India's paid gamer base to touch 235 million in 2025, driven by in-app purchases

India's paid gamer base is set to touch about 235 million in 2025, from 80 million in 2020, according to a new report by gaming and interactive media venture fund Lumikai and consulting firm Redseer.

It said the majority of the growth will come in the form of in-app purchases in casual, mid-core and eSports segments. In-app purchases are expected to grow at a rate of 30-40 percent for the next five years with the rise of paying users in casual and hypercasual gaming, the report said.

Image Source: Redseer

The next wave of growth will also be driven by gamers coming from Tier 2 cities with increasing smartphone and internet penetration due to low tariffs and the growth of regional offerings and India-first content, it said.

Overall, the total base of gamers in the country is set to grow to about 650-700 million in 2025, from around 400 million in 2020.

An average gamer spends an average of about $16 a year on gaming and it takes about a week for gamers to start paying to play games, the report said. It defines someone as a paid gamer who has paid at least once when playing a game.

Which game makes more money?

Real money games attract the highest spend on a monthly basis, with users spending an average of about $3.5 per month, while hardcore gamers (like Genshin Impact, DOTA, League of Legends) spend about $2.4 per month.

As a result, real-money games continue to be the largest revenue source for the industry, accounting for about 51 percent of the overall industry revenues that stood at around $1.8 billion in FY20. The segment is expected to witness a growth of 25-30 percent CAGR over the next five years and is estimated to account for 53 percent of the industry revenues in FY25, the report said.

“While real-money gaming will continue to dominate the market, in-app purchases (IAP), virtual gifting, etc to become mainstream spend categories among paid gamers, and the revenue from IAP is expected to outgrow overall India’s gaming market growth rate,” said Mukesh Kumar, Engagement Manager at RedSeer.

Overall, India's mobile gaming market is set to more than triple in size to over $7 billion by 2025, from $1.8 billion in 2021. While e-sports and game streaming is currently a nascent market in the country, it is expected to grow at 40-45 percent CAGR for the next five years.

India has the world’s largest number of game downloads, estimated to be 746.7 million in September 2021, or 17.7 percent of total worldwide downloads, according to app intelligence firm Sensor Tower.

The government-imposed lockdown due to the Covid-19 pandemic further accelerated the growth of these games as mobile app downloads increased by 50 percent and consequently, user engagement went up by 20 percent, the report said.

"The (gaming) market already exceeds preconceived notions around size, growth, sophistication, and most importantly propensity to pay. India’s gaming market is due to 3x in value to over $7 billion by 2025, driven by a healthy diversity of monetisation mechanics that indicate plenty of white spaces for new investment, and massive potential for a new generation of leaders across the gaming value chain” said Justin Keeling, General Partner at Lumikai Fund.