India’s Gaming Landscape: Monetisation Trends And Evolving User Dynamics

“Games are a serious business”. This was the opening phrase of a 2018 article I wrote on the scale and opportunity in the gaming industry, which since then has more than doubled to a revenue of $396.13 Bn in 2023 as compared to $116 Bn back in 2017 – more than the combined movies, OTT and music industries globally. 

Traditionally the largest contributors to this growth have been the US and China. But over the last five years, India has started to emerge as a key player. With over 568 Mn gamers in FY23 and 15.4 Bn mobile game downloads in the same year, India is emerging as one of the fastest-growing mobile gaming markets in the world. 

Fueled by the country’s burgeoning digital consumption, India has rapidly established itself as a global hub for consuming world-class games. At the same time, we see an increase in monetisation as well. With a market size projected to reach $7.5 Bn by FY28, let’s take a look at some key trends driving monetization in the country.

In-App Purchases And In-Game Ad Monetisation Fuelling India’s Gaming Sector

In India today, $1.1 Bn comes from in-app purchases and ad revenue in casual and mid-core games, and this is expected to grow to $5 Bn by FY28, fueling a substantial upsurge in monetisation. 

In FY23 alone, the Indian gaming market witnessed significant growth in in-app purchases (IAPs) and advertising revenues. Leaving aside the predicted fall in IAPs due to the ban on popular titles pioneering in-game monetisation like BGMI and Free Fire, IAP revenue outside these two games grew a remarkable 37% Y-o-Y. 

This reveals growing experimentation for more diverse IPs by Indian gamers. This IAP revenue will play a key role in revenue growth for the industry with a projected CAGR of 46% CAGR till FY28, especially with the rise in monetisation in casual and mid-core games. 

Advertising revenue also continues to be an important anchor when it comes to the overall growth of the industry. With aggregate e-cpm’s in India now over $1, in-game ad revenue is projected to grow at a steady 23% CAGR to reach $1.7 Bn by FY28. 

User Evolution And Its Impact On Monetisation

In our research, we see a 25% conversion of gamers to paid users. The ARPPU (average revenue per paying user) reached $19.2 in FY23, growing nearly 10x since FY19. 

While we’ve mapped the revenue trends, there is much to talk about the evolution of these users, which has driven monetisation with it. From 2022, the average time spent on gaming has increased by 20%, to 10-12 hours per gamer per week. 

In the Lumikai Annual State of India Gaming report for FY23, in partnership with Google, we also find that there’s an increased affinity towards casual and mid-core gaming especially from non-metro cities which has contributed to the steady increase in monetization in such games. 

In a proprietary Lumikai survey of 2,300 users, 41% of gamers said they now play all kinds of games versus just casual genres, indicating a healthy diversity of play styles. The survey also revealed that 23% of the users who used to play games for free have now started spending money in games. 

UPI has been a game changer for the industry. 62% of gamers surveyed prefer UPI as a payment method, versus 7% for credit cards. The top games that gamers are spending money on include BGMI, Free Fire, Ludo King, Candy Crush, Clash of Clans, Carrom King with MPL, and Dream11 being recent additions to the Play Store. 

These games span various genres, including casual, mid-core, and real money gaming (RMG) indicating that gamers are willing to invest in an increasingly diverse range of gaming experiences. 

This combination of macro-tailwinds around gaming usage, ease of payments, growth in in-app purchases, and an increasingly diverse and engaged user base continue to drive monetisation upside across gaming in India and indicates significant headroom for growth ahead for the sector.