India’s gaming industry is set to quadruple in the next five years, fuelled by a rapidly increasing gamer base, higher conversion to paid users, and increasing sophistication of the gamers, according to Venture Capital fund Lumikai’s State of India Gaming report FY22.
The country’s gaming market is projected to touch $8.6 billion by 2027 from $2.6 billion in 2022, growing at a compounded annual growth rate (CAGR) of 27%.
“India’s gaming industry this year hit major inflexion points, registering strong growth across the board,” Justin Shriram Keeling, Founding General Partner of Lumikai, said in a statement. “With the market now truly mainstream, we are thrilled to be at the forefront of investing in one of the fastest growing and most dynamic sectors in digital India.”
India has over 900 gaming companies that are on track to raise $513 million for the calendar year’22, the report noted. While the funding has dropped in the sector compared to 2021, it is up 380% from 2019 and up by 23% from 2020.
Gaming firms have raised a total of $2.6 billion in the last 2.5 after 2020 opened the floodgates for investing in the country.
According to the report, in the last two years, the market has yielded more than six strategic exits amounting to $775 million, three unicorns, and the public listing of Nazara Technologies.
Web3 emerged as an increasingly popular technology in games, with 30% of 450 Indian Web3 companies operating in gaming.
Web3 games in India have raised about $400 million in funding during 2019-22.
In terms of gamers base, the country has over half a billion gamers, out of which almost one-fourth are paying users. The average revenue per paying user grew 11% to $20/year, with 2 million new paying users added per month, in FY22.
India was the largest consumer of mobile games in the world in FY22, with 15 billion downloads, followed by China, the U.S. Brazil and Indonesia, as per the report.