The pandemic has provided a fillip to India’s gaming sector
By Prashanth Rao
With a market size of $1.1 billion in 2019, the Indian online gaming industry represents about 5% of the country’s overall media and entertainment (M&E) industry. The industry is expected to grow at a CAGR of 40%, reaching $2.8 billion by 2022, and accounting for 9-10% of the overall M&E market.
The Covid-19 pandemic that infused changes to everyday lifestyle, proved to be a boon to online gaming, which witnessed a surge in user acquisition and consumption levels. Online gaming gained from the shift in entertainment options — a short game substituted coffee breaks at the office. Online gaming could continue to deliver with minimum disruption at a time when traditional entertainment options (concerts, movie theatres and public spaces) were absent and alternate entertainment options, such as TV and video OTT platforms, lagged in new content generation. The increasing number of games with an Indian connect has improved the adoption rate from rural areas.
Upping the game
As a result of a variety of factors, engagement on gaming apps increased by 21% during the initial national lockdown in India, with the user base crossing 300 million. Evolving with the growth wave, gaming companies diversified their revenue streams with innovative in-game revenue streams, such as chargeable expansion packs, exclusive customisable avatars, virtual coin packs, and advanced features; ad revenue from banners, multimedia, and product placements; and subscription-based models with players paying a monthly fee in exchange for access to ad-free content and upgrades.
Industry participants continue to evolve their monetisation strategy, and exciting new options are expected to be in steady supply. In addition, the industry has made strides in its user acquisition and retention strategy using AI/ML-based analytics, improved game quality and experience, and innovative brand building strategies. The consumer’s preference of games has been veering towards categories such as racing, casual, action, strategy and puzzles.
Signs of recovery are now being witnessed both globally and in India, fuelled by hopes of wide-scale vaccination and successful containment strategies. Further, consumption across mainstream entertainment, such as theatres and public spaces, has improved. The workforce is also gradually returning to their offices.
These recovery indicators could pose a threat to the momentum that the industry has gained. However, they are not expected to make a significant dent. Shielding the gaming industry from these threats are strong socio-economic factors such as a young population, improving disposable income, rising rural user segments, affordable internet and world-class smartphones, increased adoption of micropayment solutions, and a 500 million large internet user base. The application of ‘gamification’ is gaining popularity in sectors such as edutainment, team building, and video content. The industry has strong performing segments, such as real money gaming and e-sports, which are growing at CAGRs of 40% and 36%, respectively. Fantasy sports grew nine-times to reach Rs 16,500 crore between 2017-18 and 2019-20.
Recognising the increasing significance of the sector and its segments, NITI Aayog has called for a self-regulatory body to standardise regulations for the skill gaming industry. Further, the recently announced drafting of a national animation, visual effects, gaming and comics (AVGC) policy is expected to give the industry the much-needed regulatory support, encouraging investment and expansion. The recent regulatory interventions, leading to a ban on major international online games, have led to an increase in demand for indigenous alternatives.
While the pandemic has given the sector a push, the underlying fundamental and structural factors will help the gaming industry retain much of its ground gained earlier, and set the foundation for future growth.
The author is partner, Deloitte India