Gaming and interactive media venture fund Lumikai has revised the estimated revenue of the Indian online gaming market for FY28 owing to the recent increase in the GST rate and the retrospective tax notices that are being issued.
As per a report released in November 2022, the estimated revenue for FY27 stood at $8.6 billion. The projection, however, has been downgraded to $7.5 billion for FY28.
The new GST rate of 28% on full face value has put a dent into the online real money gaming sector which brought in the majority of the revenue for the gaming market. While the revenue did see a 19% jump standing at $3.1 billion in FY23 up from $2.6 billion in FY22, the implementation of the latest GST rules can impact it adversely.
There is also the issue of GST demand notices that the industry is grappling with. The due demanded amount to about Rs 1.5 lakh crore which could potentially mark the end of a budding sector. While some of the companies believe that the claims by the Directorate General of GST Intelligence (DGGI) will not stand in court, the bigger issue of increased tax burden still remains.
The player count is not the only thing that is growing. A significant growth in the number of players who are active paying users for in-game services is also seeing an increase. It saw 17% year-on-year (YoY) increase from 120 million in FY22 to 140 million in FY23.
“Indian gaming has been on the rise because of rapid digitisation, growth in new gamers and new paid gamers, and increasing diversity of gaming content consumed. Even though funding has slowed down this year, the outlook towards the gaming industry is extremely positive,” said Salone Sehgal, founding general partner at Lumikai.
Moving further into the report, the share of number of gamers from non-metro cities also witnessed growth, increasing to 66% in FY23 up from 57% in FY22.
“We’re particularly excited to see the increasing engagement of gamers from non-metro cities, which demonstrates the massive growth potential and the opportunity in the Indian gaming industry,” Sehgal added.
As of now, it appears that the casual/video gaming sector will lead the growth of the Indian gaming market with in-game purchases. While the growth may not be as fast as compared to what online real money gaming witnessed, the sector is, nevertheless, getting a very positive response.
Several gaming firms are now starting to invest in acquiring or building their own video game studios through dedicated investment plans. Some of the major investors include Krafton which has decided to invest $150 million in the next three years in training and development of talented game developers.
Most recently, JetSynthesys announced a partnership with Brinc to launch a gaming accelerator program for startups. Moreover, international investors are aiming to expand in the Indian gaming market with Japanese entertainment giant Mixi leading a $50 million investment in Indian startups.