Breaking down the Indian gaming industry

I stayed up last night playing LudoKing and collecting coins on it, which helped me buy various themes. I’ve been chasing the Egyptian theme for a while now, for which I need 200,000 coins. I earn 1000 coins each time I win, earn 200 points if I volunteer to view an ad while watching TV as it plays out. Of course, I can buy coins too but who the hell pays for fake coins for a theme on an online gaming app. 

There have been these debates at work recently, the planned kind of course. To my complete and utter disappointment, my topic was whether or not gaming companies are investable in India. I had no idea about this space before I went into the rabbit hole of online gaming. However, what changed through the spirited conversation was my opinion on it and my perception of this industry.

Before beginning to break something down, we must build it up. It’s important to get an understanding of what different segments rule this industry and how they are separated from each other.

Are you a player? If so, what kind?

Real Money Player

These are the kind of games which regulation haunts in India and includes the likes of online Rummy, Poker, and quiz apps. Yet, the section within this which is changing the perception of “gambling-centric” apps is skill-based gaming which is seeing more acceptance in the gaming industry through new legislations.

It’s an outcome that you “earned through skill” that makes you fall within the legal framework of governing gaming laws in India. If, unless the game had a purely chance-based outcome, you’re unfortunately not able to exchange money through these gaming platforms legally. So online roulette is a no go. This is a pseudo understanding of most gaming as “gambling”. The legal statutes here date back almost fifty to a hundred years which continue to govern these criminalizing the act of gambling in public places, restaurants, etc. The states however are continuing to contest these and create their own frameworks much like Punjab and the southern states.

Mobile centric Player

This type of gaming is easier to explain because we’ve all spent a long evening trying to score a higher score at TempleRun and Candy crush. These are mostly free and accessible to most people, deemed addictive, and make money much like LudoKing which closed $20mn in revenue in 2020 for its parent company Gametion Technologies Pvt Ltd.

E-sports Player

An up and coming segment in the gaming industry, Esports is yet to mature and find its place.

The esports ecosystem has complex layers due to the presence of several entities and partnerships which makes it a limited arena for bigger more established companies since the investment is likely to be higher early on.

Lottery Player

The least talked about game but the most played by the indian population is the “legal” game of actual chance.

Where are the gamers at?

A worldwide industry generated approximately USD 152.1 Bn in 2019. India only makes up for 3% of it. However, within the industry, they’re expecting to see a 100% growth between 2019 and 2022.


It’s no surprise that another industry has seen tremendous growth due to access to smartphones in India & internet penetration. With our country digitizing its “dhobi”, one can expect that digital media is at a surgence like never before. The online gaming industry is estimated to touch the $2.8 billion-mark by 2022 growing at a CAGR of 40 per cent after witnessing strong growth momentum in the pandemic times.

While many believe that India has an isolated transitional phase where smartphone’s games are picking up, the world is also seeing most growth in mobile games with a $77.2 Bn market and comprising almost half of the global market.


The Indian skill gamer In particular is generally perceived to be a 13-25 year old and in the debate we argued the lack of access to spending to make him a profitable customer. However, reality is far from it. The skill-based Indian gamer in particular is between the ages of 20-44 years and has a spending ability both with time and money to make him a lucrative customer.

Models that have worked

The largest fantasy sports market leader with over 50 million registered users is Dream11.  The model works as a freemium model and has partnered with various brands to be able to make revenue through advertising. This statement in itself then dominated our debate in two ways :-

  1. Can the gaming industry make money only through advertising?
  2. Did Dream11 only work because it’s based (mostly) on the nation’s favorite game?

Let’s talk through 1.

Can the gaming industry make money only through advertising?

The idea that an app is making money only through advertising makes us think that the product has less inherent value in most cases otherwise the consumer would “pay for it”. A thought that spiraled out through this was if we want to rely on ad based revenue, why would we pick the gaming industry and not another one which may not suffer through these “fanatic” phases. One example is Pokemon Go.

While covid-19 gave companies a wild jump through ad based revenue since most people downloaded about 7.3 billion games in lockdown which was 17% of all of worldwide downloads. Given, we comprise a small portion of the gaming industry worldwide, that was quite a jump. But then this brings the idea of sustainability forward, covid and staying indoors won’t last forever. 

Another concern was around how much are in-app purchases evolving or growing in India and what needs to change for in-app purchasing to monetise reliably? One factor that dominates this question is what and how much do you pay for a game or are people paying to “not see ads”? 

This plays directly into the sustainability of such products since this is a one-time fee and this limits the user from seeing any advertisements making him your worst customer. This double edged-sword is often not spoken of.

And 2. Did Dream11 only work because it’s based (mostly) on the nation’s favorite game?

What’s interesting about Dream11 is that 85% of the users are focused on cricket and we went to battle on whether that was only because this was cricket oriented which is the blue eyed baby of India’s sports teams or whether this was inherently a better “league” based product. Can we say with conviction that other games would mimic or anticipate this type of growth without being 1. A first mover and 2. Gain the traction using “Cricket “ as the main attraction. 

These questions make it sound like a one-hit wonder but there lies a definite value proposition in partnerships in the fantasy sport arena unlike other mobile games.

So What are some pros and cons of investing in this space?

What excites me?

  • Growth: Don’t even want to deny but gaming industry is at its boom and India is quickly beginning to show this through its numbers.
  • Decreasing customer acquisition cost: There may be downsides to quick acquisition as things “trend” however there is also decreasing cost of acquisition once you are able to monetize through this “craze”
  • Smartphone penetration in tier-2, tier 3 cities: Bringing a whole new set of user base to the frontlines

What scares me?

  • Monetization: The large dependency on advertising revenue makes both sides of the argument. If your gaming product is superior, users will pay or continue to use it in “freemium” models where they won’t mind being marketed to. However, this superiority in products is often 1. Through word of mouth 2. Trends and 3. Heavy investment in marketing $. Here’s a quote from the Ludo King himself:

    “In the last two years, we have realised that advertisements shouldn’t be the primary source of revenue for a gaming platform. Currently, only 30% of our revenue comes from in app purchases which we want to grow. Also, in app purchases in Indian mobile gaming platforms are not well implemented which we are trying to improve upon by launching engaging features,” said Jaiswal, founder of Gametion Technologies, parent company of LudoKing”

  • The Gamble: I don’t know if I feel a gaming company’s success can be determined early on. Since a lot of the companies in this space suffer from “highs” and “lows” based on what at the time is trending, its very easy for a gaming company to gain 1Mn followers in one day and lose them in one month’s time which makes it a high risk business especially for early-stage investors to bet on making it ironically, quite a gamble. At this point I can envision a few VC’s asking “if you only had $100, is this where you’d put it?

  • Government Intervention :
    • PubG was banned in cities during board examinations in several cities way before it was banned by the government nation-wide ban.
    • If the gaming company creates an exchange and this falls in the “questionable” domain of skill versus chance. These are hard to predict since this area of law lacks precedent.

Our findings, learnings and cool insights at a glance

  • Can gaming be thought of as a way to acquire and keep users engaged?  Monetisation then happens through another higher value use case (commerce, education, etc.)

    A “play” we thought would be worthwhile was if gaming is very engaging and with the added layer of ecommerce or education, where the monetization was bought through higher value products – it could result in a more “sticky” product also solving for surge that only happened through trending periods. This could potentially result in always having a base number of users that sustainably give you revenue generating ability.
  • India has lower Customer Acquisition Cost and can be used as a test at more scale for engagement and then make monetisation happen by raising capital and going global.

    Since games are usually something that aren’t different from an engagement point of view and don’t need to attach itself to a specific demographic, India can become a great place to test various strategies at a much lower cost of acquiring customers than any other country. One can track user behavior, engagement and strategies that could help in global expansion
  • It’s illegal to get lucky
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Aparna Saxena

Aparna Saxena