Foreign game developers and publishers may have been spoiled by the average console gamer for whom paying for playing has been the norm, but the Indian online gaming market which went straight to mobile is still tempting, even if difficult at first.

The Local Market is Too Young, didn’t Go through the ‘Console Phase’

Since 2015, India has seen the fast rise in 4G connectivity backed up by the world’s cheapest mobile data plans and the rapidly growing penetration of affordable smartphones. Suddenly, a few hundred million people became the proud owners of a superb gaming device, many of them young, considering India’s current low median age.

Thus, India abruptly rose to the status of the “second largest gaming universe in the world outside of China”, explains Girish Menon, head of Media and Entertainment and Partner at KPMG in India. With four of every five desi gamers having started playing within the last four or five years, the Indian gaming market as a whole went straight to mobile, skipping the ‘phase of console gaming’.

This is one of the major reasons why many game developers and publishers are still struggling with monetization in India, says Menon. Paid products are the essence of console gaming: the gaming system itself is not cheap, and then the player needs to buy the games they are to play, he continues.

“It’s an expensive proposition, but that means that anybody who is used to playing console games doesn’t mind spending,” KPMG’s expert says. “In India most of the users skipped that generation, the consoles. This is their first time playing games. They don’t yet see the value of paying for games at scale.”

The Average Revenue Per User (ARPU) in India has been stable at $2 (appr. ₹150) since 2017, which is quite low compared to Q3 2020 figures including Germany’s $13, France’s $22 and the $37 registered by the global leader Canada. The huge gap is evident also in the other key app monetization measurement indicators: the Average Revenue Per Paying User (ARPPU) and the Average Revenue Per Daily Active User (ARPDAU).

Other factors also contribute to the quite moderate monetization figures of the Indian gaming market such as the low purchasing power parity. Its effects can be mitigated by game developers and publishers offering special pricing and dedicated packs more suitable for the Indian market.

Also important is the relatively nascent stage of the gaming market in India with both players and operators still figuring out what games are preferred and how to proceed with ad placement.  “As that maturity increases, we expect monetization to grow,” Menon says.

Monetization Estimates on Traditional Lottery Paint a Different Picture

Lottery in India has been established to be the most popular form of gaming with real money, with monetization estimates running comparably higher than online gaming ARPU figures.

Data quoted in a recently published in-depth study dissecting the Indian lottery market shows that households in Kerala have been spending between ₹12,000 and ₹15,000 crore on lottery bets per year (FY 2018 data). This means that the average Keralite citizen has been paying as much as ₹3,600 ($48) to ₹4,500 ($60) per annum for lottery tickets.

The Young Indian Gaming Market has Enormous Potential

Indian gamers have been spending approximately nine hours per week on online video games, says Yulia Mikhailova, Payments Business Development Lead at Xsolla. This is not only higher than the global average, but India currently ranks third in the world after China and Vietnam according to this user engagement parameter.

A whole 31 per cent of the country’s total population, or 400 million people, play online games, and the figure has been predicted to grow by 50 per cent and reach 600 million by the year of 2025. This means that currently one of every ten gamers in the world lives in India, or that 13 per cent of all gamers are Indian, points out Mikhaylova.

In terms of revenue, the Indian online gaming market reached $850 million in 2019, in 2020 it crossed the $1 billion threshold, and estimates place it at $1.83 billion for 2021.

On the other hand, while US and EU countries have millions of game developer companies, India currently has only about 400. While still displaying a remarkable growth from just 10 Bharat game developers back in 2010, this shows the huge potential the local market has for global game producers and publishers.

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