The year 2020 turned out to be a tipping point for the online gaming industry. As most people stayed indoors amid the Covid-19 outbreak, the online gaming industry witnessed a massive momentum. According to a recent report by Deloitte, India’s online gaming industry is expected to grow at a compound annual growth rate (CAGR) of 40 per cent to reach $2.8 billion by 2022, up from $1.1 billion in 2019. The report states that India is one of the top five mobile gaming markets in the world, with a 13 per cent share of global game sessions, and is expected to add nearly 40 million online gamers during 2020-22. Fuelling this growth are factors such as increasing smartphone penetration, affordable data plans, younger demographics, and a rising number of rural and women consumers.
tele.net takes a look at some of the developments in the online gaming market…
Market dynamics
The Indian online gaming industry is dominated by the mobile gaming segment. According to data provided in 
Limelight Networks’ State of Online Gaming Report 2020, Indian mobile gamers play for longer durations than the global average. On average, Indian mobile gamers spend 6.35 hours per week on this pastime, against the global average of 6.33 hours per week, underscoring India’s position as the world’s fastest growing mobile gaming market.
Given the trends, the Mobile Marketing Association expects revenues from the mobile segment in the country to reach $943 million by 2022, marking a growth of over 200 per cent from $466 million in 2016. Backing this is the growing mobile gamer base, which is expected to reach 368 million by 2022. Segments such as real money games, e-sports and fantasy sports are also expected to witness strong double-digit growth.
Growth drivers for the online gaming market in 2020
Cloud gaming
Recent developments in cloud technology have significantly transformed existing cloud gaming scenarios. In cloud gaming, a server stores the games and performs computations such as video encoding and streaming, game logic processing, and game rendering. This benefits users, especially smartphone owners with limited storage space.
Growth in e-sports
The year witnessed the widespread adoption of e-sports and a rapid rise in e-sports players. E-sports command a huge market demand and are driving industry growth in India and across the globe.
Affordable data plans
Affordable and unlimited 4G data plans offered by telcos are one of the key factors for the huge spike in online gaming. Going forward, the increasing investment in online services and the upcoming 5G infrastructure will fuel further growth in the segment.
Transformational technologies: Rise of AI and AR/VR
Augmented reality (AR)/Virtual reality (VR) gaming is expected to receive a significant impetus with existing headsets and smartphones becoming more capable of matching the quality of consoles and PCs. Further, with the use of artificial intelligence (AI), developers will now be able to create game assets, ranging from plot to animation, quickly and affordably. This will empower users by giving them multiple options.
Increased investments
Once considered an underfinanced sector, the Indian mobile gaming industry is now witnessing keen investor interest. According to industry reports, in 2020, investments in the segment increased to $397.3 million during the period January-December 2020 from $97.1 million during the same period in the previous year. Furthermore, there was massive growth in the amount of money pumped into homegrown gaming start-ups, with September 2020
witnessing the year’s biggest gaming deal. During the month, India’s Dream11 raised $225 million from Tiger Global, TPG, ChrysCapital and Footpath Ventures, which more than doubled its valuation from $1.2 billion to $2.5 billion. Within a week of the deal, Sequoia-backed Mobile Premier League raised $90 million in a Series C round led by SIG, RTP Global, MDI Ventures and Pegasus Tech Ventures. The same year, local gaming platform WinZO raised $18 million in a Series B round led by Makers Fund and Courtside Ventures.
Other notable gaming deals during the year included Zupee raising $8 million from Matrix Partners India, Falcon Edge Capital, the WestCap Group, Orios Venture Partners and the Smile Group; Gamezop raising $4.3 million from BITKRAFT Ventures, Velo Partners and FJ Lab; and Rheo TV raising $2 million from Sequoia Capital’s Surge and
Lightspeed India, among others. Meanwhile, the year saw the entry of Reliance Industries into the gaming industry, with Reliance Jio making an undisclosed investment in AR gaming start-up Krikey.
Big league awaits
While the gaming industry soared in 2020, it also faced several setbacks. In the wake of mounting border tensions with China, in September 2020, the Indian government banned the country’s most popular gaming app, PUBG, under Section 69A of the Information Technology Act, as part of its crackdown on Chinese apps. Further, in 2020, certain states such as Assam, Odisha and Telangana made fantasy sports illegal. Tamil Nadu also recently passed an ordinance banning “online gaming”; however, the ordinance did not explicitly mention fantasy sports platforms.
Despite all the bans and hurdles though, the game was on for the industry through 2020, as it found new ways to improve the user experience. The pandemic gave a shot in the arm to the online gaming industry, helping it move into high gear. According to Maple Capital Advisors, with over 320 million gamers and 400 gaming start-ups, India is expected to grow at a CAGR of 47 per cent by 2022. The segments that are witnessing the maximum uptick are casual board games, real money gaming, and fantasy sports. The growth in these segments – especially fantasy sports – is so huge that it has drawn the attention of NITI Aayog, which has called for a self-regulatory body for online fantasy sports in India. Such developments not only indicate the massive growth potential of this industry, but also call for a designated regulatory body to govern the content served by providers in the gaming industry.
By Shikha Swaroop
