The Indian gaming industry is witnessing remarkable growth and has the potential to emerge as one of the world's largest gaming markets. Mainly driven by the growth of in-app purchases, advertising revenues in casual and mid-core games, and user base, the Indian digital gaming industry is likely to more than double to $7.5 billion by FY28, says a report by gaming venture capital firm Lumikai.

The valuation mark reflects a robust 20% CAGR. Moreover, the industry clocked $3.1 billion in revenue in the financial year (FY) 2023, according to the annual report titled ‘State of India Gaming’ released by Lumikai in collaboration with Google.

The data decoded in the report highlights the shift from India being one of the emerging markets to now being a key market in the world driven by faster download speeds, rapid smartphone penetration and affordable data. “Increasing affinity towards byte-sized entertainment and participation in interactive communities have also been key drivers in the growth of gaming across the country,” says the report.

The data further outlines India's standing as one of the top countries in the world for the overall number of downloads of mobile games. Over 50% of all Indian internet users account for the gaming population in the country. The research states that in FY23, this figure increased by 12%. The data also showed that, on average, gamers now spend 10–12 hours a week playing games, a 20% rise from the previous year.

“Indian gaming has been on the rise because of rapid digitisation, growth in new gamers and new paid gamers, and increasing diversity of gaming content consumed,” Salone Sehgal, founding general partner, Lumikai.

She acknowledges the funding has slowed down this year but the outlook towards the gaming industry is extremely positive. “We’re particularly excited to see the increasing engagement of gamers from non-metro cities, which demonstrates the massive growth potential and the opportunity in the Indian gaming industry,” she adds.

The projected growth trajectory refutes the narrative that in-app purchases decreased after the popular Battle Royale games Free Fire and BGMI were suspended. Notably, in-app revenue outside of Free Fire and BGMI increased by 37% year over year. This was seen due to gradually rising revenue across casual and mid-core games, which suggests that Indian players are increasingly discovering new intellectual properties and are more likely to reimburse. Concurrently, RMG revenue increased by $500 million in FY23, but recent tax laws and business consolidation are likely to provide challenges in the years to come.

Other key findings of the report reveal that 41% of gamers are female and 59% of gamers are male, with 66% of gamers hailing from non-metros. Most users play games to unwind or socialise with friends. Users who responded to the study indicated that 41% had progressed from playing casual games to all kinds of games and that 28% were more likely to experiment with new genres. More than 58% of consumers reported making in-app purchases, and 62% said UPI was their preferred method of payment when buying games.

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