GST-impacted online gaming sector sees 77% decrease in investments: Tracxn report

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The overall investments across the entire gaming sector in India saw a dip of over 77% in 2023. As per Tracxn’s report, the investments stood at $94.2 million in 15 funding rounds for the said period. Notably, this is a massive drop, as the gaming startups garnered $423.2 million in over 53 funding rounds in 2022.

An increase in competition is also cited as a one of the reasons for decreased investment traction. As per Super4 fantasy’s founder Rohit Bansal, the Indian online gaming sector has grown tremendously over the past decade. Due to this, many startups entered the market and have contributed in increasing the competition.

“The global economic climate significantly influences investment decisions. In the present economic uncertainty, investors are adopting a more conservative approach, reducing their willingness to invest heavily in any industry, including gaming. Economic fluctuations can create an environment of risk aversion, which impacts the inflow of capital into gaming ventures,” Bansal said, as per The Hindu BusinessLine.

Despite the struggle, gaming companies are still adopting and innovating according to the changes. Speaking on the topic of innovation, Bansal said, “We are leveraging data analytics to inform game development decisions, ensuring games remain aligned with market demands”.

Current situations adding to the decreased investments

Tracxn cofounder Neha Singh said that the new 28% GST has impacted the investments severely. Furthermore, states banning online RMG firms is further adding to the decreased funding.

“There are multiple developments in the gaming space globally, with technologies like AR/VR, generative AI, metaverse, etc., the gameplay is becoming more immersive and engaging for players. Currently, the real-money gaming start-ups are struggling in the country, but with these recent innovations in the sector, there is scope for growth and innovation in the coming years.” she said.

The changes in GST severely impacted the Indian gaming industry, however, there are still others that are thriving. These include the esports and casual gaming sector in both mobile and PC markets. Mobile gaming gains the highest numbers due to its ease of access and affordability.

With increased tax burdens and decreasing user base, the future of gaming startups remains in much ambiguity.