India’s online casual gaming segment set to grow at a CAGR of 29%
Online gaming is one sector that has benefited enormously in post-pandemic India. Thanks to restricted mobility and fewer entertainment options, consumers have taken to gaming like never before. Girish Menon, partner and head (media and entertainment) at KPMG India, takes a look at what is making this sector tick, along with key takeaways for marketers.
The online gaming segment has grown at a rapid pace over the last three or four years in varying degrees across the globe and is now competing with traditional forms of entertainment for consumer attention. Even as Covid-19-induced lockdowns had an adverse impact on the economy and traditional segments of the M&E industry, online gaming is one of the unique sectors that got a leg up in terms of both consumption and monetization.
The India story has been particularly standout in terms of the overall growth shown by the segment. According to a recent report launched by consulting firm KPMG to better understand the burgeoning casual gaming market in India, the overall online casual gaming sub-segment in India stood at a size of INR 60bn in FY21 and is projected to grow at a CAGR of 29% over FY21-25 to reach a size of INR 169bn.
What’s in store?
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As per KPMG findings, India had the highest game downloads in the casual mobile gaming sub-segment in the world (excluding China) in 2020, with Q1-Q3 2020 downloads standing at 7.3bn, accounting for 17% of global mobile game downloads. Now that is a huge consumption basket for a relatively new segment.
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Furthermore, monthly active users for the top 100 mobile games and the time spent on online gaming are higher by 10-15% post lockdown 2020, indicating the establishment of a new normal where gaming is fast becoming an accepted form of entertainment.
Decoding India’s gaming market
Size: As per the report findings, the online casual gaming sub-segment is the most significant part of the overall gaming segment and is pegged at INR 60bn in FY21, accounting for ~44% of total online gaming revenues.
User base: In terms of users, the online casual gaming sub-segment, at 420 million gamers in FY21, accounted for ~97% of total gamers in India and is expected to maintain this share by FY25 going ahead, as per the findings of the KPMG report.
Key growth drivers: The gaming industry has been thriving due to many favorable factors: increasing smartphone and internet penetration, an increase in the supply of world-class titles, games with localized content, and new features such as multiplayer and social elements. These have all catalyzed the growth of gaming in India and made it a mainstream entertainment option.
Of course, the biggest driver has been the Covid-19-induced lockdowns that acted as the tipping point in unlocking the power of online casual gaming.
Here are three trends that are likely to define the future of gaming in India:
Cloud gaming will make it more accessible: As the launch of 5G services becomes a soon-to-happen event, it could also lead to some far-reaching changes for the gaming segment. Cloud gaming could be the way forward and help transform the gaming experience for users, taking device capabilities out of the picture. This factor could be extremely critical for markets like India, with limited capacity to invest in hardware.
AI will make it more intelligent: Increasingly AI is being used across game development (using AI-generated storylines), player engagement, interactive experiences across gameplay, and personalization of each gamer’s journey with games. This would make the gaming experience much more sophisticated and seamless.
Esports will help to monetize it: Over the next five years, the esports segment is expected to grow rapidly due to increased interest from brands for sponsorship, publishers to promote games and entry of new players across the value chain ranging from organizers to participating teams. As per the report, the India esports sub-segment is expected to grow by CAGR 27% over FY21-25 to reach a size of INR 5.7bn.
How can brand marketers make the most of the gaming craze?
Even as free-to-play games (with IAPs) remain the dominant consumption basket in India, developers and publishers are desperately trying to think of out-of-the-box monetization solutions to reduce the dependence on advertising for monetization. This situation, unique to India, is likely to remain and define the market growth in the short-to-medium term, as per market experts. As gaming grows, brands have started to look at online casual gaming as a potential media vehicle to reach their target audiences.
Here are some key trends that could be valuable to the marketing suite:
Optimizing user engagement: With user engagement seeing strong growth, online casual gaming is becoming a mainstream source of entertainment and garnering a sizeable share of the time spent on entertainment in a day. With deepening penetration around demographics, marketers are likely to see casual gaming as a viable medium to reach intended audiences, resulting in sizeable ad revenue growth. Various ad engines and mediation networks are also focusing on the gaming inventory as an important means to place digital advertisements.
Crafting strategies around rewarded ads: Rewarded ads are likely to be the dominant category in terms of ad formats in the years to come. Given the penchant of Indians around free-to-play games, rewarded ads help the gamers make progress when it comes to the gameplay by incentivizing them, and at the same time helps publishers monetize the engagement. Rewarded ads is one category which, as per various surveys by ad networks, gamers do not mind consuming as long as it helps them enjoy the game. With an incentive at the end of the ad, rewarded ads ensure constant attention from the gamer on the messaging – a win-win situation.
Making video-based advertisements work harder: Video-based advertisements, especially around the rewarded side, are likely to see tremendous growth when it comes to fill rates and CPMs. The strong call to action around video ads, and their ability to engage the audience, will be important drivers leading to their strong growth.