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While the lockdowns induced by COVID-19 have negatively impacted the economy and traditional segments of the M&E industry, online games as a segment have gained a head start in terms of consumption and monetization. This is clear from the fact that India recorded the highest number of game downloads in the casual mobile games sub-segment in the world (excluding China) in 2020, with 7.3 billion downloads in the world. first and third quarters, representing 17% of the world total. mobile game downloads.

In order to decode the Indian casual gaming market, its constituents and delve into what the future holds for this sub-segment, KPMG in India has launched a report titled – “Beyond the Tipping Point – An Introduction India Casual Gaming “, which reveals that the overall India Online Casual Gaming sub-segment was INR 60 billion in FY 21 and is expected to grow at a CAGR of 29% in FY21. 21-25 fiscal year to reach a size of INR 169 billion.

The online gaming segment has grown at a rapid pace over the past 3-4 years and now competes with traditional forms of entertainment for the share of media and entertainment time in a day. In addition, monthly active users for the top 100 mobile games and time spent playing online games are 10-15% higher after the 2020 lockdown, indicating the establishment of a new normal.

Gamers across all demographics have turned to online gaming as a way to connect with family and friends, with the offer playing its part too, in terms of several titles with multiplayer features, with a social layer, to encourage group consumption. With India currently experiencing a second wave of the COVID-19 pandemic, casual online gaming consumption is expected to continue to be robust, aided by India’s strong digital infrastructure and continued investment from Indian developers and global. and publishers by making world class games available to the Indian gamer.

The report aims to define the India Online Casual Gaming sub-segment, and the various lenses through which this definition can be seen. It also highlights the projected growth potential of casual online games in terms of revenue and user base, key growth drivers, current challenges and explores evolving themes such as cloud gaming, outsourcing. from game development, platform games, multi-game platforms and AI (Artificial Intelligence) in casual games.

In addition, it also emphasizes understanding the monetization patterns around ad spend and consumer spending, and how India’s move up the casual gaming maturity curve is likely. to help improve monetization at all levels. It also highlights the emerging phenomenon of award-winning ads as a way to strike a balance between monetization and gaming experience, as ad revenue remains a unique feature of India’s casual online gaming sub-segment.

Highlights of the report –

India’s online gambling ecosystem and its potential

1) Online gaming segment in India was estimated at 136 billion INR in FY21 and is expected to grow at a CAGR of 21% in FY21-25 to reach size of 290 billion ‘INR.
2) By total size, the casual online gaming sub-segment is the largest and stands at INR 60 billion in FY21, accounting for about 44% of total online gaming revenue.
3) In terms of users, the casual online gaming sub-segment, with 420 million players in FY21, accounted for around 97% of total players in India and is expected to maintain this share through to l ‘exercise 25.
4) The segment is significantly under-indexed on monetization with lower ARPUs compared to gaming markets such as Indonesia, Malaysia and South Africa which are comparable in terms of GDP per capita.

Main growth drivers for the gaming industry

1) Macroeconomic factors such as increasing smartphone penetration, internet penetration, youthful population and adoption of digital payments adoption.
2) Global growth in the sophistication of digital consumption, which has helped online games become a mainstream entertainment option
3) Supply factors such as increased supply of world-class titles, games with localized content, new features such as multiplayer and social elements added to games, and an increase in the interest of investors in general.
4) Additionally, COVID-19-induced lockdowns in 2020 were a tipping point in terms of casual online gaming consumption, with most metrics such as MAUs, SADs, average session times and even conversion rate of paying users experiencing high traction.

Main challenges faced by the online gaming segment

1) Low Average Income Per Paid User (ARPPU): The ARPPU of casual online gaming in India is around $ 2 (FY21) which is one of the lowest in the world given that India has the second largest online casual gamer base in the world. This is due to the significantly lower penetration of consoles in India, which historically instilled a culture of payment for games.
2) Lack of scale for Indian studios: Few Indian studios have established themselves on the world stage due to the emerging nature of the Indian market; low consumer spending on games; and relatively inferior game design capabilities. However, as monetization improves in India, these aspects should start to be addressed, as evidenced by the success of some Indian titles during the 2020 lockdown.

Advertising-based monetization

1) The reliance on advertising as a means of monetization remains unique to India and is not likely to go away in the short to medium term as free games (along with IAPs) dominate consumption in India.
2) Developers and publishers are increasingly relying on tools such as reward / incentive ads, to find the optimal balance between monetization and retention, and not hamper the overall user experience.
3) With an increasing share of time spent on games, advertisers / brands see casual online gaming as a viable way to reach their target audiences. This is all the more important as casual online gaming reaches the masses, regardless of demographics.

Consumer spending is changing

1) With an increase in the maturity curve of the game for India, consumer spending; led by in-app purchases (IAPs) are expected to experience strong growth over the next 3-4 years.
2) With the pricing of IAPs adjusted to purchasing power parity (PPP), the localization of the content, the social aspects of the game; and the emerging opportunities around multi-game platforms capable of crafting monetary rewards; the consumer spending around casual online games is likely to see better traction.

Key evolving themes

1) Cloud games: With the proposed launch of 5G services, cloud gaming has the potential to transform the gaming experience for a mass of users, by removing the capabilities of the device. This is particularly important for markets like India, where the capacity to invest in equipment is limited.
2) Esports: Over the next five years, the esports segment is expected to grow rapidly due to increased interest from brands in sponsorship, publishers to promote games, and entry of new players across the chain of value, from the organizers to the participating teams. The eSports sub-segment in India is expected to grow 27% CAGR in FY 21-25 to a size of INR 5.7 billion.
3) Artificial intelligence in casual games: AI is widely used in game development (using AI-generated storylines), player engagement, interactive in-game experiences, and personalization of each player’s journey with games.

Satya Easwaran, Partner and Head of Technology, Media and Telecommunications at KPMG India, said: “Our report – Beyond the Tipping Point – An Introduction to Online Casual Gaming in India aims to simplify the ecosystem multilayered from the world’s second largest user of casual online games. geography. Ready for 3X revenue growth between fiscal years 21-25, we have been aware of the keen interest from businesses and investors to take advantage of the incredible wave of opportunities that the online casual gaming industry has to offer. to offer. “

Read also: BE + with Ambi Parameswaran

Girish Menon, Partner and Head of Media and Entertainment at KPMG India, added: “The online casual games sub-segment in India has become the largest in terms of consumption among all online games, with nearly 420 million players engaged in casual online games. the game in FY21. Casual online gaming hit its tipping point in 2020, with consumption and engagement at an all-time high. The growth potential of this sub-segment is immense, with improved monetization aiding the growth of the developer and publisher ecosystem, leading to the likely emergence of large-scale players.

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