A recent joint report by real money gaming (RMG) firm Winzo and the Interactive Entertainment and Innovation Council (IEIC) suggests that despite the growing base of online gamers willing to make payments, the recent increase in the goods and services tax (GST) is likely to affect monetization per user.

The report is reviewed at length in an Economic Times article, which highlights that while “Pay to Play” games have historically been the largest revenue source and a key driver for India’s gaming sector, their share is expected to decrease over the next five years due to the high tax burden. This change is expected to affect user monetization, driven by recent tax policies.

IEIC includes members such as Courtside Ventures, Griffin Ventures, Hashbyte Studios, and Chennai Games, in addition to Winzo. According to Saumya Singh Rathore, co-founder of Winzo, IEIC functions as a think tank to facilitate investments in gaming firms in India.

Currently, India has approximately 560 million gamers, with 144 million having paid for games in 2023. The report forecasts that by 2028, the total gamer base might reach to 916 million, with 240 million of them being paying users.

In-app purchases currently account for about 5.8% of overall domestic gaming spending, with an estimated 35% compound annual growth rate (CAGR) expected during 2023-2028. The report predicts that by 2028, the share of overall domestic spending from in-app purchases will rise to 13.6%. The Indian gaming ecosystem is projected to grow at a compound annual rate of 14%, reaching a revenue of $6 billion by 2028. Furthermore, the report predicts that the share of non-RMG games in the overall gaming market will increase to 21% by 2028, up from the current 13%.

The report credits Battle Royale games like Krafton’s BGMI and Arena’s Free Fire Max for demonstrating the potential of mobile gaming to capture the nation’s attention. Since 2019, the Indian gaming ecosystem has attracted $2.6 billion in investments from both domestic and global investors. The number of Indian game development companies has also seen growth, increasing from 25 in 2015 to over 900 in 2023, according to the report.