India’s gaming industry, which comprises nearly 420 million players, is one of the world’s largest markets. Yet, it is a paradox: among the highest in downloads but trailing in monetisation. The banning of the RMG presents an opportunity to turn this paradox into the greatest potential

A latest report by Delhi-based gaming and esports platform Rooter, with Mumbai-based VC firm Lightbox, which is its key investor, explores how the non-RMG opportunity can be fully tapped in India, drawing on global market data and industry analysis to explore its unique position: young, multilingual and mobile-native, but still early in its monetisation arc.

Sandeep Murthy, managing partner, Lightbox and Rooter co-founder and CEO, Piyush Kumar sat down with Fortune India to discuss the findings of their latest report on India’s gaming industry, exploring the shift from real-money gaming to non-RMG opportunities, the growth of in-app purchases, and how India’s nascent market presents untapped monetisation potential.

Until recently, real-money gaming monopolised the Indian market with an 80% share, but after the government’s ban on money-based gaming, attention has primarily shifted back to esports.

One of the key insights of the report is increased spending in esports. It says almost three-quarters of gamers are already spending in non-RMG, both short and long session cohorts, with over 30% spending ₹1,000 per month. Murthy believes entertainment has evolved from programmed content to user-selected content. "The next extension of that is the opportunity to interact with entertainment. And to me, that's what gaming is.” 

On increasing monetisation in non-RMG, Murthy says initially, advertising was expected to be the primary driver of monetisation in gaming. Still, the way Rooter’s gaming commerce vertical ‘Rooter Shop’ took off has shown how content-to-commerce can capture the monetisation chain, apart from other channels like ads, sponsorships, creator monetisation and direct sales.

The early-stage venture capital firm invested in Rooter’s series A funding round in 2022 and followed up with another $16 million growth funding round in 2023, including both equity and debt components.

Rooter's Kumar, while talking about the report, says it represents a three-to-four-year journey of Lightbox and Rooter to understand the gaming industry, and that the report explains how gaming engagement works and how different industries are getting monetised.

How to solve India’s lowest APRU and monetisation problems?

More than 3.42 billion people play games worldwide. China, India and the US are home to the largest bases of gamers at 702 million, 419 million and 221 million, respectively. However, in terms of ARPU (average revenue per user), the US leads with $215, followed by China at $68. 

India has one of the lowest ARPUs (average revenue per user) at $3.03 despite having the second biggest user base. And that’s where the opportunity lies. “About 200 to 250 million are serious gamers (midcore to hardcore). About 60 to 75 million people are spending money in India on gaming. The industry expects the number of paid gamers to increase from 60-70 million to 100 million quickly, partly due to the RMG situation,” says Kumar.

Globally, monetisation approaches are evolving beyond conventional one-time purchases. There’s been a rise in the number of microtransaction-based, free-to-play games, where players get free access to games but pay for specific in-game items. Micro-transactions accounted for 58% and 32% of PC and console revenues, respectively, in 2024.

Subscription-based services such as Xbox Game Pass, Apple Arcade and PlayStation Plus are also growing, enabling users to access several games at once on a given hardware for a fixed monthly fee. Cloud gaming services and in-game advertising are also on the rise.

The Rooter CEO explains that the gaming company initially focused on ad monetisation, sponsorships, and influencer campaigns. They also experimented with premium content and subscriptions, particularly with esports. Even dabbled with gifting.

“In-app purchases are the most important mechanism, driving growth from $100 million in 2020 to nearly $1 billion. In India, in-app purchases worth $1 billion are happening right now as more than five games are doing over $100 million in revenue,” says Kumar.

The in-app purchase market in India is growing by the day. Five gaming players are currently making in excess of $100 million in in-app purchases, says Kumar. The industry has shifted from a "cottage industry" to a real business.

Rooter, for example, launched Rooter Shop, a marketplace for in-app currencies, last year. Kumar says every paid gamer on Rooter spends an average of about $30 a month (2,400 rupees). “First purchase: around $20. Repeat purchases: go to $40. The assumption is that India will settle at an average of $10 to $30, and gaming will push it,” says Kumar.

Delhi-based gaming company Rooter originally started as a game streaming, e-sports and content platform, which soon expanded into content-to-commerce, where users get everything from top-ups to gift cards, vouchers to in-game currencies, thus capturing the monetisation chain. 

In his take on monetisation, Murthy says: “The finite nature of time (24 hours in a day) drives the need to optimise time spending, and monetisation makes it easier to acquire customers, educate them, and create engaging experiences.”

Future of gaming investment in India: Local stories, global scale 

The non-RMG ecosystem in India encompasses a wide range of game developers, distribution platforms and content types. Apart from global studios, domestic companies are also making their mark. For example, Gametion Technologies, the creator of Ludo King, is a prime example of an Indian studio dominating a segment of the Non-RMG market. Nazara Tech has a portfolio that includes casual and educational games. Many smaller indie studios also contribute to the diverse content pool.

Murthy says Lightbox has always focused on gaming, so the lens hasn't shifted much. “Game development is a hit-driven business, like investing in a movie, while true gaming platforms are rare. Rooter is probably the only one at scale with real monetisation, which is why we’ve focused our investment there and will continue to do more in that space.”

In non-RMG, he sees the biggest shift from an ad-supported world to one where in-app purchases drive far greater monetisation and opportunity. “Advertising will follow user bases in time, but for now I’m very happy with where in-app is going and the growth it’s unlocking for the industry.”

The gaming sector has attracted $3 billion of FDI in gaming so far, but much of that has happened in the RMG space. Will there be a shift? Kumar says yes. 

India has 700 to 800 million smartphone users with available data. As the regulation changes the overall policy environment, India could see major gaming companies coming to India for distribution and scale. “Global studios are now bringing successful PC and mobile titles to India or developing games specifically for this market, encouraged by the new gaming bill and state-level support. Platforms like Rooter, built for scale and democratisation, are at the centre of this wave—there has never been a better time to be a gaming company in India,” Kumar says 

Kumar says cloud and smartphone gaming are also going to become big as companies with bigger pockets enter the space. “Cloud gaming is a big opportunity, with Jio working to bring gaming studios into cloud gaming. Smartphone penetration is a major tech opportunity in India. Games can be customised for lower bandwidth internet or lower-value smartphones.”

In terms of opportunities for new entrants in the non-RMG space, there is a strong and underserved demand for gaming content that resonates with India’s diverse cultural and linguistic landscape, titles based on Indian mythology, culturally resonant content, folklore, history, pop culture, and local stories.

As per the Rooter-Lightbox report, around 75% of Indian users prefer gaming content in Hindi or other regional languages. AI can be a powerful enabler for hyper-localising game dialogues, narratives, avatars, and user interfaces at scale, says the report. 

Kumar agrees, saying that for India to achieve the scale both in terms of volume and value, hyperlocal and culturally relevant games will define the way forward. “Gaming will move local with local stories, characters, and heroes. Cultural nuance will play a very important role in building new audiences, especially in Tier 2 cities.” He adds that India is a fragmented country, and what sells in one region may not sell in another. 

Non-RMG on cusp of breakthrough

Non-RMG gaming in India is on the cusp of its breakthrough moment. Whether it’s in-app purchases, community-driven commerce, or brand partnerships, the pathways to sustainable revenue are opening up. With capital seeking redeployment post RMG ban, the non-RMG ecosystem offers a wide, under-explored canvas from casual and mid-core titles to social and community-driven platforms.

On his projections for the non-RMG gaming industry, Kumar says he is bullish, especially about the app purchase market that’s about a billion dollars currently and is growing at 40%. He believes it will be a $3 to $4 billion opportunity in India in the next 3 to 4 years. “I see at least 10 titles earning over $200 million each, and many smaller studios thriving. Esports could add another half-billion to a billion, putting the industry at $4-5 billion without any real-money gaming.”