The Indian gaming market has come a long way — from the coin-based arcade games in gaming parlors where teenagers spent hours playing Tekken and Super Mario, to gaming consoles, and now gaming apps. With a massive market size of nearly 400 million gamers, and a growth rate that has been faster than DTH and OTT, the future of gaming in our country looks promising to say the least. Several factors are jointly increasing this sector in India. By the looks of it, the race towards the country becoming the world’s dominant gaming market has just begun.
demographic dividend – About 50% of the country’s population is under 25 years, and 60% of the gaming community also comprises those below 25. With hundreds of millions of youth set to join this age bracket in the years ahead, India is unlikely to ever face a shortage of gaming crowds. This makes us a hot destination for gaming firms and investors.
Mobile and Internet spread – About 85% of the gamers use their smartphones to play. The share of PC users is 11% and tablets account for the remaining 4% of gaming devices. Currently, internet penetration in India is estimated to be at 30%. With 4G taking internet access to every nook and corner of the country, and 5G expected to make up for the ‘Need for Speed’, the gaming industry has entered the growth highway.
covid-19 pandemic – In the first nine months of 2020, India had emerged to the top of the list in mobile game downloads globally, with about 7.3 billion app installs, accounting for 17% of the global numbers. With the pandemic ensued lockdown and work from home, the digital entertainment footprint expanded rapidly. It is estimated that nearly 45% of Indian mobile phone users entered the world of gaming during this time. Multiplayer games with chat features and competitions have witnessed a strong interest from the gamers. Before it was hit by the ban, PUBG Mobile had reportedly reached a user base of 34 million daily players, and the Battle Royale genre game had been downloaded 175 million times, achieving a near cult status.
With such enchanting numbers on display, and an imminent growth (market size expected to more than triple from the current $1.5 billion to $5 billion plus by 2025), the investor community is more than eager to enter the market and secure a slice of the startups in this arena. Even though the Indian gaming industry makes up just 1% of the global market size and is way smaller than the US and China markets, it is the rate of growth and untapped potential that is making the investors line up for this sunshine sector.
There was one prominent challenge that was often cited for the poor performance of the gaming industry, and that was the low ARRPU. Coupled with the lack of high-quality gaming studios and tech capabilities, the market remained nascent. Majority of the current gaming apps generate more revenue from the advertising than the in-app purchases or paid subscriptions. Traditional concept of gaming being a harmful activity also prevented monetization of gaming apps. However, the factors listed above as well as the maturing of the market are now turning the tide steadily. Perception and low ARRPU notwithstanding, the arrival of cloud gaming options, superior graphics and immersive gaming experience, and the upcoming 5G rollout will drive the industry. The surge in the number of gamers and engagement is bound to convert a major portion of the audience into ‘willing to pay’ users, and expand the ARRPU in the years to come. Further, advertisers are also pouring in more of their budgets in the gaming-app advertising. From a free to play ecosystem, engaged gamers are set to turn into subscribers at a rate faster than OTT and other media. Further, during the recent Union Budget 2022, the government announced setting up of an AVGC (animation, visual effects, gaming, and comics) promotion task force to plan and build capacity for serving domestic as well as global markets.
For any investor, the most important thing is to ensure that their investments grow. With incredible size and future expansion potential, the high-growth Indian gaming market is proving to be more than ideal for investors who wish to gain the early-mover advantage. Gaming studios, AI, AR, VR and app developers are all going to witness stronger funding support in 2022 and beyond. It is not time to calculate revenue, but to build a full-fledged gaming infrastructure and ecosystem. Once every stakeholder is logged in, the game will surely be a lot of fun for investors!
From a consumer behavior perspective, it’s easier to attract them to pay for winning (participate) – the speculative nature – rather than pay for access to game or make in-house purchases. This has led to wider success of RMG gaming in India with the likes Dream11, MPL or Paytm First Game which allows gamers to participate to win based on skill they possess.
Adding the layer of esports, live streaming and blockchain as a service for gaming, this truly creates a plethora of monetization avenues for participants in the gaming ecosystem beyond just advertisements, direct purchases and subscriptions.
Over the last decade the number of players in the gaming ecosystem expanded from developers, publishers, and gamers to esports teams, tournament organizers, live streaming platforms, aggregation platforms, cloud hosting and gaming influencers democratizing the space. This has led to equilibrium shift from conceiving of gaming as leisure activity to professional career like physical sports.
Also excited about how the metaverse will converge with gaming and Indian mythology based virtual games.
Views expressed above are the author’s own.
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