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Emergence of Online Gaming in India

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As mentioned in the introduction, we take a dive into a new emerging sector – Online Gaming. In today’s chapter, you will learn about how the Indian online gaming industry went from $290Mn in 2016 to ~1.9Bn in 2021. This means a 45.64% compounded annual growth.

For starters, Gaming is a subsector of a larger industry – Media and Entertainment. From the returns perspective, the performance of Nifty Media has been dismal compared to the blue-chip index Nifty. Over the past decade, NIFTY grew 240% while Nifty Media grew only 31%. Looking at these, you may wonder why then are we discussing a sub-sector of an industry with below-average returns.

Your doubt is valid, but did you forget – a stock market is a dynamic place, with new winners and losers every day, month, year, and decade. Nifty Media constitutes stocks like Zee Media, INOX Leisure, PVR, Dish TV, etc. However, with the entry of gaming players like Delta Corp. and Nazara Technologies, you may see a shift in the tide.

We are not talking about the media industry in particular. We are talking about an emerging sub-sector.

What is online gaming?

Online gaming in simple words means a video game played over the internet. According to a KPMG India report, “the term “Online Gaming” has multiple interpretations today, as internet network platforms facilitate procurement or game-play of almost all games. An online game is bought or accessed through online channels and requires internet in the primary game-play experience or monetization. Online games include all genres and can be played across single-player, multi-player, and massively multi-player formats.

When Did Online Gaming pickup?

Online gaming in India can be divided into two time-frames –Pre 2005 and 2005 -10.

The foundation for digital/online gaming in India was laid in the early 2000s. This was the era when console and PC gaming pulled several middle-income Indians on digital gaming platforms. Although the consumption was limited to a niche consumer segment because of expensive PCs and consoles, it highlighted the potential of online gaming in India.

We asked some of our team members who lived through this video game era to share their experiences. Prasad from our team shared,

“I remember urging my father to buy me a gaming console. He bought it on my 10th birthday. It was a thrilling experience playing “Super Mario”, “Contra Strike”, “Adventure Island”, “Racing Car, etc. I truly enjoyed playing those games on my first gaming console.”

During the mid-2000s (2005-10), social media introduced a huge chunk of the Indian population across ages and genders to online gaming. People started exploring, learning, and sharing online games across social media platforms.

“Do you remember playing ‘8 Ball Pool’ with a stranger on Facebook?”

Then global players dominated the supply later. Global gaming companies began setting up local units to tap into the emerging Indian gaming market. The number of local service providers went up from five major gaming companies before 2005 to ~25 companies by 2010.

Soon smartphones entered the Indian market and replaced conventional feature phones. This change paved the way for the inception of new, less capital-intensive opportunities for local gaming companies. Indian gaming companies, which at first acted as service providers began end-to-end development for the Indian market.

Factors Driving the Online Gaming Industry


In 2016, KPMG India published a report on the Indian Gaming Industry. According to the report, the Industry was expected to become $1Bn by 2021 from $0.29Bn in 2016. As you can see, they got it right. In FY21, the Indian gaming industry was valued at ~$1.9Bn with a user base of 433 Mm gamers in India.

There are several macro factors that may further push the industry in the future

(i) Increasing smartphone adoption
(ii) Growing internet penetration
(iii) Young Population
(iv) Adoption of digital payment methods

  • Along with the macro factors above, COVID-19 led pandemic also acted as a lever to lift the India Online Gaming industry. People confined to their homes, with limited means of entertainment, turned to online gaming as a means of entertainment and socializing. The monthly active users (MAUs) during the first wave of Coronavirus reached 630-670.
  • Eventually, the number reduced but is still above the pre-COVID level. This shows the increased adoption of gaming witnessed during the lockdown is here to stay and the industry is growing at a faster pace than ever.
  • The Indian Olympic Association recognized E-sports when they established the Esports Federation of India (ESFI) as the leading governing body for e-sports in the country.
  • Various global investment firms have made significant investments in the gaming sector in India. The industry attracted $544 Mn in investments from Aug 20 to Jan 21.

A shift in the mindset of Indian parents

Indian parents are known to refrain their children from playing video games. However, that has been changing now. Indian parents seem to be “OKAY” with their children playing games online with some restrictions.

A recent article in The Free Press Journal states, “Sixty-one percent of the parents agreed online games are beneficial to kids. Sixty percent of parents also believe that online gaming can be a great stress buster for kids, according to a study YourDost conducted.”

In the past video games were a thing for children or youngsters. Switch to today, game developers have got Indian parents, especially women, playing games online. The launch of “Ludo King” attracted new demography of players, i.e. 45 years and older.

We hope you now have a better idea of the Indian gaming sector, which has developed over the years. The next article will be an interesting one where we explain how the gaming industry makes money.

Read more

Read more:  How Long-term investing helps create life-changing wealth – TOI

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I’m Vinay Mahindrakar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.

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