India’s gaming market saw significant growth in 2023-24, reaching US$ 3.8 billion in revenue, a 23% increase year-over-year (YoY), despite the imposition of a 28% Goods and Services Tax (GST) on online gaming, as reported by gaming-focused venture capital firm Lumikai. The market is projected to exceed US$ 9.2 billion by FY29, expanding at a five-year compound annual growth rate (CAGR) of 20%. Real-money gaming (RMG) continues to be the largest revenue generator, contributing US$ 2.4 billion. However, in-app purchases are the fastest-growing segment, rising by 41% YoY in FY24. By FY29, with a CAGR of 44%, in-app purchases are expected to surpass RMG revenues.
There is a noticeable shift towards non-RMG games, including casual and mid-core games, as gamers are increasingly motivated by entertainment rather than monetary rewards. Mid-core games saw a 53% YoY increase, while casual games grew by 10% in in-app purchase revenue. Despite global reductions in ad spending, ad revenue in the gaming sector remained stable. Casual and mid-core games mainly generate revenue through in-app purchases, whereas RMG games require players to deposit money in order to participate. RMG companies contributed US$ 400 million in FY24, helping absorb much of the GST impact. However, smaller companies face challenges, such as a 30% decline in gross margins and a near doubling of payback periods. The gaming sector now accounts for 30% of the broader US$ 12.5 billion new media market, with 590 million gamers in FY24. Remarkably, 44% of gamers are women, and 66% hail from non-metro cities, with a significant portion of the 18-30 age group demonstrating a strong willingness to spend on gaming.
