The Rapid Growth Rate in India is Driven by Mobile Gaming
The Indian online gaming sector has generated $1.8 billion in revenues in 2020 after growing at a compound annual growth rate (CAGR) of 37 percent in 2018 and 2019, and then further increasing pace to a CAGR of 39 percent in 2019 and 2020. The figures are from a new joint report by global management advisors Boston Consulting Group (BCG) and Sequoia, a venture capital firm.
Bharat’s average CAGR of 38 percent for the 2017-20 period is 3.8 times higher than the CAGR of the US gaming market of 10 percent, and 4.75 times higher than China’s 8 percent.
The mobile-first phenomenon in India is the main driving force behind the high growth rates, with mobile gaming accounting for $1.5 billion or 86 percent of all revenues from gaming in India combined across console, PC and smartphone platforms.
For comparison, mobile gaming holds the lead in China too, accounting for the more modest 59 percent of all revenues, with PC being the second largest gaming segment with roughly 40 percent. The largest segment in the US is console gaming with 55-60 percent of revenues, while mobile gaming is as low as 28 percent.
The Desi Market is Still Miniscule with Low Monetization
Despite its impressive growth rates which attribute it with a sunrise industry status, the Indian online gaming sector accounts for only 1 percent of the global market. Its $1.8 billion of revenues place it way below USA’s 23 percent share of the global market with revenues exceeding $40 billion, and even further down from China’s 26 percent share and revenues of more than $45 billion.
This brings to the front the relatively low monetization figures of the desi market, perhaps best illustrated by the example of PUBG. Before the game was banned in India, a quarter of its downloads were done by desi users, but at the same time they contributed less than 5 percent of the game’s global revenues.
The comparison of the average amounts spent annually by mobile gamers excluding real money gaming (RMG) provided by the BCG and Sequoia report show a large discrepancy even after undergoing a Purchasing Power Parity (PPP) adjustment.
In 2020, a US mobile gamer spent an average of $73-77, while the spending of a Chinese smartphone player was between $57 and $66 ($35-40 without PPP adjustment). At the same time, annual spending by desi mobile gamers was as low as $3-10 ($1-3 without PPP adjustment).
RMG Accounts for the Largest Share of Indian Mobile Gaming Revenues
More than half, or 53 percent amounting to almost $800 million, of the $1.5 billion revenues of the Indian mobile gaming sector for 2020 were generated by online casino games and other RMG genres. Paid apps and in-app purchases (IAPs) combined accounted for another 27 percent, or a little bit more than $400 million, of the total mobile gaming revenues.
Thus, user paid revenue in total was 80 percent or $1.2 billion, while B2B revenue from ads placement accounted for the remaining 20 percent or $300 million.
The BCG and Sequoia report differentiates six distinct types of active gamers in India based on key drive to play. Among them, the ‘prizewinner’, usually a self-employed person or a business owner, comes out as the biggest revenue generator.
Prizewinners play aiming to earn money on Pure Win India and other card and casino game sites, or on online fantasy sports platforms. This category has the highest share of paying users of 68 percent and the highest average spending per user of $10-11 and $15-16 per paying user.
Desi Mobile Gaming Expected to Grow Further
The Boston Consulting Group and Sequoia paper projects the Indian mobile gaming market to grow to $5 billion in revenues by 2025 driven by rising internet availability due to the spread of affordable smartphones and cheap high-speed mobile data plans.
India’s 46 percent internet availability as of 2020 is expected to rise to 62 percent by 2025, while China had 60 percent of its population connected to the internet in 2020, and the USA’s availability of the same year was 89 percent. #KhabarLive #hydnews