India’s gaming revenue grew 23 percent in the last fiscal year to $3.8 billion — and is expected to triple over the next five years.

That’s according to a new report by Indian venture capital firm Lumikai, created in collaboration with Google and Deloitte. Some of the consumer data in the report was based on a survey of 2,269 smartphone users in India.

According to this year’s State of India Interactive Media and Gaming Research report, mobile gaming accounted for 30% of the nation’s $12.5 billion new media market in the fiscal year ending March 31, 2024. New media includes, of as well as video content, animation and VFX, audio streaming and social media.

In fact, gaming revenue nearly equaled the $3.9 billion in video content, the largest new media segment.

And games are projected to reach $9.2 billion in revenue by the end of fiscal 2029.

Lumikai Founding General Partner Salone Sehgal says GamesIndustry.biz he Indian gaming market has been plagued by misconceptions over the years – for example, that players only engage in real money gaming – but the data proves that the industry is much wider.

“The (typical) narratives of ‘Indians don’t play games’ and/or pay for games – have been completely debunked,” she says. “So if we take that off the table, if you’re looking for the next billion players, they’re going to come from the Indian market.”

According to the report, India is the second largest mobile game market in the world with 15.2 billion downloads in the year ending March 31, 2024.

Meanwhile, the total number of players increased by 4% to 591 million in the past year.

“it didn’t happen before.

“Post-COVID is when games and mobile games have become very much a mainstream phenomenon,” she explains. “Real money gaming in India is a decade-long phenomenon, it started with the oldest companies that were established around ten years ago, and in those ten years they built a very large user base, which was accelerated in the period 2019-2021. UPI (Unified Payments Interface) unlocked free-to-play games, and that really started to happen during COVID. So free-to-play has become a big phenomenon.”

Unified Payments Interface is an India-only instant payment system that was first launched in 2016 and allows users to manage digital payments through bank accounts without the need for debit or credit cards. As more and more Indian gamers have started using it, paying for video games has become easier – case in point, 83% of all survey respondents who spend money on games prefer to use UPI to in-game purchases.

“If you’re looking for the next billion gamers, they’re going to come from the Indian market”

Another eight million players started spending money on mobile games in the past year, bringing the total number of paying players to 148 million.

The number of in-app purchases made increased by 41% year-over-year, becoming the fastest-growing source of this $3.8 billion in revenue – and this was driven primarily by the growing popularity of games midcore, such as Battlegrounds Mobile India (Krafton’s). India only version of PUBG), Clash of Clans and Garena’s Free Fire Max.

According to the Lumikai survey, 64% of users who pay for real money games have also spent on midcore titles in the past year.

25% of all gamers surveyed said they spent money on games, unchanged from last year, while 18% said they now make game purchases, having previously only enjoyed free-to-play games without spending .

Average revenue per paying user grew 15% year-over-year, and again, Sehgal sees the growth of midcore games as a crucial factor. Specifically, she credits the launch of PUBG — before the Battleground Mobile India refresh — as the turning point.

“Earlier it was thought that a 1GB game that monetizes through microtransactions and IAPs won’t work in India,” she explains. “PUBG made this possible. Now with Battlegrounds Mobile India, Free Fire Max and Clash of Clans, we’re seeing other titles scratching that midcore itch, and foreign publishers are now seeing revenue from in-app purchases in India.

“When you add UPI to that, which allows very smooth, fee-free, small-ticket transactions, that really unlocks monetization (in India).”

The report provides a more detailed look at what players are spending, with 66% of paying users saying they buy in-game currency. 61% say they buy upgrades based on performance, compared to 51% who buy cosmetics and other visual items. Only 36% of spending players buy loot boxes and other packs, while 24% invest in season passes.

Sehgal adds that other misconceptions about India’s gaming scene suggested that the audience was “overwhelmingly male, overwhelmingly urban and overwhelmingly an affluent phenomenon”. Again, the data proves otherwise; the number of women playing video games increased from 41% in FY 2023 to 44% in FGY 2024, with Sehgal adding that they mostly play casual titles.

66% of players are based in non-metro cities, while 43% are described as “first comers” in the 18-30 age group.

Most gamers in India are on high-end mobile devices; 43% use smartphones that cost between $200 and $400, while 38% use phones that cost less than $200. This, Sehgal explains, means they have access to cheap data and reasonably good mobile devices.

Combine that with the trend for digital payments, increasing payment behavior and the fact that more than 40% of gamers are between 18 and 30 years old, and Sehgal says you have “the perfect recipe for why Indians are now paying for games. “

The average time spent playing video games is also increasing, by 30% to 13 hours per week – double the time spent on social media.

“Earlier it was believed that a 1GB game that monetizes through microtransactions and IAPs will not work in India. PUBG made this possible”

Looking ahead, Sehgal says there are plenty of opportunities for both Indian gaming firms and overseas publishers – and the former are particularly well-placed to capitalize on the growth of gaming in India.

“60% of gamers say they want to see games that represent our local culture and language,” explains Sehgal. “If we apply the same lens to entertainment, Indians consume a lot of global content, but we also consume domestic mass-market content. This is not reflected in our games today – our games are mostly made by global publishers. There is a lack of cultural or India-specific games.

“China, for example, has a high consumption of games that are built for the Chinese market – despite all the approval issues that have happened in the last two years in China, but China’s domestic market has been built by feeding and, essentially building for the domestic market.”

Meanwhile, she advises overseas publishers – particularly in the West – that “adjustments are required” if you’re targeting India.

“Greens like Riot or Krafton have started to localize a lot. They have done (partnerships) with local celebrities, integrated local characters, organized events from Indian festivals – these are reflected in their games. Their prices reflect Indian prices. So all these things are important to keep in mind if one is trying to enter the Indian market.