Despite regulatory challenges, the real money gaming (RMG) segment is emerging as a dominant force in India’s flourishing online gaming industry. As of FY2024, RMG held the lion’s share (85.7%), valued at $3.2 billion, of the online gaming economy’s revenue of $3.7 billion, as per a report released earlier this year by the Interactive Entertainment and Innovation Council and homegrown gaming platform WinZO. The segment is further expected to grow at a CAGR of 17.9% to reach $7.3 billion by FY2029, the report added.
Fuelling this rapid growth is an innovation in monetisation models and a shift in consumer preferences, said industry experts. For instance, the microtransaction-based monetisation model (where users make small, frequent payments within a game to gain virtual items, currency, or other advantages) has “redefined the viability of skill gaming companies in the country,” said Saumya Singh Rathore, co-founder of WinZO.
Apart from organic growth, business model innovation, and international expansion of gaming businesses, the category is also benefitting from the democratisation of game development in India. “This increased accessibility has led to more people coming online and engaging with gaming as a preferred medium for entertainment and connecting with the larger community. The shift in consumer preferences is fuelling the sector’s rapid growth and shaping market dynamics,” added Rathore.
As per Roland Landers, CEO of All India Gaming Federation (AIGF), an apex industry body for online gaming in India, improved digital payment infrastructure, rise of vernacular content, and deeper engagement from non-metro audiences have unlocked new monetisation avenues. “With regulatory clarity and a responsible gaming framework in place, the RMG sector is poised to lead the next wave of digital growth in India’s booming online gaming economy,” he added.
RMG is also popular, said Amrit Kiran Singh, founder president of Skill Online Games Institute, because “companies have mastered the art and science of providing affordable entertainment in a low-middle-income country like India in formats that people already know and enjoy — rummy, cricket, poker, etc”.
RMG involves playing online games where players wager and potentially win real money. These can include games like rummy, poker, fantasy sports, and even ludo.
Incidentally, RMG’s growth comes at a time when the segment has been reeling under a substantial tax burden — a GST of 28% on the total deposit value. “This tax structure has increased operational costs for gaming platforms, thereby affecting user engagement and sustainability of skill-based platforms. Startups and smaller operators, in particular, are struggling to maintain profitability under this regime,” said Landers of AIGF.
Prior to the 28% GST imposition, the industry was growing at a higher rate of 30%, said Singh of SOGI. “The decline will persist as the momentum of vast growth in the past years dissipates. This will see a sustained deceleration as the platforms pass on the impact of the huge GST increase — which they are currently absorbing in a desperate attempt to prevent a complete meltdown — to consumers,” he added.
The excessive tax burden is also significantly deterring foreign direct investment (FDI) in the online gaming industry, 90% of which is absorbed by the RMG segment. “After the new GST regime, the FDI inflow has pretty much stalled. This stands in contrast to the $1.7-billion FDI received by the sector in 2021,” added Rathore of WinZO.
Credit: Financial Express