Investments in Indian gaming top $1.6 bn till Sept, surpass total of 5 yrs

Though monetisation in India is only 1% of global share, report by investment bank Maple Capital Advisors sees strong growth in domestic sector with heavy spending by users

Investments in the gaming sector in India have crossed $1.6 billion in the first 9 months of 2021 and exceeded what was invested in the last five years, a report by boutique investment bank Maple Capital Advisors, in partnership with All India Gaming Federation (AIGF) has found.

The sector “is poised to attract greater capital across stages, and we expect increased cross border mergers and acquisition activity. We expect investments to increase in the sector in the next 12-18 months. Consumer traction (about 17 per cent of global traffic) on the back of greater awareness and engagement is likely to accelerate,” said Pankaj Karna, founder and MD, Maple Capital Advisors.

Even though monetisation in India is only around 1 per cent of global share, the firm said it is seeing strong growth in people spending money on gaming platforms.

Post pandemic, gaming has become mainstream in India, driving growth in users, revenue, average revenue per user, etc. Online gaming in India "sky-rocketed" in the last 18 months, majorly driven by the pandemic and lockdowns.

Unlike global trends, mobile gaming in India accounts for 90 per cent of the market share with over 3 billion downloads. With 17 per cent global traffic, and around 1 per cent of ARPU, India is a high volume, low value market which is now seeing some value growth. Maple expects 6x growth over the next four years.

Key growth drivers for the gaming sector in India are increasing smartphone penetration, growing internet penetration, young population, adoption of digital payments, work from home culture, aggressive Indian gaming users, new entrants, genre diversification, etc.

Real money games (RMG) such as cards (Poker and Rummy) and fantasy sports have attracted significant interest from investors in 2021, with about $700 million invested in first nine months of 2021.

Close to 90 per cent of the capital invested in the sector was primarily in the fantasy sports and platform gaming sectors.

India also saw the highest casual game downloads in the world (excluding China) in 2020, with Q1-Q3 2020 downloads standing at  about 7.3 billion.

Casual games such as Candy Crush, Ludo, and Teen Patti have attracted new audiences across all demographics. Monthly average users (MAUs) for top 100 mobile games and the time spent on online gaming, are higher by 10-15 per cent post lockdown in 2020, indicating a new normal

Increasing online transactions and emergence of new gamers, have led to strong growth in in-app purchases in casual games, which is a new revenue stream in gaming in India.

Top real money games played in the first half of 2021 were Dream11, Mobile Premier League (MPL), RummyCircle, Octro PlayRummy, Rummyculture, Adda52, and Poker Stars.

The e-sports market is estimated to be $40 million in the current financial year and is projected to reach $145 million by FY25, growing at ~35-40 per cent. As of FY21, 150,000 professional players generate viewership for 17 million people and this number is estimated to grow to 1.5 million professional players, and 85 million and more viewers by FY25.

The sector has started seeing consolidation, with large players acquiring or partnering with mid and small companies to expand their presence across segments.