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Booming gaming sector sees investors queuing up

Gaming, once seen as a ‘time-pass’ activity, has now evolved to be one of the most prominent cultures in the country and the world. With 252 million unique visitors to games-related sites in March 2021 (as per ComScore), India is among the top five mobile gaming markets in the world.

Internationally, the gaming industry has boomed over the last few years, whereas India has experienced a tremendous growth spurt during the lockdown period. KPMG estimates that the online gamers will increase to 657 million by 2025, growing the market size to $3.7 billion. According to a report by Boutique Investment Bank, Maple Capital Advisors, titled ‘Gaming – India Story’, the Indian Online Gaming Industry is expected to grow 41% annually, with market value pegged at $3750 million by 2024.

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Given the growth potential of the gaming industry, venture capital firms and investors from all over the world are showing interest as well as pumping in money into India’s gaming industry. According to industry reports, venture capital funding for the Indian gaming start-ups stood at $350 million between 2014 and 2020 and it is growing at a CAGR of 22%. A Financial Express report states that in FY2021, Indian gaming start-ups received venture capital funding amounting to $438 million since April 2020.

Speaking about how the Indian gaming sector is attracting global investors, Anurag Khurana, Co-founder and CEO, Newgen Gaming, said, “The gaming sector in India has been growing at a rapid pace. According to the recent KPMG report, the online gaming segment in the country is projected to grow at a CAGR of 21% over FY21-FY25 to reach a size of Rs 29,000 crore. With more people taking to games as a mode of entertainment and socialising, the number of users will only grow. Going by the aforementioned report projections, investing in the Indian gaming industry, which is taking off, brings in the prospect of high returns, making it a lucrative space for investors.”

Tarun Gupta, Founder, Ultimate Battle, added here, “Indian gaming population is currently at 365 million with estimates to reach 470 million in 2022. India’s gaming segment is also estimated to grow at 29% CAGR between FY21 and FY25 to reach Rs 169 billion. An increase in target user base, as well as GDP per capita, shows the positive growth of the gaming industry, which has already established roots in other countries like the US, China, Japan, and many more.”

Talking about the investment propelling the gaming industry, Dr Subi Chaturvedi, Chief Corporate & Public Affairs Officer, Zupee, noted, “Currently, with 250 gaming companies, India is stamping its position on the global gaming map. The sector has shown tremendous growth in the last two years and this has opened the gates for a number of new innovations like gamification and game-based learning in sectors like education, healthcare, manufacturing, etc. Investments will ensure healthy and continued growth of the sector, which will lead to career opportunities and creating income.”

“Investments are also important to help homegrown gaming startups like Zupee, which is currently leading the skill gaming segment in the country, to compete at an international level and drive the idea of an AtmaNirbhar Bharat towards realisation. Its nimble-footed start-ups like this that will lead the next phase of growth and the surprise push towards the 5 trillion-dollar economy,” she added.

Ultimate Battle’s Gupta pointed out, “Investments are a backbone factor for the growth of every industry. The major hurdle for start-ups is always the cash flow to scale their business operations and reach a larger audience. Investments provide the much-needed fuel to boost up the businesses which in turn grows the industry as a whole.”

In a bid to attract investors the Indian Government has introduced some measures to promote ease of doing business. 100% FDI through automatic route is allowed under the Electronic System and IT & BPM sectors. The Government has also announced that it will set up the Animation, Visual Effects, Gaming and Comic (AVGC) Centre for Excellence in collaboration with IIT Bombay. Karnataka is the first Indian state to have an AVGC Policy.

Scope & expansion of investment in gaming

Newzoo statistics reveal that 80% of Indians consume food or drinks regularly while playing games. This information is critical for FMCG brands in developing their marketing strategy. Brands can utilise these channels to build trust and engagement with potential customers, which can lead to a huge profit in investment of the gaming industry.

Commenting on the scope and expansion of investment in gaming for the upcoming years, Khurana said, “According to the KPMG report, as of July 2020, the number of Indian online gamers crossed 400 million and India being a mobile-first market, more than 90 per cent of the online gamers play on mobile. With the total number of online gamers projected to touch 657 million by FY25, the expansion in the scope of investment has already begun, I believe, and given the traction gaming has been receiving and the potential it has, the influx of capital in this sector is imperative.”

Dr Chaturvedi believed that the gaming sector is going to be worth $200 billion by 2024 globally and a $3.9 billion opportunity in India. “The gaming sector is also going to lead gamification in India, which is going to be more than a $37 billion opportunity by 2030. These numbers could increase with increased access and benefits to the end users. We are going to see many new investors looking to take a slice of this mouth-watering pie which will lead a transformation in the education and entertainment sectors to begin with,” she concluded.

(Edited and Additional Inputs by Shanta Saikia.)

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