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India’s online gaming industry gains with increased user spending

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NEW DELHI
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After years of stagnation, e-sports and video game firms in India have begun generating in-game and advertisement revenues, thanks to India-specific in-game items, a stronger competitive gaming scene, and widespread use of the Unified Payments Interface (UPI) as a convenient last-mile payment method.

An industry report by Google and venture capital firm Lumikai, released on 2 November, pegged the annual average revenue per user (ARPU) for India’s gaming industry to reach 1,600 by FY23-end, rising tenfold in the past four financial years. While some stakeholders in leading e-sports firms consider it to be at the upper limit of gamer monetization in India, the projected figure may well be heading in the right direction.

Krafton, the Korea-based publisher of popular e-sports title Battlegrounds Mobile India (formerly PUBG Mobile), is seeing an uptick in monetization of in-app offerings. Sean Hyunil Sohn, chief executive of Krafton India attributes it to aligning the pricing of in-game offerings with Indian consumer preferences, and India-specific in-game items.

“Monetization is definitely more difficult in India than in other parts of the world. Overall revenue that gaming companies earn from India remains lower than other markets as of now, but India’s massive number of users gives plenty of opportunities for it to change. To do this, we are looking at offering India-specific pricing and other similar monetization strategies, to normalize paying for in-game items,” Sohn said in an interview.

While Sohn did not divulge its India revenue, industry estimates peg BGMI revenues at $10 billion in India in FY23 from $7 billion in FY22, given its increasing popularity in terms of its active user base. “These are encouraging signs from the India market—of course, the monetization amount is still lower than some other global markets. But, Indian gamers are showing increasing encouragement to pay for in-game bundles. We’re revising the pricing for some items—bundles that were priced at 499 as per global markets are revised to 199 to make them more accessible to more gamers. The advent of UPI, too, is helping, since most gamers play on smartphones. This is helping us build a strong base in India, that is already strategically important due to the vast number of gamers here.”

This trend is fuelling optimism among more gaming firms. Roby John, co-founder and chief executive of e-sports firm Supergaming said according to internal research, there are “multiple games in India making $100 million, spearheaded by the Battle Royale genre”. “A lot of this spending by player is driven by in-game cosmetics like skins. Also, from our research gleaned directly from players via our play-tests for Indus held over the year, there is a demand by gamers to embrace Indian culture in their games through self-expression. These two factors result in tremendous upside that we hope to see when we launch Indus next year.”

Akshat Rathee, the co-founder and executive director of Nazara subsidiary, Nodwin Gaming, said the uptick in monetization is happening due to an increasing number of gamers paying more for hobbyist titles. “Two years ago, India had a base of around 400 million ‘gamers’ who would contribute 1 in revenue, driven by ads. Today, there is a correlation to users paying for streaming services, driving nearly 150 million users out of the gamer base to pay around 25-30 per user for casual games, which are often labelled as ‘time pass’. It is this user base that is gradually converting to those paying 600 every two months for an in-game Battle Pass on titles such as BGMI. It is this that is fuelling a hockey-stick curve of growth in monetization for gaming in India, which will drive up monetization of in-game items exponentially in the next one to three years,” Rathee said.

India’s gamer base, according to the Google-Lumikai report, will be at 568 million in FY23. UPI has over 300 million unique users, along with 500 million merchants. The growing monetizable user base, an executive who works for a global esports firm said, is boosting revenue for e-sports and video gaming firms. However, there are still challenges along the way, he added.

For instance, China’s ARPU in the gaming segment was $64, or around 5,200, in FY22, as per data published in May last year by market intelligence platform, Niko Partners. This is projected to rise to around 6,300 in FY26—a figure that India’s gaming industry, despite being comparable in size with China, could still struggle to match. The faster growth pace of monetization in games is also largely due to India’s monetization base being small—as ARPU increases, the annual growth rate will drop, too.

Until then, microtransactions are set to give an exponential boost to gaming firms’ quest for monetizing its India gamer base, which will go beyond just enthusiasts for the first time ever.



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