Gaming revenue in India grew 23% in the last financial year to $3.8 billion – and is expected to almost triple over the next five years.

This is according to a new report from Indian venture capital firm Lumikai, created in collaboration with Google and Deloitte. Some of the consumption data in the report was based on a survey of 2,269 smartphone users in India.

According to this year’s State of India Interactive Media and Gaming Research report, mobile games accounted for 30% of the country’s $12.5 billion new media market in the financial year ended March 31, 2024. New media also includes video content, animation and visual effects. , audio streaming and social networks.

In fact, gaming revenue was almost on par with the $3.9 billion from video content, the largest new media segment.

And gaming is expected to reach $9.2 billion in revenue by the end of fiscal 2029.

Salone Sehgal, founding partner and founder of Lumikai, tells GamesIndustry.biz The Indian video games market has been plagued by misconceptions over the years – for example, that players only play games for real money – but data demonstrates that the sector is much larger.

“The (typical) narratives that Indians don’t play games and/or don’t pay for games have been completely debunked,” she says. “So if we take that off the table, if you’re looking for the next billion gamers, they’re going to come from the Indian market.”

According to the report, India is the second largest mobile gaming market in the world, with 15.2 billion downloads in the year ending March 31, 2024.

Meanwhile, the total number of players increased by 4% to 591 million over the past year.

Sehgal tells us that while most markets saw a surge in gaming revenue during the early years of the COVID-19 pandemic, lockdowns helped boost mobile gaming and drive revenue and gamers away from their real money counterparts in a way that had not been the case. This hadn’t happened before.

“It was after COVID-19 that video games and mobile games became a widespread phenomenon,” she explains. “Real money gaming in India is a decade-long phenomenon. It started with the first companies set up around ten years ago, and over those ten years they have built a very large user base , which accelerated from 2019 to 2021. While UPI (Unified Payments Interface) helped unlock free-to-play, and that only really started happening during COVID. is therefore become a major phenomenon.

The Unified Payments Interface is an India-only instant payments system, first launched in 2016 and allowing users to manage digital payments through bank accounts without the need for debit or credit cards. As more Indian gamers start using it, paying for video games has become easier – for example, 83% of all survey respondents who spend money on games prefer to use UPI to make in-game purchases.

“If you are looking for the next billion gamers, they will come from the Indian market”

Eight million more players started spending money on mobile games over the past year, bringing the total number of paying players to 148 million.

The number of in-app purchases made increased 41% year-over-year, making it the fastest-growing $3.8 billion revenue source – and that’s mainly due to the growing popularity of games midcore such as Battlegrounds Mobile India (Krafton’s Indian version of PUBG only), Clash of Clans and Free Fire Max from Garena.

According to Lumikai’s survey, 64% of users who pay for real money games also spent on midcore titles in the past year.

25% of all gamers surveyed said they had spent money on games, unchanged from last year, while 18% said they are now buying games after only previously enjoying games free without spending.

Average revenue per paying user increased 15% year-over-year, and again, Sehgal believes the rise of midcore games is a crucial factor. Specifically, she credits the launch of PUBG – before its Battleground Mobile India update – as a turning point.

“Previously, we thought that a 1GB game monetized through microtransactions and IAPs was not going to work in India,” she explains. “PUBG has truly made this possible. Now with Battlegrounds Mobile India, Free Fire Max and Clash of Clans, we are seeing other titles that scratch that midcore itch and foreign publishers are now seeing revenue coming solely from in-app purchases in India.

“When you add UPI to that, which allows for very seamless, commission-free small ticket transactions, it really unlocks monetization (in India).”

The report offers a deeper look at what players are spending, with 66% of paying users saying they purchase in-game currency. 61% say they purchase performance-based upgrades, compared to 51% who purchase cosmetics and hardware. other visual objects. Only 36% of high-spending players purchase loot boxes and other packs, while 24% invest in season passes.

Sehgal adds that other misconceptions about India’s gaming scene suggest that the audience was “largely male, largely urban, and largely a rich and affluent phenomenon.” Once again, the data proves otherwise; the number of women playing video games increased from 41% in FY 2023 to 44% in FY 2024, with Sehgal adding that they mostly play casual titles.

66% of players are based in non-metro cities, while 43% are described as “new earners” in the 18-30 age bracket.

Most Indian gamers use low-end mobile devices; 43% use smartphones that cost between $200 and $400, while 38% use smartphones that cost less than $200. This, Sehgal explains, means they have access to cheap data and reasonably good mobile devices.

Add to this the propensity for digital payments, the increase in paying behavior and the fact that more than 40% of gamers are between 18 and 30 years old, Sehgal says you have “the perfect recipe for why Indians have now started paying for games.” “

The average time spent playing video games is also increasing, by 30% to 13 hours per week, double the time spent on social media.

“Previously, it was thought that a 1GB game monetized through microtransactions and IAPs wasn’t going to work in India. PUBG actually made that possible.”

Looking ahead, Sehgal says there are plenty of opportunities for both India-based gaming companies and foreign publishers – and the former are particularly well-positioned to capitalize on the growth of gaming in India.

“60% of gamers say they want to see games that represent our local culture and language,” says Sehgal. “If we apply the same lens to entertainment, Indians consume a lot of global content, but we also consume very mainstream domestic content. This is not reflected in our games today – our games are largely made by global publishers. shortage of games or cultural games specific to India.

“China, for example, consumes a huge amount of games designed for the Chinese market – despite all the approval issues over the last couple of years in China, but the Chinese domestic market was built by basically feeding and building for the domestic market .”

At the same time, she advises foreign publishers – particularly Western ones – that “adaptations will be necessary” if you are targeting India.

“Groups like Riot or Krafton have started to localize very strongly. They have done (partnerships) with local celebrities, they have integrated local characters, they have organized Indian festival events – this is reflected in their games. Their prices reflect those of India, so it’s important to keep all of these things in mind if you want to try to tap into the Indian market.”