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XMG Studio scouts for partner in India

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Canadian firm wants to develop for local tastes.

Gamers in India could soon get a lot more on their handhelds. Toronto-based , one of the largest independent mobile game development studios in app economy for and , is scouting for partner in India. The Canadian company, which has seen three of its titles hit the No. 1 spot in unique installs or downloads worldwide, wants to develop products tailored to the growing Indian market for mobile games.

XMG’s Indian-born founder and CEO, , is in India this week as part of a trade mission sent by the to promote business between the media and entertainment industries of the Canadian province and India.

Many of XMG’s 10 games, including its biggest hits — Inspector Gadget’s Mad Dash, Marine Sharpshooter and Little Metal Ball — and its latest offering, Powder Monkeys, have their share of followers in India, but the country is not yet among the top 10 generators of revenue for the company, which boasts of multi-million installs for six of its titles and 100 million minutes of gameplay in the first quarter this year.

In an interview, Sharma said the top three markets for XMG at present are the United States, Australia and Canada, but he was confident India had the potential to quickly become one of their major markets. He cited data showing that by 2014, the Indian smartphone market would be larger than the entire US population. He also pointed out that the popularity of games on the iOS and Android platforms was soaring worldwide, and that in India, it was the most dynamic part of the media sector, expected to grow at a cumulative 30 per cent over the next five years.

The challenge, according to Sharma, was in squeezing revenue out of the growing base of users in India. He noted that the average revenue per unit (ARPU) in India’s mobile phone industry was $5-6, as against the global average of $35-38. But sees potential to make money from mobile games through a combination of creative products, lowering costs and marketing tie-ins.

Earlier this year, XMG released a mobile game based on the Degrassi television series, one of Canada’s most popular shows for the tween and teen audience. Sharma also said XMG had a deal with Sony for a game based on the studio’s planned new Ghostbusters movie. This week, Sharma plans to meet with “four of the top five” film producers in India to explore opportunities for similar ventures. Other ideas to generate revenue from mobile games include giving away the game for free, and marketing the background music in albums by popular artists for a share of the revenue.

According to Sharma, even a loyal base of about 50,000 users who become hooked to a game, and are willing to buy it after a free trial, can compensate for giving away a million free downloads. When it comes to the Indian market, Sharma says, “My strategy for monetisation assumes that Indian users won’t pay upfront for a game.”

Sharma is clear that games for the Indian market would have to cater to local tastes, not just in terms of language, but also the art, story and cultural references. At present, many of the mobile games available in India are developed locally, with Mumbai and Chennai being the main hubs for this activity. But, Sharma says, India still lags far behind when it comes to the industry worldwide.

Canada is the world’s third largest employer of game developer talent, behind the US and Japan. India’s strengths, according to Sharma, are its stories and “exceptional artistry”. He wants to combine this with XMG’s expertise.

As for cost, Sharma’s counter-intuitive argument is that mobile game development is actually more cost-effective in Toronto than in India, thanks to a concentration of talent and various tax credits offered by Ontario’s government. “I’m willing to go toe to toe with anyone in India. The cost of developing a game by a team in Toronto is lower in absolute dollar terms than by a comparable team in India,” says Sharma.

The growth of the mobile app industry has been phenomenal. It began with Apple’s launch of its App Store in July 2008. The market for apps that year was about $100 million. By end-2009, it had expanded to $1 billion, and is expected to cross $10 billion this year. Sharma notes that the dollar value of the app industry in North America had surpassed the recorded music industry, and in three years, will overtake the film industry. Around half of the mobile app economy is currently driven by the US, but Sharma sees this changing as the market for smart phones expands in China and India.

Sharma is a veteran of the mobile technology and financial industry. A former stock market analyst, he set up the privately owned XMG in 2009. He is also chairman and co-founder of the Toronto-based Xtreme Labs, which he says is the world’s largest Blackberry app developer.

Apart from Sharma, the OMDC delegation visiting India consists largely of representatives from Ontario’s film industry. The trade mission was inspired by the huge success of the IIFA awards for Bollywood films held in Toronto this summer.

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