Redefining the Gaming Landscape: Separating Video Games from Real Money Games

A coalition of 70 gaming companies in India, including industry leaders like Outlier Games, Ayelet Studio, Gmonks Entertainment, and RedDevil Studio, have come together to petition the Ministry of Information and Broadcasting (MIB) and the Prime Minister's Office (PMO) for a clear distinction between "video games" and "real money games." This strategic move aims to address the nuances and challenges faced by the diverse gaming ecosystem, ultimately paving the way for more conducive policymaking and industry growth.

Unlocking the Potential of India's Gaming Sector

Differentiating Video Games and Real Money Games

The gaming companies argue that the current lack of differentiation between video games and real money games has led to confusion and unintended consequences. With the introduction of the GST amendment, the ambiguity in categorizing these two distinct gaming experiences has resulted in significant business disruptions and friction with international investors. Video game companies have faced multiple show-cause notices and tax raids, while banks and payment gateways have denied them services, all due to the perceived association with real money games.To address this issue, the companies propose a clear definition of "video games" as digital experiences focused on entertainment, leisure, or learning, where users navigate through objectives, challenges, or storylines without the ability to stake money to win more money or prizes. This distinction would help policymakers and regulators better understand the nuances of the gaming industry and develop tailored policies that foster the growth of the video game sector.

Preventing Media Misrepresentation

The gaming companies also express concern over the media's tendency to use visuals of popular video games when covering news about real money games or gambling. They argue that this practice has led to the conflation of the two categories, which can hinder the acceptance and growth of the video game industry. To address this, the companies request the MIB to issue a notification that prevents media outlets from using incorrect and unrelated visuals when reporting on real money games.

Designating the MIB as the Nodal Authority

Recognizing the entertainment-centric nature of video games, the companies suggest that the MIB should be designated as the nodal authority for this sector. Furthermore, they propose the creation of a dedicated wing within the MIB to oversee the implementation of the Animation, Visual effects, Gaming, and Comics, and Extended Reality (AVGC-XR) Policy. This dedicated unit, headed by a joint secretary-level officer, would optimize governance and ensure the effective implementation of policies tailored to the video game industry.

Avoiding Premature Regulations

The gaming companies argue that the video game industry in India is not yet large enough to justify country-specific regulations, such as the time limits on gaming implemented in China. They caution that this approach would not be conducive to the growth of the Indian video game industry or the interests of Indian consumers. This stance comes at a time when Tamil Nadu is considering imposing time and usage limits on online and real-money gaming to address addiction concerns.

Fostering Intellectual Property Creation

To support the creation of intellectual property (IP) in the video game industry, the companies propose several measures. These include the establishment of a central catalyst fund to provide financial support to startups, as well as initiatives to promote the export of gaming IP through awareness programs and the utilization of World Intellectual Property Organization (WIPO) mechanisms.

Reducing the GST Burden

The gaming companies argue that India's 18% indirect tax on video games is one of the highest globally, with even advanced gaming markets applying a 5-10% tax rate. They suggest that the GST bracket for video games should be reduced to 12% to promote sustainability and better cash flow for game companies.Furthermore, to boost investment, job creation, and the long-term viability of the video game industry, the companies propose a tiered corporate tax incentive. This would include a full tax exemption for three consecutive years, followed by a 50% tax reduction for an additional two years, allowing video game companies to choose when to initiate this five-year tax benefit period.By addressing these key issues and proposing strategic solutions, the gaming companies aim to create a more conducive environment for the growth and development of the video game industry in India. Their collective voice and recommendations serve as a blueprint for policymakers to unlock the immense potential of this dynamic sector, ultimately benefiting both the industry and the Indian gaming ecosystem as a whole.