Here's Why More Investors Are Turning To the Online Gaming Industry
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The online gaming sector in India is evolving continuously, emerging as a significant part of the mainstream entertainment industry. This domain has witnessed exponential growth over the last five years. Currently estimated at $930 million (up from $360 million in 2015), the Indian gaming industry is projected to be valued at $3.7 billion by 2024 owing to the growth of digital infrastructure as well as the improved quality and engagement of gaming content, according to a recent report by Maple Capital Advisors. The report, titled Gaming - India Story, said there are over 400 gaming startups in India and mobile gaming has captured 85 per cent share of the country’s online gaming market.
The growth of India’s gaming industry is being propelled by increased usage of smartphones and other Internet-enabled devices, rising disposable income, the change in society’s attitude towards gaming and the ever-expanding young population base in the country. However, it is the proliferation of smartphones that has revolutionized this sector and opened new avenues for a new generation of gaming companies. The online gaming industry presents the next multi-billion dollar opportunity for both startups and enterprises, with more and more people turning to online games for entertainment during this pandemic. Further, the ban on Chinese apps makes it the perfect time for Indian entrepreneurs to foray into this segment and come up with indigenous gaming products that are designed specifically for Indian gaming enthusiasts.
The stellar rise of online gaming makes it a very lucrative sector for investors if statistics are any indicator. As estimated by Maple Capital Advisors, India's gaming industry attracted about $350 million in investments from venture capital firms between 2014 and the first few months of 2020. Some of the biggest funding rounds include $100 million investment by Tencent and Steadview Capital in Dream11 in 2016, $41 million investment by Sequoia Capital and Times Internet in Mobile Premier League in 2019, and $20 million investment made by One97 and AG Tech holdings in Paytm Games in 2020.
The coronavirus pandemic and the subsequent lockdown of three months have further accelerated the scope of India’s online gaming sector. More people are installing gaming apps in their smartphones to pass time as they remain shuttered inside their homes. The three key segments of online gaming that garnered a huge response from users were real money games (RMG), mobile-centric/casual games and e-sports. As a result, online gaming companies in India registered a 24 per cent spike in traffic between the weeks of February 10 and 16, 2020 and March 16 and 22, 2020.
Against this backdrop, it is not surprising that marquee VCs and large corporates are now showing a greater interest in online gaming startups. As the online gaming industry continues its upward growth trajectory, they now are keen on capitalizing on the new opportunities and maximizing their profits.
The future of the Indian gaming sector does look promising as both domestic and international investors come on board. While we are yet to see if online gaming can be the next fintech in India, a growing number of reports predict that it will soon be a major contributor to the country’s GDP. When it comes to investors, this industry is expected to give back great returns, early exits, and overall the pleasure of being a part of a thriving domain.