By Pradeep Gupta
The game’s getting interesting.
From modest beginnings, the Indian gaming market is now growing at a spectacular pace. India topped gaming app downloads in the first quarter of the calendar year 2021, with a growth rate of 28 percent, says Sensor Tower. This comes on the back of the gaming industry growing to a size of Rs 90 billion in 2020, up from Rs 62 billion in 2019, a growth of over 45%, according to research by Statista. The belief that gaming is just another fad has also been put to rest by the 1.7X rise in unique user count seen during the July 2020 to April 2021 period.
So, what are the factors that are driving the mobile gaming industry in India? Well, there are quite a few. Covid-19 was one major factor. The pandemic kept everyone inside their homes, chained, in a sense, to their laptops, tablets, and smartphones, through which they conducted their businesses as well as indulged in entertainment. Gaming took off in a spectacular way during this time.
The other factor is the spread of smartphones across the length and breadth of India over the last few years, especially among non-Metros. India is the second-largest market for smartphones, racing past North America, Latin America, and Africa in 2020. According to Counterpoint Research, India’s smartphone market is expected to touch 173 million units in 2021, an expansion of 14 percent year-on-year, with over 100 million units expected to be shipped in H22021. It expects the market to touch 200 million units in a couple of years.
A third factor is the commoditisation of data. Since the entry of Jio into the market, data prices have plummeted. That gave an impetus to gaming, which requires the use of copious amounts of data. The roll-out of 5G technology has added to this large-scale use of data. 5G smartphones accounted for less than 3% of the market in 2020. This is expected to shoot up over 8 times to touch 32 million, accounting for 19 percent of the smartphone market in 2021, says Counterpoint Research. This indicates the level to which people are consuming data – including for games — without concern for costs.
Following business models such as Software as a Service (SaaS), and Platform as a Service (PaaS), the gaming industry is seeing Gaming as a Service (GaaS) take the segment to a new level. The onset of Covid-19 drove a number of games to the online realm. These include cricket, football, and hockey. Gaming companies realised these winds of change and rolled out Esports. Deep-pocketed players jumped into the arena. After the initial induction period marked by free games, these gaming companies started pricing their offerings. Since then the tills have not stopped ringing.
Yet another major driver of the gaming industry is women. Surprised? Well, traditionally, it was believed that men played most of the games, both on the field and on the Web. But times have changed, more so in the virtual world. According to the 2021 Women Mobile Gaming Report, India, women account for over 43% of smartphone gamers in India today. And 49% of women gamers are above the age of 34. These are women with paying capacity.
According to a recent study by BlueWeave Consulting, a strategic consulting and market research company, the global gaming market was worth $16.7 billion in 2020. This is expected to grow to a whopping $31.6 billion by 2027, at a CAGR of 11.4%.
Entry barriers have been lowered for online gaming. That has seen private equity investors like Kalaari Capital and Sequoia Capital increasing their investments by 78 percent in 2020 to $173 million, as per data from Tracxn Technologies. Estimates say there are over 400 gaming companies in the country at this point in time. But when we juxtaposition this huge number of gaming companies against the lack of desire among Indian gamers to pay for the games, the challenge in terms of monetizing these games in India becomes quite evident. Compared to this, countries like the US, Europe, China or the Middle East & North Africa (MENA) region are more mature gaming markets where gamers pay to play.
Another challenge is that not many IT professionals aspire to make gaming a career avenue. Gaming is a niche area and the big IT players like Infosys or Wipro are not present in this area. Due to this fact, there is a perception among IT professionals that this stunts their growth chart. That’s not entirely true. Following listing on the stock exchange of a gaming company, there’s been a huge perception change for the better among all stakeholders.
Dearth of art professionals and game designers are significant impediments as well. Unlike IT professionals, who are churned out in the thousands (or even lakhs) from colleges across the country, art professionals and game designers are a rarer commodity, as there are not too many institutions offering such courses, coupled with the fact that the idea of being employed in the gaming industry for a lifetime is yet to gather traction.
Perception and legislation are two major challenges for India’s gaming industry. The two are connected. There is a general perception in this country that playing games are a waste of time since it (mostly) does not result in economic gains.
Notwithstanding this challenge, the gaming industry is expected to expand at a sharp pace, going forward, say estimates by some large global consulting firms. For instance, KPMG says India’s gaming industry will grow to a size of Rs.118.8 billion by 2023. Statista sees a third of the people on this planet have experienced mobile games by the end-2021. And App Annie estimates the global size of the industry to cross the $120 bn mark by the end of this calendar year.
The author is head of growth, data and marketing at Gameberry Labs. Views expressed are personal