The Indian gaming industry's revenue projections have been slashed to $7.5 billion for fiscal year 2028 from $8.6 billion in FY27 on the back of the 28 per cent GST rule, that kicked in on October 1, 2023
India's first gaming-focussed venture capital fund Lumikai expects India's gaming market to hit $7.5 billion in valuation in the next 5 years. The industry clocked $3.1 billion in revenues in 2023. Notably, in November 2022, Lumikai projected that India’s gaming market will reach $8.6 billion in FY27.
India's first gaming-focussed venture capital fund Lumikai expects India's gaming market to hit $7.5 billion in valuation in the next 5 years. The industry clocked $3.1 billion in revenues in 2023. Notably, in November 2022, Lumikai projected that India’s gaming market will reach $8.6 billion in FY27.
The 28 per cent GST regime is “expected to adversely impact the RMG (real money games) segment,” said the State of India Gaming Report by Lumikai released at the 15th India Game Developers Conference (IGDC) in Hyderabad.
Lumikai Gaming Report 2023
“Growth in RMG (real money games) over the coming years is expected to be muted due to recent tax policies and industry consolidation,” said Lumikai report.
Adding that RMG taxation will adversely impact companies in the short to medium term, the report noted that tax demands related to RMG have surpassed estimated revenues. For the fiscal years 2018-2023, notices totalling $8.9 billion were served, while the estimated revenues stand at $4 billion.
Indian GST authorities have issued notices to 70 digital companies, including international giants like Facebook and Google, for 18% IGST, expanding the tax scope to include online education, gaming, and advertising services, with a revenue expectation of around Rs 2,000 crore in FY2023-24.
Lumikai Gaming Report 2023
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However, it said that the lastest move by the government have established separate legislation and taxation between games with cash-based outcomes and games with non-cash-based outcomes.
Bullish on ad revenues from casual and mid-core games
The venture capital (VC) firm still expects growth will be driven by in-app purchases and ad revenues in casual and mid-core games.
“Despite the headwinds facing the RMG sector, the broader policy outlook on gaming, animation, and VFX is positive and favorable,” said the report.
India’s gaming market showed resilience in FY23 with promising engagement and monetisation trends, according to the latest report by the VC.
“Growth in the number of gamers, a rising number of paying users, a growing appetite to experiment with new IPs, and increased time spent on games paint a positive outlook for the sector in the coming years. While new tax policies are expected to adversely impact the RMG segment, new government initiatives for the overall industry are favourable,” said the report.
In the last financial year, gamers in India stood at 568 million, of which 25 per cent were paying users. The number of gamers in India, as per the report, grew by 12 per cent compared to last year, while the number of paying users grew by 17 per cent.
Lumikai Gaming Report 2023
India maintained its position as a major player in the global gaming industry with 15.4 billion game downloads. Average gaming time per player increased by 20 per cent to 10-12 hours per week. The Average Revenue Per Paying User (ARPPU) reached $19.2 in FY23, marking nearly a tenfold growth since FY19, according to the report.
Estimated in-app purchase (IAP) revenues from games other than BGMI and FreeFire grew by 37 per cent year-on-year. The report also noted that casual games demonstrated strong monetisation, consistently outpacing download growth in the segment over the past three years.
The report forecasted a strong industry growth rate with a 20 per cent Compound Annual Growth Rate (CAGR). This growth is primarily fueled by the rise in in-app purchases within casual and mid-core games, as well as the increasing revenues generated from in-game advertising.
"The projected growth trajectory counters the narrative of a decline in in-app purchases following the suspension of top Battle Royale games, BGMI and Free Fire,” said Lumikai report.
“Even though funding has slowed down this year, the outlook towards the gaming industry is extremely positive. We're particularly excited to see the increasing engagement of gamers from non-metro cities, which demonstrates the massive growth potential and the opportunity in the Indian gaming industry,” said Salone Sehgal, Founding General Partner
50% of gamers in the age group of 18-30 years
According to the report, about 50 per cent of gamers in the country fall in the 18-30 age group, with a male-to-female ratio of approximately 60:40. The report also emphasises the growth in the number of gamers from non-metro cities, which increased from 57 per cent in FY22 to 66 per cent in FY23.
According to the report, about 50 per cent of gamers in the country fall in the 18-30 age group, with a male-to-female ratio of approximately 60:40. The report also emphasises the growth in the number of gamers from non-metro cities, which increased from 57 per cent in FY22 to 66 per cent in FY23.
UPI most preferred method of payment
Furthermore, 62 per cent of users prefer using UPI as their payment method for games.
Furthermore, 62 per cent of users prefer using UPI as their payment method for games.
Funding is down
Funding in the Indian gaming sector is down 75% y-o-y in 2023, mirroring the global funding decrease of 79% y-o-y. However, direct investment by strategics such as Mixi, Sony, Krafton point towards a positive outlook
