratio between the top cities and B, C towns and cities. Males in the age group 12-25 are the core TG. Having said that, however, youngsters below 12 are increasingly playing on Zapak. They are becoming stickier towards gaming.

How does the market size for online games compare with mobile gaming?

If you look at developed gaming markets like China, Korea and Vietnam, online gaming has surpassed mobile gaming. In countries that have a strong PC and online penetration, online gaming offers a better user experience. The best part about online gaming is that you can form communities that you cannot have on the mobile.

Could you shed light on the strategy being followed to increase the product portfolio?

When we started, we focused on casual games, which is the low hanging fruit. There is no point getting hardcore games to non-gamers. We brought in world-class casual games into the country. We work with over 50 studios globally.

Having built a critical mass of gamers, we want to expose them to better content. We are going into the next phase which is to bring in casual hardcore games and hardcore games.

Hardcore games are played in cafes and most cafes do not have the right PC specifications and infrastructure for this. This is why we started our gameplexes across the country. We will have almost 10,000 seats by the end of this year. We started our gameplex business in the big cities and towns. Now we have expanded to smaller places like Jaipur where we are also getting good traction.

What have been your top five properties?

The kids genre has done well for us. Zapak Girls also does well as do our action-oriented games. But cricket is our biggest property. You need to have a hybrid model. Generally, in business it is a 80:20 ratio where 20 per cent of content gives you 80 per cent of traction.

However, in casual online gaming, the long tail is also important. A lot of people who come back, also want to check out the catalogue in addition to consuming the same content twice or thrice. Therefore, you need to build on your catalogue.

Zapak has done activities to get women and children involved in gaming. What prompted this?

The 12-25 male TG is still being built up. It has not been fully tapped. However, we have gone into early segmentation. We want every gamer in this country to relate with Zapak. We want to have a product and a service for everyone including a four-year-old kid. Therefore, we have been broad basing our offerings.

Does Zapak also focus on game development?

We have a small in-house team but we don't do actual game development. We outsource it. We work exclusively with studios both in India and abroad. We drive the game ideation, concept and documentation. Then they do the rest. We work with our sister company Jump Games. We work with a Delhi-based company Saffronage. However, by and large, we work with studios outside India.

There have been technological advances from a product point of view. Casual games are now incorporating social networking phenomena. Community features which are possible due to technology are growing in importance. The more features you have and the better customer relationship management setup you have, the better is the traction you will get.

Is Zapak also looking at acquisitions in the gaming space?

Yes! We will be aggressive in this regard both in India and abroad. Our targets would include game developers. In India, nobody has the competence to develop a game from scratch to finish. Besides acquiring content, we are also talking with global companies to set up a studio which could serve as a factory to develop content.

What are the different revenue sources for Zapak and how important is advergaming in the mix?

Advertising is our main revenue stream at the moment. Casual games are a portal business. We also get some revenue from our cafes and our cards business as well as events that we do. Subscription revenue will come in when we get into offering hardcore games. Users either purchase the product or subscribe on a monthly or a weekly basis. Our first product here will be three casual MMOG titles which will be launched in May and June.

Could you give me examples where Zapak has done innovations for clients?

With McDonalds, we did a deal where you buy a "Happy Meal" and get a product from Zapak. With Dominos, we did an innovation around a gaming pizza which was accompanied with goodies. We also tied up with MTV for games around their show Roadies.

There is talk about how gaming is evolving into a social activity with massively multiplayer online games (MMOG). What is your view on this?

If you look at countries like China and Korea, it is the stickiest social networking opportunity. Other entertainment options do not engage on a social level. In a virtual world, though, you live a virtual life. Already in our cafes, you see thousands of kids who live in a virtual environment.

The BCCI is kicking off the IPL in April. Are you looking to work with the franchisees to develop properties?

Yes! We are working with franchisees to develop properties that aim to reflect the sport.

Does cricket work better than Bollywood for games?

Yes! This is partly because cricket has gameplay built in. With film, you have to think about a strategy that can fit. We have worked with Bipasha Basu and Salman Khan. We also did successful games around the film Cash. However, even in Hollywood, games out of films are not generally successful. Spiderman was an exception, though. The challenge for us is to tailor Bollywood content so that it is suitable for gameplay.

Apart from cricket, are you looking at other sports?

We are looking at tennis and F1. We also feel that table tennis will translate well as an online game. We recently did a successful tennis game that Apollo sponsored. In terms of working with official sports bodies like Fifa, their licence fees are too high to justify a good RoI in India at this point of time.

What is the way forward to combat the lack of skill sets in game development in India?

Gaming has to be more widely accepted as an activity and profession. Companies from abroad have to come in and invest. We cannot grow this space all by ourselves.

How did the concept of "Zapak Corporate Gamer Challenge" come about? Do you foresee a time when gaming will be viewed as a professional sport in India?

We have a division called Zapak Live. This division organises conferences, events, tournaments, etc. We realised that a lot of casual gaming happens in the office. So it seemed like a good idea to take it to an offline level where corporates can take part. The response was good. I see no reason why gaming cannot be looked at as a sport in India a few years down the line.

One of your recent marketing innovations revolved around offering people the chance to win cash by constantly playing. How was the response to that?

It was a loyalty programme for the portal. For each activity done, participants got points. It was a three-week programme. We also do other marketing innovations. We had done a series of short films to create awareness for our e-mail product. We also do a lot of viral activities which have included spoofs on films like Sholay. We also did innovative stuff in loos in multiplexes.

Finally, is Zapak looking at expanding abroad?

We are looking to launch our portal in China, Pakistan and the UAE. You will see launches from the next quarter. Our USP is content that is not India-centric; it appeals to a global audience. It is a question of customisation from a language point of view.

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