AI, entertainment push app revenue to record $345 mn in Q2: Sensor Tower

India's app market crossed $345 million in Q2 revenue as AI, entertainment and digital services pushed non-gaming apps ahead, extending a trend seen in the first quarter

India’s mobile app market reached a record $345 million in in-app purchase (IAP) revenue in the second quarter of calendar year 2026, up 35 per cent year-on-year, as non-gaming apps continued to drive growth. According to market intelligence firm Sensor Tower, non-gaming apps generated nearly $240 million in revenue during the quarter, an increase of more than 50 per cent from a year earlier. The category accounted for 70 per cent of total app downloads in Q2.

 

The latest numbers build on a trend that was already visible in the first quarter of 2026. India’s mobile app market generated more than $300 million in in-app purchase revenue during the quarter, up 33 per cent from a year earlier. Non-gaming apps had already emerged as the main growth driver then, generating more than $200 million in revenue, up 44 per cent year on year.

 

 

The reports point to a market that is no longer being driven only by the total number of downloads. AI services, video entertainment, short drama, e-commerce and digital services are increasingly contributing to app revenue, while gaming continues to grow at a slower pace.

 

AI moves beyond experimentation

 

Generative AI was one of the clearest examples of this change. In Q1, downloads of generative AI apps in India increased 69 per cent (YoY). ChatGPT had crossed 300 million cumulative downloads in the country and had already entered the top three apps by revenue.

 

Its momentum continued in Q2. ChatGPT ranked first among non-gaming apps by downloads, with cumulative downloads crossing 358 million. The more interesting change, however, was visible in the revenue rankings. Claude ranked fifth among generative AI apps by downloads but second by revenue. Its revenue increased more than 19-fold year on year in Q2.

 

This report suggested that AI apps are developing a paying audience in India. Users are not only downloading these services to try them out; some are also paying for premium AI capabilities. That gives AI a different role in the app economy from categories that depend primarily on advertising or large download volumes. 

 

Gaming remains strong, but the market is maturing

 

The rise of non-gaming apps does not mean gaming has stopped growing. As per the report, India's mobile gaming downloads reached 2 billion in Q2, up 14.2 per cent from the previous quarter. Ludo King retained the lead position by downloads and was approaching one billion cumulative downloads in India.

• Gaming revenue: Exceeded $106 million in Q2, up 3.7 per cent from the previous quarter.
• eFootball: Downloads rose 214 per cent year on year, while revenue grew nearly 29 per cent. Because of interest around the 2026 FIFA World Cup.
• Kingshot: Revenue jumped more than 13-fold after entering the Indian market in 2025.

However, the overall gaming market appears more established than some of the newer non-gaming categories. The top four highest-grossing games retained their positions from a year earlier, pointing to the continued strength of established titles.

 

In Q1, gaming revenue had already grown 15 per cent year on year, while downloads remained above 1.7 billion. Sensor Tower described the market as more mature and competitive, with established games continuing to lead. 

Entertainment continues to drive spending

 

According to the report, entertainment remains another major source of app revenue. Video entertainment accounted for half of the top 10 revenue-generating apps in Q2. JioHotstar remained among India's highest-grossing apps, showing the continued strength of established local entertainment platforms.

 

The pattern was similar in Q1, when video entertainment apps accounted for five of the top 10 revenue-generating apps.

 

Crunchyroll also recorded its highest quarterly revenue in India in Q2 and became the country's top-grossing Media & Entertainment app for the first time since entering the market. For context, Crunchyroll is a popular online video service focused entirely on Japanese anime shows and movies. Sensor Tower linked the increase to a concentrated line-up of Spring 2026 anime releases and the wider rollout of the platform's updated subscription strategy.

 

The point is that India's app economy is not being driven by one new category. AI is adding a new source of paid usage, while entertainment platforms continue to monetise established audiences.

 

Short drama is becoming a bigger part of India’s mobile entertainment market. In Q1, downloads of short drama apps grew 403 per cent year on year, with FreeReels, Story TV and Kuku TV entering the top 10 downloaded apps in the country.

 

The category gained further ground in Q2, when cumulative downloads crossed 800 million. Story TV was the only short drama app to feature in India’s top 10 download ranking. Its monthly active users reached a record high in June, while revenue rose more than 50 per cent from the previous quarter. The growth suggests that short drama is moving from being a relatively new format to a more established part of India's mobile entertainment market.

 

Shopping and local services expand the market

 

The growth in India's app market is not limited to entertainment and AI. Shopping and local service apps also continued to attract users during Q2. Meesho became India's most downloaded shopping app, with its monthly active users peaking in June.

 

Its reach was also spread beyond the country's biggest cities. Nearly 46 per cent of Meesho's monthly active users came from markets outside the top nine cities.

 

Rapido, meanwhile, recorded its highest-ever monthly downloads in May and became India's number one ride-hailing app by monthly active users in Q2.

 

These examples show another side of India's app market. Users are increasingly using mobile applications for everyday activities such as shopping and transportation, rather than only for entertainment. This also helps explain why non-gaming apps are taking a larger role in the market. Their growth covers a much wider range of activities and services.

 

From a download market to a monetisation market

 

Taken together, the Q1 and Q2 reports show a gradual shift in India’s mobile app economy. The market continues to operate at enormous scale, but downloads are increasingly translating into revenue. In Q1, the market crossed $300 million in in-app purchase revenue, which rose to $345 million in Q2. Non-gaming apps remained at the centre of this growth, with their revenue increasing from more than $200 million to nearly $240 million during the period.

 

AI, entertainment and digital services are contributing to this shift. ChatGPT’s growing downloads and Claude’s sharp rise in revenue show that users are beginning to spend on AI services. Video entertainment continues to be a major source of revenue, while short drama is building a new mobile-first audience.

 

Shopping and mobility apps are also expanding the role of apps in everyday activities. Gaming remains an important part of the market, but its relatively mature growth means newer categories are taking a larger role in driving incremental revenue.

 

The Q2 numbers therefore build on the trend identified in Q1: India’s app economy is gradually moving from a focus on downloads towards monetisation. Downloads remain the foundation, but the ability to turn users into paying customers is becoming increasingly important. For now, non-gaming apps are leading that shift, with strong growth in AI, entertainment and digital services helping push the market to a record quarterly revenue in Q2 2026.