India's online gaming market grew by 23% in FY24 despite GST burden: Report

Average weekly time spent on online games soars 30%. Over 44% of gamers are now women, up from 41% the previous year, playing casual mobile games

India’s gaming market grew 23 per cent year-on-year (Y-o-Y) by revenue to $3.8 billion in financial year 2023-24 (FY24), despite the newly imposed 28 per cent blanket goods and service tax (GST) on online gaming, according to a report by gaming-focused venture capital firm Lumikai.

 

With sustained growth in in-app purchases and ad revenue, the gaming market is expected to cross $9.2 billion by FY29, growing at a five-year compound annual growth rate (CAGR) of 20 per cent, Lumikai’s ‘State of India Interactive Media and Gaming Research’ said.

 

While real-money gaming (RMG) continues to be the biggest driver of revenue for the industry at the moment, contributing as much as $2.4 billion to the overall revenue pool, in-app purchase revenue was the fastest growing segment in FY24 at 41 per cent Y-o-Y.

 

By FY29, in-app purchases, growing at a CAGR of 44 per cent, are expected to surpass RMG revenues, the report said.

 

“It is very clear that gamers are migrating to playing other kinds of (non-RMG) games. These include casual and mid-core games. Their motivation to play is not just winning money, it is becoming recreational,” Salone Sehgal, Founding General Partner at Lumikai, told Business Standard.

 

Revenue from midcore games grew higher than anticipated at 53 per cent Y-o-Y in FY24, while casual and hyper-casual games saw 10 per cent annual growth in in-app purchase revenue. Ad revenue remained stable despite global pullbacks on ad-spends, the report added.

 

Casual and mid-core games derive most of their revenues from in-app purchases, while RMG firms require a monetary deposit. As gamers continue to migrate towards non-RMG formats, there has been a 20 per cent increase in time spent on casual games in FY24.

 

Regardless, RMG firms added as much as $400 million in topline in FY24 by absorbing most of the GST burden coupled with a packed live sports season comprising two world cups and an IPL.

 

“While the GST norms have not had an impact on the topline of RMG firms, there has been a 30 per cent decrease in gross margins with an almost two-fold increase in payback periods. While the larger players have been able to absorb the burden, smaller players are facing working capital issues,” Sehgal said.

 

While the migration from RMG to casual gaming continues, Indian gamers are becoming more willing to spend on games. As many as 25 per cent of gamers said they have spent money in games in FY24. According to the report, the top payment motivators of paying gamers include unlocking new content and upgrading in-game items.

 

Currently, gaming constitutes 30 per cent of the broader $12.5 billion new media market, and is its fastest growing segment. The Indian gaming market added 23 million new gamers to cross 590 million total gamers in FY24. At the same time the average weekly time spent on games increased by 30 per cent, from 10 hours to 13 hours, the report said.

 

In terms of demographics, 44 per cent of gamers are women, up from 41 per cent the previous year, playing casual mobile games.

 

As many as 66 per cent of gamers come from non-metro cities, and 43 per cent of gamers are first-time earners in the age-group of 18-30, exhibiting high propensity to pay for gaming and interactive entertainment.  

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53% rise in revenue from mid-core games

41% revenue growth in in-app purchase segment

20% increase in time spent on casual games