The Indian online gaming market was on a strong growth trajectory even before the pandemic. However, COVID-19, and the ensuing lockdowns and WFH models, provided a tipping point in terms of how Online casual gaming has emerged as a major channel both in terms of the game base at 420 Mn in FY21, and the revenue contribution to the gaming industry at INR 60 bn (of the total gaming industry size of INR 136 bn in FY21).

Through this report titled Beyond the tipping point : A primer on online casual gaming in India, KPMG takes a deep dive into the online casual gaming ecosystem in India, the potential of monetisation models both through In-app purchases and incentivised advertising.

The report also covers near to medium-term trend-markers that are emerging, which have the potential to dramatically change demand drivers and operating models in this segment.

As per the report compared to global markets, online gaming in India is still at a very nascent stage. While the country has the second-highest number of gamers in the world, its Average Revenue Per User is still quite low compared to even other developing and comparable markets like Indonesia, Malaysia and South Africa.

KMPG notes that there could be a number of reasons for this ranging from significantly lower GDP per capita of India as compared to mature gaming markets to a negative perception of gaming in India.

The online casual gaming segment in India had an estimated value of Rs 60 billion in FY21 and is projected to grow at a CAGR (Compound Annual Growth Rate) of 21 per cent over FY21-FY25 to reach a size of Rs 169 billion, reveals KPMG’s ‘Beyond the tipping point – A primer on Casual gaming in India‘ report.

As per the report, online gaming segment in India was estimated at INR 136 billion in FY21 and is projected to grow at a CAGR of 21% over FY21-FY25 to reach a size of INR 290 billion.

The online casual gaming sub-segment accounts for approximately 44 per cent of the total online gaming revenues. In terms of users, the online casual gaming sub-segment, at 420 million gamers in FY21 accounted for about 97 per cent of the total gamers in India and is expected to maintain this share by FY 2025.

Key highlights: At a glance

Gaming as a segment has indeed skipped a complete generation in India, with minimal adoption of PC and console gaming. However, the mobile internet and smartphone revolution in India, which started in 2016, has ensured that this segment has come to the fore, with giant strides being undertaken on the supply side and consistent demand emerging from the gamers.

The COVID-19 induced lockdown in 2020, while devastating for the economy at large, helped online gaming get a leg up in terms of both consumption and monetisation.

A further uptick is expected owing to the lockdowns in 2021, on account of the second wave of the pandemic in India. Gaming has become an alternate form of entertainment, competing with the share of time with other forms of entertainment such as Television, OTT video, Music streaming etc.

However, while consumption and interest in gaming is  at an all-time high in India, the casual gaming segment is severely under-indexed in terms  of monetisation, with ARPPUs amongst the lowest in the world.

It is this gap, which makes the casual gaming sub-segment in India extremely  attractive from a short to medium term point of view. With robust consumption, innovations around building paid gaming models, and advertisers seeing gaming as a viable medium to advertise on, the monetisation in India is likely to move steadily up the maturity curve.

That doesn’t mean casual gaming in India doesn’t have its challenges. Lack of scale for India studios due to limited monetisation, the current dependence on Real money format to monetise, and a relatively lower maturity publishing ecosystem are some of the aspects India’s gaming segment needs to grapple with and overcome.

Overall, the opportunities  far  outweigh these challenges. Indian studios are steadily moving to create world class products, with the success of Ludo King and Teen Patti having demonstrated the same. Further, with emerging trends such as Cloud gaming and Multi gaming platforms, which are a unique phenomenon to India, likely to see traction over the medium to long term, the casual gaming landscape in India holds significant potential.