The gaming industry experienced revenue growth of 12 percent, rising to $3.8 billion in the Financial Year (FY) 2024. This growth surpassed the earnings of social media industries, despite concerns from online gaming companies about the increased Goods and Services Tax (GST) rates imposed by the Government of India.

A report released by the Gaming Venture Capital Lumikai mentioned that the growing trend of in-app purchasing (IAP) by players, as well as a packed sports schedule that boosted fantasy gaming, led to the industry registering growth despite initial fears from the companies that numbers would decline with the decision to impose a 28 percent on the full face value of player deposits.

Salone Sehgal, Founding General Partner at Lumikai, stated, “In-app purchase revenue continues to be the fastest-growing segment with 41 percent year-on-year growth. With sustained growth in in-app purchases and ad revenue, the gaming market is expected to cross $9.2 billion by FY29, growing at a 20 percent five-year CAGR.” 

Sehgal further noted that online gaming is experiencing an increased adoption among users, with the average time spent on gaming rising significantly. "The average weekly time spent on games has increased by 30 percent, growing from 10 hours to 13 hours. The market welcomed 23 million new gamers, bringing the total user base to 590 million," she stated.

Affordable data plans and the rise of budget-friendly smartphones have significantly contributed to the growth of the gaming industry. This expansion is not limited to metropolitan and larger cities; it is also reaching Tier 2 and Tier 3 towns, as well as rural areas.

India is the world’s second-largest market for mobile gaming downloads, with 15.2 billion downloads, which is 3.5 times larger than the combined downloads from the US and Brazil, according to Lumikai. More than 60 percent of the smartphone user base, which totals 883 million, has games installed on their devices. Out of these, 148 million users are paying customers, as reported for FY24.

The changes in tax rates have put pressure on company margins as real-money gaming (RMG) companies absorbed the GST costs for their users, Sehgal stated. "Despite an increase in top-line revenue, taxation issues in RMG have led to margin compression and negatively impacted profitability."

Giving insights into the base, the Lumikai report said 44 percent of gamers are women, many of them playing casual games. “As many as 66 percent of gamers come from non-metro cities.”