Indian gaming sector gets slight budget boost
When Finance Minister Nirmala Sitharaman, in her February 1 budget speech, announced her intention to establish a task force to promote the animation, visual effects, games and comics industry, leaders game companies felt that they had passed a level in a complex game. . Just a few months ago, they feared that regulations were holding back the growth of the sector.
After the suicide of an 11-year-old boy was blamed on gambling addiction last month, Madhya Pradesh said it would join Andhra Pradesh, Karnataka, Kerala and Tamil Nadu in adopting regulations against the sector. China’s crackdown on online gambling last year underscored the risks to India’s gambling industry. But the budget announcement suggested a more pragmatic approach, one that also saw the sector as a generator. jobs. Sitharaman said the task force would “recommend ways to achieve this and build national capacity to serve markets and global demand.”
India’s gaming industry employs around 38,000 people, and that figure is expected to rise to 120,000 by 2025, according to a report by the Internet and Mobile Association of India (IAMAI) and consulting firm RedSeer. The number of gaming companies has increased from 25 to 50 in 2015 to 275 in 2019 to over 400 in 2021, according to the report. Amid the covid-19 induced movement restrictions, the sector attracted twice as much private investment in 2020 and 2021 than in the previous five years. Another report from venture capital firm Sequoia and consultancy BCG points out that investors have been drawn to gaming platforms (such as MPL and WinZo) because they are diverse across titles and genres.
Underlying these investments is the growing pool of gamers in the country, which grew from 300 million in 2019 to 500 million, according to KPMG. In a 2020 survey by YouGov, a research and analytics company, 71% of Indian respondents said they had played video games or mobile games, making it one of the top 10 countries.
While players were concentrated in Tier 1 cities, they are increasingly coming from Tier 2 cities and rural areas. The number of active internet users in rural India has risen from 134 million in 2017 to 299 million in 2020, according to data analytics firm Kantar. The smartphone penetration rate is expected to increase from 40% in 2021 (600 million users) to 60% by 2025 (860 million users), still driven by semi-urban and rural areas. As a result, while metros are expected to add 50 million mobile gamers over this period, Tier II cities and rural areas could add 200 million, according to RedSeer.
Many companies attracted by India’s large population have struggled to monetize their user base. The experience of gaming companies has shown that there is a path to revenue and profitability. According to IAMAI, 40% of hardcore gamers spend around ₹230 per month on games. BCG and Sequoia estimate mobile gaming revenue at $1.8 billion today, with potential to grow to $5 billion by 2025. IAMAI-RedSeer report puts 2025 revenue at 6 -7 billion dollars.
Of the $1.8 billion in revenue in 2021, hardcore gamers accounted for 21%. This segment is expected to reach 30% by 2025 and generate revenue. They also engage more deeply, spend four times more than casual gamers, and spend time watching esports, a key sub-segment. Game streaming via YouTube, Twitch and other platforms is also expected to generate ad revenue in the coming years.
India is only part of the bigger story. According to Newzoo, a market research firm specializing in games and esports, the number of gamers worldwide is expected to reach 3.4 billion in 2024, up from 2 billion in 2015 and 2.7 billion currently. That’s why the past month has seen two big acquisitions in the segment: Take-Two Interactive Software buying Zynga for $12.7 billion and Microsoft buying Activision Blizzard for $70 billion.
These figures also reflect the state of game development in advanced markets, characterized by high levels of skills and enhanced capacity in terms of technology and investments, the two focus areas of the new task force. A 2017 report by KPMG indicates that India can evolve towards the characteristics of developed economies (with gaming demands met by local development) and also become the preferred exporter of gaming products and services to developing economies.
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