In the last three years, particularly since the onset of Covid, online gaming in India has gained momentum. According to EY’s recent report, the online gaming industry has clocked a significant 28 percent CAGR from FY20 to FY23, resulting in a market size of Rs 16,428 crore in FY23. Industry estimates anticipate further growth, projecting a market size of Rs 33,243 crore in FY28E, with a 15 percent CAGR.
“The online gaming segment in India has seen remarkable growth with immense economic potential. The country boasts a substantial gaming community, comprising 42.5 crore gamers, the second largest globally after China,” said the report.
EY analysis also said that the sector holds the potential to boost Foreign Direct Investment (FDI) inflows, employment, and investments in various sectors. It will also catalyse ancillary sectors like fintech, cloud services, data analytics, and cybersecurity.
The industry has attracted consistent investments totalling Rs22,931 crore between FY20 and FY24 from both domestic and foreign sources. Additionally, it directly and indirectly employs around one lakh individuals, with the prospect of expanding to 250,000 job opportunities by 2025.
Within online gaming, real money gaming (RMG) sub-segment constitutes
a substantial part of the online gaming ecosystem, comprising 82.8 percent of the market share in FY23, with more than 400 RMG start-ups.
Industry estimates this sub- segment to contribute around Rs6,500 crore-Rs6,800 crore as direct tax revenues(comprising TDS and corporate tax), and Rs75,000-Rs76,000 crore as indirect tax revenue (GST) to the exchequer during FY24−FY28.
Moving on from taxes and revenues, the report also said that India’s online gamers are expected to grow at a CAGR of 5 percent and reach 53.8 crore by FY28.
The percentage of paying gamers among the total gamer base is also anticipated to increase gradually, reaching 34 percent by FY28. This growth is primarily attributed to an increasing interest in RMG among tier 2 and tier 3 audiences a surge in in-app purchases, gaming evolving into a lifestyle choice of many individuals, fostering willingness to pay and an inclination to invest in enhanced gaming experiences
“India possesses a distinctive demographic profile, with 65−70 percent of gamers below the age of 34. Leveraging the world’s largest youth population, this demographic advantage bodes well for the country’s future growth in game consumption and positions it as a promising hub for emerging gaming trends and innovations,” said the report.
India’s gamer penetration rate hovers at around 30. This figure, however, remains notably lower compared to China and the U.S., where the gamer penetration ranges between 53 percent and 56 percent. This indicates the scope for substantial growth of the gamer base and the segment in India.