October 01, 2024

The Rise of Indian Online Gaming

by Team Oister
Indian online gaming, market growth, mobile gaming, esports, investment

The Rise of Indian Online Gaming: A Strategic Overview

Introduction

India’s online gaming industry has witnessed an explosive surge in recent years, evolving into one of the most dynamic sectors in the digital economy. With a vast user base of 500 million active gamers and a significant 200 million willing to pay for enhanced experiences, the sector is expected to grow even further. As more smartphone users delve into casual and competitive gaming, this landscape presents unique opportunities for investors, developers, and players alike.

This post highlights key insights from the report, “Playing to Win: A Thesis on Indian Online Gaming,” covering the historical evolution, financial growth, gaming trends, and market potential of the Indian gaming ecosystem.

Market Overview and Growth

India’s gaming sector has grown in sync with global digital trends, boasting 500 million gamers in 2023, with 138 million of these willing to pay for premium services. This is partly driven by increased smartphone usage and lower data costs, which are among the lowest globally at ₹13.98 per GB. The availability of cheap data and the ease of digital payments via UPI have further supported this growth, creating a fertile ground for game developers and platforms.

  • Total gaming revenue in 2023: $1.50 billion
  • Projected growth by 2025: $2.00 billion
  • Average revenue per user (ARPU): $6.38 annually

The gaming frequency varies across India, with Kolkata and Chennai having the highest numbers of avid gamers, mostly aged between 25-34. This demographic is especially appealing to developers and advertisers, as younger players tend to spend more time and money on gaming.

Gaming Genres and Popularity

According to the report, the most popular genres in India reflect a global trend, but with a specific preference for casual and accessible games:

  • Shooting games dominate with an in-app purchase (IAP) share of 24.7% and drive the highest spending in India, totaling $41.6 million.
  • Strategy games (19.1%) and match games (11.9%) round off the top three, demonstrating Indian gamers’ interest in competitive and skill-based games.
  • Casino, RPG, and sports games also make up a significant share, contributing to the growing diversity of the gaming ecosystem.
Impact of Regulatory Changes

The Indian government’s Gaming Regulations 2023 provide greater clarity and stability, encouraging investments and reducing uncertainties around real-money gaming (RMG).

RMG will be less favoured due to regulatory concerns and 28% of GST. As a result, more developers are focusing on skill-based, casual, and immersive games to align with the growing demand for entertainment rather than gambling.

Investment Trends

India’s gaming sector continues to attract substantial investor interest, although 2022-2023 saw a correction in valuations. The report indicates that early-stage venture capital investments in gaming remained strong, with major funds allocating significant resources to gaming startups.

  • Funding rounds have primarily targeted mobile gaming studios and cross-platform games, capitalizing on India’s massive user base and the increasing engagement with online content.
  • Nazara Technologies, an Indian gaming company, has emerged as a leader with diversified offerings across multiple genres, demonstrating the potential for successful exits.
The Role of Fintech in Gaming

An interesting overlap exists between India’s gaming and fintech sectors. Of the 300 million active fintech users, nearly two-thirds are also paid gamers. The convergence of gaming and digital finance has created opportunities for gamification in financial services, making it easier for companies to engage and retain users.

Gamification, driven by India’s demographic dividend, is not only limited to fintech but also extends into e-commerce and healthtech, facilitating smoother digital migration for India’s next billion users.

Challenges in Indian Gaming

While the demand for quality gaming content is strong, the report identifies a supply-side gap in terms of gaming infrastructure, talent, and capital. Developers often face difficulties in accessing the necessary mentorship and funding to scale their operations and create world-class games.

To bridge this gap, initiatives like The Gaming Lounge, organized by Eximius Ventures, aim to provide a platform for early-stage gaming startups, offering them opportunities for mentorship, capital, and ecosystem support.

Future Outlook

The future of Indian gaming appears promising, with regulatory clarity, growing investor confidence, and strong consumer demand paving the way for innovation. Some of the key trends expected to shape the sector include:

  • Increased investment in immersive gaming technologies like AR, VR, and cloud gaming.
  • The rise of hyper-casual gaming, driven by the increasing number of smartphone users in India.
  • Localization of content to attract more regional players, particularly in tier-2 and tier-3 cities, expanding the reach of game developers.
  • Partnerships between gaming and fintech companies to leverage gamification as a means of increasing user engagement and retention.

FAQs on Indian Online Gaming Market

Q: What is driving the growth of online gaming in India?
A: The growth is driven by the widespread use of affordable smartphones, lower data costs, the rise of mobile payments via UPI, and increased interest in immersive gaming experiences.
Q: Which are the most popular gaming genres in India?
A: Shooting games, strategy games, and match games are among the most popular genres in India. Shooting games, in particular, dominate with the highest in-app purchase revenue.
Q: How is fintech impacting the gaming sector in India?
A: There is a strong overlap between gaming and fintech users in India, with nearly 66% of fintech users also being paid gamers. This convergence allows for greater gamification of financial services, improving user engagement.
Q: What are the key challenges facing Indian game developers?
A: The key challenges include a lack of adequate infrastructure, mentorship, and capital to support the development of high-quality games that can compete on the global stage.
Q: How has regulation affected the gaming industry in India?
A: The Gaming Regulations 2023 have provided regulatory clarity, encouraging more investments in non-gambling segments like casual and skill-based games while tempering interest in real-money gaming due to regulatory concerns.
Q: What is the future outlook for the Indian gaming industry?
A: The future looks bright, with anticipated growth in immersive technologies like AR, VR, and cloud gaming, as well as increased localization of content to cater to diverse regional audiences.
Conclusion

The Indian gaming market is at a pivotal moment, with immense growth potential and numerous opportunities for investors, developers, and consumers. As the ecosystem matures, the focus will shift toward creating innovative, immersive gaming experiences that cater to India’s young, tech-savvy population.

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