India’s game market could grow from $3.8B to $9.2B by 2029 | Lumikai

India’s game market could grow from $3.8 billion in 2024 to $9.2 billion by 2029, according to a report by Lumikai.

That represents a 20% compound annual growth rate. Lumikai, a venture capital fund in India focused on games, also said that India’s $3.8 billion gaming market is about 30% of its broader $12.5 billion new media market.

Gaming is India’s the fastest-growing new media segment, and it is just shy of the $3.9 billion video and over-the-top media market (based on the fiscal year periods ending March 31). Overall, the new media market is growing at a compound annual growth rate of 16%, said Salone Sehgal, founding general partner at Lumikai, in an interview with GamesBeat.

Such growth is similar to China’s growth in gaming a couple of decades ago, making India the next hot market that game investors should follow, Sehgal said. Aditya Deshpande, senior investment associate at Lumikai, said in an interview with GamesBeat. believes that gaming is in the process of surpassing India’s vaunted Bollywood film industry.

Lumikai’s own growth has mirrored the Indian gaming market’s growth. Back in 2020, when it started, there were 25 game companies in India. But over the course of five years, Lumikai has evaluated more than 2,300 leads with Indian game entrepreneurs, Sehgal said.

The Lumikai State of India Interactive Media and Gaming Report is being unveiled at the Lumikai Insignia interactive media and gaming summit for Lumikai’s limited partners.

Key statistics

The report found that out of the total of 591 million gamers (up 23 million from a year ago) in India, female gamers rose from 41% to 44%. And in fiscal year 2024, more than eight million new paying users were added, taking total paying gamers to 148 million.

Sehgal said Indian gamers have seen a 30% increase in average weekly gaming time to 13 hours. That was double the time spent on social platforms. Average revenue per paying user of $22, which was up 15% in a year. About 66% of gamers were from non-metro cities, with 43% of gamers being first-time earners in the 18-year-old to 30-year-old age group.

In-app purchases, propelled by mid-core games, grew by 41% year-on-year, and continues to be the fastest growing slice out of the $3.8 billion revenue pie for fiscal year 2024.

“The mid core games emerge to tap into that very large mid-core appetite in the India market,” said Sehgal.

The report said 64% of paying users who play real-money gambling (RMG) also pay for mid-core games, suggesting a high degree of overlap in gamer personas and migrating preferences of gamers.

India is the world’s second-largest mobile gaming market in terms of downloads, with 15.2 billion, or three times the combined volume of Brazil and the U.S. And 25% of gamers said they have spent money in games this year, consistent with FY23, with 83% preferring UPI or digital wallets to make in-game payments.

India also saw a 20% increase in time spent on casual games in fiscal 2024. Users spend 25% more time on interactive social media/streaming platforms compared to passive social platforms. And 47% of users are ad-tolerant to avoid paying for subscriptions with preference for micro-transaction based in-app purchases.

In terms of mobile platforms, Android is about 90% of the market in India, where smartphones may cost $200 to $400. Most games are played on smartphones, with PC and console games a few percent of the market, Desphande said.

As for esports, revenues are still a small slice of the overall pie, but Sehgal said viewership continues to rise fast.

Methodology

The report includes primary research covering nearly 3,000 mobile users across India. And it was developed with Google and Deloitte. Lumikai’s analysis is based on third party analytics data providers, secondary research, Lumikai proprietary data, primary survey and expert interviews. The gaming estimates include subscription, in-app purcahses, and ad revenues.

“We understand both the urban markets, the rural markets and the gender demographics as well,” Sehgal said.

Lumikai’s growth

Lumikai has backed some of India’s leading interactive media companies including, Elo Elo (India’s live social entertainment platform), Bombay Play (hyper-social, casual gaming studio from India for the world), All Star Games (casual sports gaming studio), Studio Sirah (mid-core strategy gaming studio), Supernova (real-time, interactive, personalized AI tutors disrupting edtech), Autovrse (India’s fastest growing AR/VR company building solutions for industrial training), Vobble (India’s first interactive audio platform for children), Mayhem Studios (building Indian battle royale game) among others.

The Mayhem Studios game is interesting in that it is a battle royale game focused on Indian setting and culture. Such trends toward culturally relevant games for certain regions are on the rise, according to Matthew Ball, gaming analyst and author of The Metaverse.

“These game kind of games take time to build. What Battleground Mobile India (formerly PUBG Mobile) taught us is that there is a massive (opportunity) in the market,” Sehgal said. “Our strategy to back Indian games (resonates) as we increasingly here people saying they want to play IP which reflects our culture.”

Despande said, “There is more diversity in terms of indigenous games trying to take on global giants. It’s a matter of just development cycles. So a lot of these games are now in the process of being made.”

Many of the entrepreneurs are coming out of work-for-hire companies that took advantage of India’s low costs for development. Now those entrepreneurs are striking out on their own to make their own games. There are also a lot of Indian diaspora founders who are coming back to India to build new companies in their homeland. And there are a wave of strategic companies and investors who are looking at India as the next big major market. Over time, this should lead to a healthy acquisition market in India.

“The smartphone has completely revolutionized the kind of games people play,” said Deshpande. “Almost two thirds of the population that we surveyed consumes one or two gigabytes of mobile data a day, and that’s because we have one of the cheapest data rates in the world.”

Lumikai Insignia

The speakers at the Lumikai Insignia event include Oscar-winner SS Rajamouli, Abdullah Alorainy from Saudi Arabia’s Public Investment Fund (which is investing $37 billion in gaming), Crysis co-creator and Crytek founder Cevat Yerli, chip design veteran Raja Koduri who has led graphics/CPU design at Intel, AMD and Apple.