Gaming is serious business in India. After making the most of the stay-at-home traffic in the lockdowns, businesses in the space are now focusing on strengthening their revenue streams. Content, subscription, advertising and micropayments are the four primary models that gaming companies are working on to monetize their offerings.
According to Piyush Kumar, founder, and CEO, Rooter as of 2022, the Gaming industry in India stands at $2.3 billion in revenue and is expected to grow to $7 billion in 2025.
He says, “Every stakeholder in the industry has potential to make a high revenue growth business. Gaming is one of the fastest-growing sectors in entertainment in India. Consumers in the sector show a very unique trait of spending a lot of time on content and fairly large amounts of money across in-game assets and hardware needed for gaming. This makes this TG highly monetizable, given their propensity to pay.”
Rooter’s revenue has jumped from a few lakhs in FY20 to Rs 2 crore in FY21 and Rs 12 crore in FY22. “We are now aiming to clock a revenue run-rate of Rs 60 crore for FY23,” Kumar says.
Since last year the gaming and esports streaming platform has been sharply focused on building multiple revenue streams. In the last quarter they recorded a 59 percent spike in MAUs (monthly active users) and an 83 percent jump in revenues from Q4 2021 to Q1 2022.
These revenues have two key revenue sources for Rooter - brand monetization and user monetization.
Leading the growth story
As reported by Statista, the largest section of India's mobile gaming audience belonged to the 25-44 age group in 2021. The target audience in the sector is exactly the audience most marketers across categories are looking to engage with. Naturally, brands are interested.
“Last decade brands were understanding the engagement code through social media. This decade belongs to brands who understand the same through gaming. Young consumers are here for entertainment and engagement and that is why brands are looking forward to working with us,” says Shivanandan Pare, executive director and CEO at Deltatech Gaming Pvt. Ltd. Deltatech is working with multiple brands in their loyalty programme section.
Abhishek Aggarwal, co-founder at Trinity Gaming India, says earlier they saw the inclusion of only endemic and industry-specific brands like game developers or publishers but recently, non-endemic brands like FMCG and more have started investing and supporting gaming content creators. Since 2019, the company has seen 200 percent growth in revenue.
Advertising and sponsorships are Trinity’s significant sources of revenue, along with fan-related engagement activities like merchandising and sales of digital goods. “This revenue generation is based on our creator pool. However, we are focused on diversifying the revenue streams and working on producing content revolving around gaming,” Aggarwal says.
Traffic and growth
The growth in traffic in the last two years has opened up monetization channels for companies. Larger user base is helping these companies to sell in-app offerings and is also being used as a sales pitch to advertisers.
Justin Shriram Keeling, founding general partner at Lumikai that is one of India’s first gaming funds, says that last year there were 10 billion downloads of gaming apps, that is more than the US. There are half a billion gamers in the country today, with an approximate paying user conversion of 20 percent which translates to 120 million who actively pay in and for games.
“Monetisation has absolutely grown with this -- last year there was a 50 percent growth in new paying users in gaming, with over $600 million in gaming in-app purchases,” Keeling says.
Lumikai’s surveys indicate average yearly spending of $16/year per user. Propensities to pay are even higher in mid-core and core genres, with the paying users spending $7-14 per month.
Talking of user spends Pare points out micro-payments have also led to growth in traffic wherein more and more people get on the platform because of the low entry barrier which is sometimes as less as 25 paisa. This is the smallest amount that players have to put in a cash game micro stake to participate in a big blind on Adda52.
New paying users in gaming have grown faster in India than any other country in the world for two years in a row. 40 percent in 2020 and well over 50 percent in 2021.
Rajan Navani, founder and CEO, JetSynthesys seconds Keeling. “We have noticed the trend that Indians across digital media are getting increasingly comfortable with paying for entertainment online, and the same applies to gaming as well. According to a report by SensorTower, player spend is set to reach $138 billion globally by 2025,” he says.
Other than that he says, in-app advertising has also been an interesting revenue pull for the studios.
“Gen Z and Millennials spend more time gaming than on any other form of entertainment. These opportunities are very attractive for the advertisers making it a rewarding mode of monetization for the studios,” he adds.
JetSynthesys has seen 3-5 percent month-on-month growth leading to 40-60 percent year on year growth.
Growth of ancillary businesses
While growth is a crucial driving force for pushing monetization in the industry, the technology used to promote these platforms deserves equal credit. Fueling the growth of the gaming industry and also gaining from it are numerous gaming studios, IT partners, merchandise providers and even consultancies.
Yudiz Solutions for instance, a Gujarat based IT solutions company offering services related to mobile game development has a target of 50-100 percent growth per year. How do they plan to do it? They plan to cater to projects from several industries that want to leverage the potential of superior technologies such as IoT, Metaverse, Blockchain, and Unity 3.
“The majority of our revenue will be obtained by providing cost-effective development solutions in the blockchain and gaming industry,” says Bharat Patel, co-Founder and director, Yudiz Solutions.
Another company, 8Bit Creatives, an esports consulting and talent agency, says they’ve clocked up to 5X growth in revenue in the last two years. Advertisements have been a major revenue source for them through their content creators. That apart, they also have platform partners that contribute to revenues through streaming deals and IPs.
Just like the gaming companies these companies are also working with both endemic and non-endemic brands like OnePlus, Aorus, Elgato, Iqoo, Amazon Prime Video, Netflix, KFC, Mamaearth, Loreal, PNG Shiksha, Aditya Birla Group, Coca-Cola, Intel, Airtel and Unacademy.