They say you lose some and win some. And currently, the online gaming industry is perhaps the perfect example. While companies which operate play-to-win online games are trying to navigate the 28% goods and services tax (GST) issue, from what it seems esports as a genre has benefitted from the roll-out of old popular games. This is also believed to have helped esports generate user traction. Case in point: Garena announced the return of Free Fire on August 31. Battlegrounds Mobile India, popularly known as BGMI, also returned to India earlier this year. Both the games were banned by the Indian government, last year.
Battlegrounds Mobile India Masters Series (BGMS) was broadcast on Star Sports and streamed live on Rooter while BattleGround Mobile India series (BGIS) was live streamed on JioCinema. The prize money for the former was Rs 2.10 crore while the latter’s prize money was Rs 2 crore. “Free Fire India’s launch is a game-changer, set to transform India’s esports scene. It heralds more tournaments, increased earnings, and massive prize pools, mirroring Free Fire’s firm grip on India’s user base. Despite no Indian teams at the Free Fire World Series 2022 Grand Finals, the Hindi stream astonishingly recorded peak viewership,” Devam ‘Dev’ Vyas, vice president- esports, Gods Reign, an esports team.
India’s esports market is projected to grow to reach Rs 880 crore in 2023, as per market research firm, Statista. Furthermore, the revenue is expected to reach Rs 1410 crore at a compound annual growth rate of 12.47% by 2027. There were around 17 million viewers of esports in India in FY21. The number of viewers was almost double that of 2019.
Esports’ rise as RMGs fall
While esports has grown by leaps and bounds, online real-money gaming has been struck with the GST council’s almost unanimous decision to levy 28% GST on the face value of deposits. The immediate impact of this was while a few online gaming companies shut shop, the rest such as MPL and Rush Gaming Universe laid off staffers. Interestingly, industry experts believe that it was a matter of before the ban on these popular games was revoked as these always had fan following. The current taxation which will be implemented from October 1, 2023, will reduce the chance of winning a higher amount among users playing pay-to-win games, who may then migrate to such games. “As for investments, the resurgence of these games will potentially attract more sponsors and investors looking to tap into the esports market. With esports tournaments making their way to mainstream streaming and sporting networks, there will definitely be an influx of investment into the sector in the coming years,” Lokesh Suji, director, the Esports Federation of India (ESFI) and vice president, the Asian Esports Federation (AESF), said.
A strong support system
Industry experts believe that with esports now gaining traction in international tournaments such as the Asian Games, the Indian government has started to take esports seriously. And now certain governments have begun to invest in it. “At least there are four or five state governments which are working in the field of esports and gaming. Bihar government and Gujrat government are doing a lot in the realm of esports. All of this is now coming to a stage where gaming and esports are now becoming a very important part of the government’s outlook into the new stage of sports and entertainment,” Piyush Kumar, founder and CEO, Rooter, told BrandWagon Online.
The streaming platform, Rooter, claims to have clocked a growth in numbers for BGMS season two. The overall views on Rooter were approximately 84 million views with engagement (likes and comments) amounting to approximately five million, as per the firm. The average time spent was approximately 42 minutes while the total watch hours across the 22-day event was approximately 17 million hours.
Here comes the money
The genre has finally begun to get two kinds of funds flowing. First – investment firms have begun serious process funding. For example, KRAFTON, the parent company of BGMI, announced a corpus of $150 million to invest in various spaces including gaming and deep tech. “This is not a fixed allocation but we would like to invest one-third of the investment to our portfolio companies in subsequent rounds to support them to expedite their growth, the other one-third of the investment would go to new investment opportunities in gaming and adjacent areas and lastly, we would like to invest in spaces like deep tech and artificial intelligence (AI),” Sean Hyunil Sohn, CEO, KRAFTON India, said in a press briefing on August 31.
Secondly, platform like Rooter further claims that it also had 12 brand associations with Lenskart, TVS and Criteo as sponsors besides Intel, Tata, FanCraze, JioCinema, and Spotify, among others which advertised during the tournament. Earnings from sponsorships and brand associations was approximately Rs 2 crore with sponsorship amounting to 30% (approximately Rs 60 lakh) of the total value. “There were two big takeouts. One is the fact that we managed to monetize the tournament and the second one is that we could distribute it well. We distributed it through the iOS app, Android app, web platforms (mobile and desktop) and through our TV app we launched in June so we got viewers on CTV as well,” added Kumar.