Casual online gaming set to grow at 29% CAGR in FY 2025, to Rs 169 billion: KPMG
The Indian online gaming market has seen incredible growth in not only the number of players but also the levels of user engagement. According to the recent KPMG report Beyond the Point of No Return – An Introduction to Casual Online Gaming in India, from around 250 million players at the end of FY18, the number of players in India grew to around 400 million by mid-FY20, the second largest online player base in the world after China . India’s online casual gaming sub-segment was Rs 60 billion in FY21 and is expected to grow at a CAGR of 29% in FY21-25 to size 169 billion rupees.
Here are the highlights:
- In 2021, there were 420 million users in casual games, 92 million RMG and casual card users, 60 million RMG card users and fantasy sports.
- The online gaming segment in India was estimated at Rs 136 billion in FY21 and is expected to grow at a CAGR of 21% in FY21-25 to a size of Rs 290 billion.
- In total size, the casual online gaming sub-segment is the largest and stands at Rs 60 billion in FY21, accounting for about 44% of total online gaming revenue.
- Currently at 423 million in 2021, the Indian game user base will grow to 657 million by 2025 and the market size will grow to Rs 290 billion by 2025, which is currently Rs 136 billion.
- The segment is significantly under-indexed on monetization with lower ARPUs compared to gaming markets such as Indonesia, Malaysia and South Africa which are comparable in terms of GDP per capita.
- The 10 best games downloaded (Google Play Store) in April 2021 are Ludo King, High Heels, Carrom Pool: Disc Game, Garena Free Fire, Xtreme Boat Racing 2019, Hill Climb Racing, Join Clash 3D, Howzat Fantasy Cricket, Temple Run 2, Subway Princess Runner etc.
- Compared to global markets, online gambling in India is young and in its infancy, but is among the fastest growing gambling markets in the world. India, despite having the second highest number of players in the world, is significantly under-indexed on monetization with lower ARPUs compared to developing gaming markets such as Indonesia, Malaysia and Africa. from the South, etc. Some of the reasons for India’s under-indexing in terms of ARPU are as follows:
- Relatively lower maturity of casual gaming as a segment with the recency of the digital revolution and low penetration of PCs and consoles
- India’s GDP per capita significantly lower than mature gaming markets
- Lack of purchase price parity for game pricing (India vs. developed markets) by major studios
- Negative historical perception of gambling in India
- Lack of clear government support historically for the gaming ecosystem
- With India moving up this maturity curve, monetization and hence ARPUs are likely to increase dramatically due to increased user penetration as younger gamers adopting games, an increase in disposable income, an increased propensity to spend on games as a form of entertainment and more time spent playing.
- India recorded the highest number of game downloads in the casual mobile game segment in the world (excluding China) in 2020 with 7.3 billion downloads from Q1 to Q3 2020, or 17% global mobile game downloads (around 43 billion, excluding China) during the same period.
- Monthly active users for the top 100 mobile games in 2020 increased from 630 to 670 million, was eventually reduced after the lockdown to 480-520 million, but decreased to an above average than before COVID (425 to 475 million), which indicates that increased adoption of the game has been observed. it wasn’t just during confinement.
- Main growth drivers and levers: increasing smartphone penetration, increasing internet penetration, young population, adoption of digital payment methods, etc.
- With an upward movement in the gaming maturity curve for India, consumer spending; led by in-app purchases (IAPs) are expected to experience strong growth over the next three to four years.
- With purchasing power parity (PPP) adjusted IAP pricing, content localization, social aspects of gaming, and emerging opportunities around multiple gaming platforms capable of crafting monetary rewards, the consumer is spending around casual online games is likely to see better traction.
- The main evolving themes of the sector are as follows:
- Cloud gaming: With the proposed launch of 5G services, cloud gaming has the potential to transform the gaming experience for a mass of users, removing the capabilities of devices. This is particularly important for markets like India, where the capacity to invest in equipment is limited. Projected cloud gaming revenue is expected to reach $ 12 billion at a CAGR of 25%.
- Esports: Over the next five years, the esports segment is expected to grow rapidly due to increased interest from brands in sponsorship, publishers to promote games, and the entry of new players across the chain. value, from the organizers to the participating teams. The Indian eSports sub-segment is expected to grow 27% CAGR in FY 21-25 to a size of Rs 5.7 billion.
- Outsourcing game development can help solve many issues related to cost, talent, and time to payback.
- Artificial Intelligence in Casual Games: AI is widely used in game development (using AI-generated scenarios), player engagement, interactive in-game experiences, and game journey personalization. every player with the games.
KPMG Partner in India and Head of Technology, Media and Telecommunications Satya Easwaran commented: “Our report – Beyond the Tipping Point – An Introduction to Online Casual Gaming in India aims to simplify the game. Multi-layered ecosystem of the world’s second largest geography of casual online gaming users. Ready for 3X revenue growth between FY21-25, we have been aware of the keen interest from businesses and investors to ride the incredible wave of opportunities that the online casual gaming industry has to offer. After experiencing rapid growth in the past five years, due to the growth of digital infrastructure in the country and the availability of leading titles, the online gaming segment in India is now a business. serious, the gaming market in India is primarily mobile.
M&E Girish Menon, Partner and Director of KPMG in India, added: “The online casual games sub-segment in India has become the largest in terms of consumption among all online games, with almost 420 million. of players engaged in casual online gaming in fiscal year 21. Online casual gaming reached its tipping point in 2020, with consumption and engagement at an all time high. The growth potential of this sub-segment is immense, with improved monetization aiding the growth of the developer and publisher ecosystem, leading to the likely emergence of large-scale players. Consumer spending and ad-based monetization, which is unique to India, expected to experience strong traction, with India moving up the maturity curve and supplying world-class securities with the adoption of reward / incentive ads and game title localization being the key enablers.
Additionally, with the emergence of ecosystem enablers such as esports and game streaming, casual online gaming is likely to appeal to the masses and professionals alike. Finally, with technologies such as cloud gaming on the anvil and the adoption of the latest AI / ML-led technologies, online casual gaming in India is serious business for both ecosystem players and players alike. for investors. We anticipate that the online gaming segment will be among the most important segments of the M&E industry in India in the coming years, garnering a share of the Indian digital billion’s time and wallet.