In recent years, India has emerged as one of the top five markets for mobile gaming in the world. According to Statista Research & Analysis, the Indian gaming industry was valued at Rs 62 billion in the 2019 fiscal. Mobile gaming has emerged as the biggest growth driver, dominating the gaming industry with 89 per cent contribution to the revenue share. In contrast, PC and console gaming has projected muted growth while appealing to a niche audience. Mobile gaming is riding on the back of low-cost smartphones, high speed internet and democratised data. The rise in its popularity is also attributed to India’s favourable demographics, the proliferation of virtual payment mechanisms and a substantial improvement in the quality of games being developed. Given its large youth population, India is seeing an increased uptake of games like PUBG and Fortnite. As per Statista, the overall gaming industry is expected to reach over Rs 250 billion by 2024. Meanwhile, NASSCOM estimates that the Indian mobile gaming market will reach 628 million gamers in 2020 from over 300 million in 2019.

Industry overview

The smartphone revolution has been driving the rapid adoption of online gaming among millennials. Given India’s largest youth population and second largest internet population, the country is one of the world’s leading markets in the gaming sector. According to KPMG, 60 per cent of India’s online gamers are below the age of 24. Not only is India becoming a lucrative market for games, it is also witnessing a huge growth in game development companies with 275 companies currently operating in the country.

The Indian gaming market has also witnessed an increase in foreign investment. Chinese internet giant Tencent, which has stakes in several popular games, is planning to invest in the gaming industry in India. In 2019, Youzu launched the Indian version of its famous strategy games. Further, Vietnam-based StomStudio recently partnered with mobile game developer Gamesbond to create mobile games in India.

Source : Statista

Key drivers

Smartphones made affordable and accessible

The affordability and ease of access to smartphones are contributing to the rise of casual and hardcore gamers. This is also reducing the need to invest in a play-station or any other video game console to meet their gaming requirements.

The advancement in smartphone console quality graphics and gameplay mechanics with multi-point touchscreens is taking mobile gaming to a whole new level. The transforming graphics processing unit has unlocked the potential of the mobile gaming market, allowing smartphones to run AAA titles. This has further been aided with declining costs, improved pixel ratio, better processors and larger screens.

Various studies indicate that 20 per cent (75 million users) of the mobile gaming base in India is constituted by serious gamers, while around 50 per cent (over 200 million) users fall somewhere between serious and casual gamers.

Internet penetration

Complementing the growth in smartphone usage is the declining cost of data services. With the sharp rise in internet penetration and availability of low-cost data, India has seen a surge in online gamers, strengthening the demand further. Internet penetration has also led to a rise in media consumption, which will support new concepts like game streaming. With the availability of high speed Wi-Fi and the impending roll-out of 5G networks, streaming games with advanced graphics will soon become a reality.

Content customisation

The share of mobile phones in overall gaming revenues has grown from 18 per cent to 51 per cent, riding on increased consumption in Tier II and Tier III cities. This has led to the adoption of vernacular languages in gaming applications to capture the semi-urban market.

Indian game developers are also building titles in multiple local languages and themes. Further, with voice assistants taking over a regional tone, brands are witnessing an expansion of the customer base and opening up of new markets. Mobile game developers have also started introducing games that are more local in nature, drawing inspiration from the cultures and lifestyles of local people who are the target audience. This content customisation is expected to drive the domestic gaming industry forward.

Others

Transforming technologies: Rise of AI, AR/VR

Augmented reality (AR)/virtual reality (VR) gaming is expected to receive a significant thrust 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 assets for gaming, ranging from plot to animation, quickly and affordably. This will empower users with multiple options.

Robust hardware

E-sports is also evolving in the country, which calls for better equipment. Companies like Dell and Lenovo have already witnessed growth in the high-end gaming segment in India, driven by smaller towns. The gaming segment accounts for 30–60 per cent of HP’s sales in India. Further, Lenovo has witnessed a 25 per cent year-on-year growth in the Indian gaming business.

Rural uptake

With mobile internet becoming increasingly cheaper and more accessible, industry statistics reveal that up to 80 per cent of regular gamers are from non-metro cities, and 40-60 per cent of the overall gaming population of India resides in Tier II and Tier III towns. Cities such as Mangaluru, Guwahati, Jaipur and Bhubaneswar are reportedly home to countless online gamers.

Covid-19 drives adoption

The Indian mobile gaming industry is witnessing a short-term benefit from the Covid-19 outbreak and the lockdown in the country. During the past few weeks, the industry has witnessed an uptick in the number of users and a surge in the number of hours spent on online gaming. According to a joint report by BARC India and Nielsen there has been an increase of 26 per cent in the time spent on gaming platforms. WinZO Games says online traffic on its games has increased three times. Further, Games2Win witnessed around 1.5 million gamers daily against an average of 1.1–1.2 million earlier. Hitwicket’s users have increased by 10-15 per cent over the past few weeks. Such a scenario has also attracted investors in the sector.

Challenges and opportunities

There are several challenges facing the segment such as control management on smartphones, security assurance and game discovery. Further, easy availability of pirated games in India has enabled gamers to play their desired games for free or at a relatively low cost, which has impacted sales. Meanwhile, since the telecom industry is burdened with debt, the quality of mobile internet is expected to suffer. This may jeopardise the entire online gaming ecosystem as patchy internet services can ruin user experience, especially in gaming, which requires high levels of engagement and involvement.

Challenges notwithstanding, as India has a skilled workforce available at a relatively low cost, game-developing companies are outsourcing their development to India. Apart from providing low-cost labour, India serves as an emerging market for gamers abroad. They can perform game testing with the available gamer audience. The mobile gaming segment offers attractive investment prospects and employment opportunities to application developers and graphic designers. Given the surge in demand for mobile games, gaming companies are increasingly looking for talented designers and developers who can constantly innovate. This is necessary to stay afloat in the highly competitive mobile gaming business.

As per industry experts, the Indian online gaming market will continue to experience accelerated growth, largely driven by digitalisation. The constant need for improvement due to competition among gaming companies will also increase the uptake of AI and cloud gaming. With such advancement in technology, both entrepreneurs and players have a bright future. s

By Shikha Swaroop