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India is a tempting, but still a challenging market for game developers and publishers. Player numbers and user engagement are high, and local competition is low, but online monetization is still a struggle, especially compared to traditional lottery games.

The majority of Desi gamers skipped the ‘Age of Console’

Console gaming revolves around paid products, says Girish Menon, partner and head of Media and Entertainment at KPMG India, explaining the low monetization statistics related to online gaming in India. Paying for playing is the norm for console gamers, they start with purchasing the gaming system itself, and then go on to buy all the games they want to play.

“It’s an expensive proposition, but that means that anybody who is used to playing console games doesn’t mind spending,” Menon continues. “In India, most of the users skipped that generation, the consoles. This is their first time playing games. They don’t yet see the value of paying for games at scale.”

India has become the “second largest gaming universe in the world outside of China” and 80 per cent of gamers started playing within the last four or five years. This is the period when penetration of affordable smartphones and cheap data plans skyrocketed in the country and crores of people suddenly ended up having a real gaming device in their hands.

At the same time, all the key measurement indicators for any app developer – ARPU (Average Revenue per User), ARPPU (Average Revenue per Paying User) and ARPDAU (Average Revenue per Daily Active User) remain very low in India compared to mature markets. While ARPU from Desi users has been staying at $2 (roughly ₹150) since 2017, the indicator reached an average of $13 in Germany, $22 in France and $37 in Canada for the third quarter of 2020.

Another effect of the Indian gaming market being so young is that Desi users as a group still have to figure out which games they like the most and how much they are willing to pay for playing them. “As that maturity increases, we expect monetization to grow,” Menon says.

Given the low purchasing power parity in the country, providers have to think of special pricing and dedicated bundle offers for the Indian market. Similarly, operators depending on ad monetization, still have to figure out when and how to place ads and what benefits to go with watching them.

Traditional and digital lottery draws are the most popular real money games in India with monetization estimates running as high as ₹3,600 ($48) spent annually per person, based on figures on lottery spending in the state of Kerala for FY 2018. Nevertheless, the Bharat market is mostly offline-based as the Desi lottery bettor is predominantly buying paper tickets from state-run draws from street stands, Kirana stores or intranet terminals.

True digital online lottery ticket sale of local and global lottery brands is incomparably smaller than the offline market, if we look at the gap displayed by stable organic search trends (for 6 or 12 months). The combined lookups generated by the top 30 lottery-related keywords exceed 0.8 crore per month, while searches connected to online lottery are less than 1 lakh.

The Indian gaming market has huge potential

Despite the quite traditional trends displayed by the lottery sector, currently more than 400 million Indians, which is almost one third or 31 per cent of the country’s population, have been reported to play online games. Predictions show this number growing by more than 50 per cent by 2025 with the ranks of Indian online gamers exceeding 600 million.

In terms of engagement, Indian gamers now hold the third place after Chinese and Vietnamese players for average hours per week spent on online games, points out Xsolla’s Payments Business Development Lead Yulia Mikhailova.

Thus, India with its young demographics excels in all three areas that affect market ranking and growth rate, the first two being the size and engagement of the potential audience. The last factor, according to Yulia, is the number of local game developers, which shows the level of competitiveness of the local market.

India’s game developers have grown from 25 in 2010 to more than 400 now, but this is still a negligible number compared to the millions of game producing companies in US and EU countries. On the other hand, this is one of the reasons which makes Bharat interesting for foreign game developers and publishers as the majority of app downloads in India are of products not of local origin.

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