The online gaming culture in India is burgeoning with the number of gamers and engagement levels reaching record high levels. A multitude of factors has contributed to the unprecedented growth of the online gaming industry, while the Covid-19 pandemic-induced lockdown has been the recent one. Other key drivers of the industry that led to fast-paced growth are accelerated adoption of smartphones, mobile-first games and widespread 4G internet access.
Today, the gaming industry has evolved into a billion-dollar industry with projections to grow at a CAGR of 21 percent between FY21 and FY25, as per the recent KPMG report With more interesting tournaments and leagues embedded in the gaming applications, the industry is seeing tremendous growth attracting investors’ community in the space. According to the stats – the global esports market was valued at $1,178 million in 2021 which is further projected to reach $5,743 million by 2030 at a CAGR of 21.9per cent. The unprecedented growth of the industry is continuing to open foreign investment opportunities estimating $120 to $160 billion per year by 2025. Thus some of the major reasons for investor’s passionate interest in the industry are:
Era of digitisation
India is at an inflection point in its digital journey. It is at the cusp of a paradigm shift in digital solutions with the deployment of technologies at a large scale. In 2015, India stood at 81st place in the Global Innovation Index and has now reached to 48th spot in 2020. With continuous efforts made by the government in accelerating digital adoption, technology advancements including AI, VR/AR, Blockchain have gained huge prominence in the gaming industry. Gaming developers are making extensive use of technologies to extend reality and elevate gamers’ experience. In addition, the accessibility and affordability of high-end smartphones have democratised the Indian gaming sector, attracting a huge investor community.
Larger prize pool
As the gaming industry is outperforming the entertainment industry, the new-age gaming developers are introducing interesting formats to attract more players. It directly correlates with the increase in participation, viewership and audiences, leading to a higher prize pool. Considering the higher prize pool, the need for regulation is also becoming clearer, involving the government’s efforts in promoting structured growth. It makes the Indian gaming industry a high potential market for revenue generation that ultimately strengthens the investors’ trust with improved ROI in the Indian esports industry.
Investment growth
As per a recent report of Maple Capital Advisors and All India Gaming Federation (AIGF), investors have poured in a whopping amount of $1.6 billion in the first nine months of 2021, which is further predicted to continue the same momentum in 2022. The investments in the Indian esports industry are highly driven by consumer traction, greater degree of awareness and accelerated engagement. The industry has already moved on its exponential growth trajectory backed by large capital infusions from VCs and PEs. However, with the digitally transforming era, the capital market in the esports industry is making a radical shift towards investments in the form of cryptocurrency and NFTs.
Monetization formats
As the gaming industry is getting more and more popular, revenue models of gaming companies are also becoming innovative with in app purchases , real money gaming and even the NFT-based gaming. The industry stakeholders capitalising on next-level real money gaming formats are bringing the real-life experiences of casino games, fantasy sports, and regulated sports. This has opened new avenues of monetisation in the industry that in-game transactions are circling around buying gaming accessories, new lives, ad-free subscriptions, NFT coins, and so on. Further, new gaming formats in the metaverse are translating into buying new avatars, assets and even real estate in the virtual world. The strong traction in the real money gaming world drives transactions and high revenues for companies, making it a profitable bet for investors.
Thriving economy
India is the fifth largest economy and has the second largest population in the world. With a fast-paced digital adoption, the economy is attracting foreign companies by providing them easier access to private capital via improved digital infrastructure. It allows the fund-flowing seamless, enabling businesses to scale and innovate with no restrictions. Playing on the success of high speed 4G internet, the industry is projected to have 657 million gamers by FY25, recording a steep surge from 433 million gamers in June 2020, as per a KPMG report.In addition, the plans to deploy 5G internet commercially will further improve the gamer immersion due to its lower latency or input delay than 4G or other networks.
The bottom line
Given the immense upside potential of the sector and the strong tailwinds it has been able to generate, the sector will remain high on the target list of investors. Whether from the gamers’ point of view or the developers’ perspective, the Indian Gaming industry has more room to capitalise on untapped opportunities. We are in the middle of exciting times and the fun has just begun.
(This article has been contributed by Khiladi Adda founder and CEO Satyam Rastogi, and AnimationXpress does not necessarily subscribe to these views)