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Leveling up India's Gaming Market 2021

RedSeer
RedSeer

An estimated 96 Mn Indian users are forecast to pay for games in 2021. Paid gamers are forecast to reach ~240 Mn (3x) in the next 5 years. Survey results show that up to 50% of new midcore and hardcore game users pay $7-$14 per month.

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Leveling Up
INDIA’S
GAMING
MARKET
Solve. New
Inside Digital Entertainment’s
Fastest Growing Sector
November 2021
Powered by
© 2021 RedSeer Consulting confidential and proprietary information
2021
Knowledge
Partner
Technology
Partner
2
©RedSeer
Foreword
As India’s first and most active gaming and interactive fund, our mission for this report is to shine a light on the
true potential of India’s gaming market. We’re proud to present the most comprehensive deep dive of India’s
gaming market ever undertaken. This inaugural report leverages insights from India’s gaming ecosystem
leaders, knowledge partners, and proprietary Lumikai insights gleaned from conversations with 500+ founders
from India’s gaming sector.
India’s gaming market is due to surpass $2.2B in value in 2021, growing 3x to over $7B in 2026. The
market is also maturing faster than expected across all key markers — in user sophistication, propensity to pay,
quality of talent, capital inflows, and exits. This represents enormous upside for founders and investors in this
space over the coming decade.
Monetisation has always been the billion-dollar question for India’s mass scale audience. We map out
remarkable inflection points for the fastest growing gaming market in the world. India for two years running has
seen the highest proportion of first-time paying gamers (over 50% YoY) out of any country in the world. At a scale
of ~10B gaming apps due to be downloaded in 2021, this represents a once in a generation growth opportunity
across India’s entire gaming value chain.
We also include never-been-seen-before insights from the largest panel of Indian gamers ever surveyed. Over
2,000 domestic mobile gamers were interviewed across 30 categories on their habits, preferred features,
motivations, and propensity to spend — split across multiple demographic and socio-economic profiles.
We’re thankful to all our partners and LPs who continue to support us on this journey, and we look forward to
sharing future insights as the market continues to grow and matures.
Justin Keeling
General Partner, Lumikai.
Salone Sehgal
Team Lumikai, October 2021
General Partner, Lumikai.
3
©RedSeer
Preface
The Indian gaming market is coming of age. Restrictions imposed in COVID lockdowns led users to explore alternate forms of entertainment. This,
in turn, was provided by mobile and digital games. The growth and user-base of games surpassed that of popular OTT & Video-on-Demand
services by as high as 4-times, during the period.
India's demographic dividend, with its large young population and increasing income, shows a strong potential for gaming, a market growing
exponentially as the mobile internet penetration sky-rocketed in 2020. The lockdown encouraged new users to pay for games, which saw an
unprecedented growth in “First-time payers”. Several other factors have further driven the growth of the sector; and resulted in a large gamer base
of 400-450 Mn, which is expected to reach to 700 Mn by the end of 2025.
New formats such as HyperCasual, Social games and eSports are expected to outperform the market growth rate in the next 5 years. As gamers
mature, the monetization streams are also expected to evolve with the proportion of In-App Purchases and Ad revenue increasing to the overall
revenues of Gaming companies.
We at RedSeer, with Lumikai - India’s first and most active gaming and interactive fund, have also been able to dissect the complex gaming sector
in various categories; and analyze the consumer behavior by surveying over 2000 gamers in India. Amongst other findings, we gathered that while
the average monthly spend on games is around $1.5, it is as high as $3.5 for Real-Money games.
We hope that the report will help the reader gain a perspective of the sector, and help developers and publishers in their game development
and management.
Anil Kumar
Founder & CEO
RedSeer
4
©RedSeer
Executive
Summary
India’s gaming market is at a once in a generation inflection point exceeding previous estimates
on sophistication, scale, growth, and propensity to pay (1/2)
Executive Summary
20% of roughly 400 Mn active gamers in India
choose to pay for games
Spend/ month
Overall RMG Non-RMG
India’s Gaming
Market Size: $2.2
Bn growing to $7B
in five years
Propensity to Pay
Growing: Average
yearly spends at
$16 per gamer
The gaming market in India is a $2.2 Bn industry,
and is projected to grow at ~30% CAGR to reach
$7B market -- more than 3X in the next 5 years.
India is transitioning from a net importer of
global gaming titles to a global exporter of
content and IP.
An estimated 96 Mn Indian users are forecast to pay
for games in 2021. Paid gamers are forecast to reach
~240 Mn (3x) in the next 5 years.
India’s percentage of first new time paying users
(NPUs) in gaming is the fastest growing in the world
two years running, at 40% (2020) reaching 50%
in 2021.
Survey results show that up to 50% of new midcore
and hardcore game users pay $7-$14 per month.
Average gamers spend ₹1,200 ($~16) per year on
games, with RMG users spending INR 3,000 ($~40)
per year. (Survey results across a sample of 2180).
Av spend per paying user is $77/year.
₹~100 ₹~250 ₹~50
5
©RedSeer Note (s): For this report, we have included all games played or viewed on mobile, PC, Consoles and any other digital medium.
CAGR ‘21-’26
Casual & Hyper-
Casual
Mid & Hardcore
RMG
PC & Console
Esports
FY19-FY26P. USD Bn
30-35%
25-30%
25-30%
~10%
40-45%
Gaming market in India: Trend by Segment
FY19 FY20 FY21 FY26P
$~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn
40%
49%
7%
3%
1%
0%
12%
22%
8%
25%
52%
3%
2%
19%
24%
50%
1%
3%
19%
27%
25-30
2
1
Indian Gamers’ Behaviour
Revenue growth
increasingly being
driven by new
forms of
monetisation
The market is
maturing both from
a demand (user) and
supply (developer)
perspective
In-app purchases now constitute 27% of
domestic gaming spending, with IAP growth
forecast to outstrip RMG and ad monetisation
through 2025 and beyond.
With RMG remaining in a regulatory grey zone,
developers are implementing newer, fast
growing forms of monetisation such as
subscriptions and virtual tipping/gifting.
Users are maturing and localising in their
behaviour – from time-spent gaming,
engagement with new midcore gaming
formats, and over 60% expressing interest
in more Indian themed games.
The number of gaming companies has
seen a geometric increase, from 25 studios
in 2015 to over 500 in 2021.
Time Spent Gaming : Average weekly time spent on gaming
has risen to ~3.6 Hours from ~2.5Hr before Covid lockdowns.
Esports, Streaming & Social gaming are rapidly growing in
India; especially in regional & vernacular markets.
India Themed Games : Players surveyed indicated a strong
preference towards games with Indian central themes or
characters.
6
©RedSeer Note (s): For this report, we have included all games played or viewed on mobile, PC, Consoles and any other digital medium.
3
4
India’s gaming market is at a once in a generation inflection point exceeding previous estimates
on sophistication, scale, growth, and propensity to pay (2/2)
CAGR ‘21-’26
~20%
~30%
~40%
$~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn
(27%)
(17%)
(26%)
(15%)
(31%)
(53%)
(11%)
Ad Revenue
In App
Purchases
(IAP)
RMG
Others
Gaming market in India: Trend by Revenue Streams
(54%)
~0.3
~0.5
~0.9
25-30%
~0.1
~0.3
~0.6
~1.2
~0.1
~0.7
~2.1
~3.7
~0.3
FY19 FY20 FY21 FY26P
Executive Summary

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Leveling up India's Gaming Market 2021

  • 1. Leveling Up INDIA’S GAMING MARKET Solve. New Inside Digital Entertainment’s Fastest Growing Sector November 2021 Powered by © 2021 RedSeer Consulting confidential and proprietary information 2021 Knowledge Partner Technology Partner
  • 2. 2 ©RedSeer Foreword As India’s first and most active gaming and interactive fund, our mission for this report is to shine a light on the true potential of India’s gaming market. We’re proud to present the most comprehensive deep dive of India’s gaming market ever undertaken. This inaugural report leverages insights from India’s gaming ecosystem leaders, knowledge partners, and proprietary Lumikai insights gleaned from conversations with 500+ founders from India’s gaming sector. India’s gaming market is due to surpass $2.2B in value in 2021, growing 3x to over $7B in 2026. The market is also maturing faster than expected across all key markers — in user sophistication, propensity to pay, quality of talent, capital inflows, and exits. This represents enormous upside for founders and investors in this space over the coming decade. Monetisation has always been the billion-dollar question for India’s mass scale audience. We map out remarkable inflection points for the fastest growing gaming market in the world. India for two years running has seen the highest proportion of first-time paying gamers (over 50% YoY) out of any country in the world. At a scale of ~10B gaming apps due to be downloaded in 2021, this represents a once in a generation growth opportunity across India’s entire gaming value chain. We also include never-been-seen-before insights from the largest panel of Indian gamers ever surveyed. Over 2,000 domestic mobile gamers were interviewed across 30 categories on their habits, preferred features, motivations, and propensity to spend — split across multiple demographic and socio-economic profiles. We’re thankful to all our partners and LPs who continue to support us on this journey, and we look forward to sharing future insights as the market continues to grow and matures. Justin Keeling General Partner, Lumikai. Salone Sehgal Team Lumikai, October 2021 General Partner, Lumikai.
  • 3. 3 ©RedSeer Preface The Indian gaming market is coming of age. Restrictions imposed in COVID lockdowns led users to explore alternate forms of entertainment. This, in turn, was provided by mobile and digital games. The growth and user-base of games surpassed that of popular OTT & Video-on-Demand services by as high as 4-times, during the period. India's demographic dividend, with its large young population and increasing income, shows a strong potential for gaming, a market growing exponentially as the mobile internet penetration sky-rocketed in 2020. The lockdown encouraged new users to pay for games, which saw an unprecedented growth in “First-time payers”. Several other factors have further driven the growth of the sector; and resulted in a large gamer base of 400-450 Mn, which is expected to reach to 700 Mn by the end of 2025. New formats such as HyperCasual, Social games and eSports are expected to outperform the market growth rate in the next 5 years. As gamers mature, the monetization streams are also expected to evolve with the proportion of In-App Purchases and Ad revenue increasing to the overall revenues of Gaming companies. We at RedSeer, with Lumikai - India’s first and most active gaming and interactive fund, have also been able to dissect the complex gaming sector in various categories; and analyze the consumer behavior by surveying over 2000 gamers in India. Amongst other findings, we gathered that while the average monthly spend on games is around $1.5, it is as high as $3.5 for Real-Money games. We hope that the report will help the reader gain a perspective of the sector, and help developers and publishers in their game development and management. Anil Kumar Founder & CEO RedSeer
  • 5. India’s gaming market is at a once in a generation inflection point exceeding previous estimates on sophistication, scale, growth, and propensity to pay (1/2) Executive Summary 20% of roughly 400 Mn active gamers in India choose to pay for games Spend/ month Overall RMG Non-RMG India’s Gaming Market Size: $2.2 Bn growing to $7B in five years Propensity to Pay Growing: Average yearly spends at $16 per gamer The gaming market in India is a $2.2 Bn industry, and is projected to grow at ~30% CAGR to reach $7B market -- more than 3X in the next 5 years. India is transitioning from a net importer of global gaming titles to a global exporter of content and IP. An estimated 96 Mn Indian users are forecast to pay for games in 2021. Paid gamers are forecast to reach ~240 Mn (3x) in the next 5 years. India’s percentage of first new time paying users (NPUs) in gaming is the fastest growing in the world two years running, at 40% (2020) reaching 50% in 2021. Survey results show that up to 50% of new midcore and hardcore game users pay $7-$14 per month. Average gamers spend ₹1,200 ($~16) per year on games, with RMG users spending INR 3,000 ($~40) per year. (Survey results across a sample of 2180). Av spend per paying user is $77/year. ₹~100 ₹~250 ₹~50 5 ©RedSeer Note (s): For this report, we have included all games played or viewed on mobile, PC, Consoles and any other digital medium. CAGR ‘21-’26 Casual & Hyper- Casual Mid & Hardcore RMG PC & Console Esports FY19-FY26P. USD Bn 30-35% 25-30% 25-30% ~10% 40-45% Gaming market in India: Trend by Segment FY19 FY20 FY21 FY26P $~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn 40% 49% 7% 3% 1% 0% 12% 22% 8% 25% 52% 3% 2% 19% 24% 50% 1% 3% 19% 27% 25-30 2 1
  • 6. Indian Gamers’ Behaviour Revenue growth increasingly being driven by new forms of monetisation The market is maturing both from a demand (user) and supply (developer) perspective In-app purchases now constitute 27% of domestic gaming spending, with IAP growth forecast to outstrip RMG and ad monetisation through 2025 and beyond. With RMG remaining in a regulatory grey zone, developers are implementing newer, fast growing forms of monetisation such as subscriptions and virtual tipping/gifting. Users are maturing and localising in their behaviour – from time-spent gaming, engagement with new midcore gaming formats, and over 60% expressing interest in more Indian themed games. The number of gaming companies has seen a geometric increase, from 25 studios in 2015 to over 500 in 2021. Time Spent Gaming : Average weekly time spent on gaming has risen to ~3.6 Hours from ~2.5Hr before Covid lockdowns. Esports, Streaming & Social gaming are rapidly growing in India; especially in regional & vernacular markets. India Themed Games : Players surveyed indicated a strong preference towards games with Indian central themes or characters. 6 ©RedSeer Note (s): For this report, we have included all games played or viewed on mobile, PC, Consoles and any other digital medium. 3 4 India’s gaming market is at a once in a generation inflection point exceeding previous estimates on sophistication, scale, growth, and propensity to pay (2/2) CAGR ‘21-’26 ~20% ~30% ~40% $~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn (27%) (17%) (26%) (15%) (31%) (53%) (11%) Ad Revenue In App Purchases (IAP) RMG Others Gaming market in India: Trend by Revenue Streams (54%) ~0.3 ~0.5 ~0.9 25-30% ~0.1 ~0.3 ~0.6 ~1.2 ~0.1 ~0.7 ~2.1 ~3.7 ~0.3 FY19 FY20 FY21 FY26P Executive Summary
  • 7. 7 CONTENTS 1. Gaming in India: Context & Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment trends enabling growth in Gaming 6. Appendix ©RedSeer
  • 8. 8 Macro perspective and impact on India Gaming Descriptive $~7 Bn Gaming Market by 2026 ©RedSeer India is emerging as one of the world’s largest gaming markets, especially post the COVID 2020/21 lockdowns; with multiple macro drivers, domestic market is expected to grow to $~7 Bn by FY2026. Note (s): For this report, we have included all games played or viewed on mobile, PC, Consoles and any other digital medium. Source(s): RedSeer Analysis, Secondary Research. Young Population ~500 Mn individuals in the age group of 15-35 years Income increased ~45% in last 5 years Sophisticated gamers with exposure to Western games World’s cheapest data rates at just $0.1/GB Large ‘target segment’ and potential user base Increased ability to spend when motivated Strong culture of games and social motivations for users Lower barriers to access games Digital India and Internet Access Increasing Disposable Income Social & interactive Culture India Gaming market is witnessing an unprecedented growth phase fueled by various social, economical and technological factors
  • 9. 9 Media Consumption in India Avg. Time spent per users per week (Hours) ©RedSeer Note (s): Pre-Covid : 13Jan-2Feb ’20 ; Lockdown Week 1 – 21-27 Mar ’20 ; Lockdown Week2 – 28Mar-1Apr ‘20. Source(s): RedSeer Analysis, Survey Results, Nielsen SmartPhone Panel, BARC report. Gaming is increasingly becoming the more popular medium of recreation in India; with the growth in time spent four times higher than time spent on OTT Video during lockdown Gaming on smartphones has grown in popularity especially during the COVID lockdowns. The time spent on gaming has increased ~45%, which is higher than other forms of entertainment consumption such as video-streaming services Approximately 30% of users also claim that their usage of mobile games has increased during the past 12 months and for ~20%, it is likely to increase going forward as well. Decreased Remained the same Increase Past Behaviour v/s Future Expectation Change in Time Spent Gaming Pre-Covid Lockdown Week 1 Lockdown Week 2 Gaming 2.5 3.1 3.6 +44% OTT Video Past 12 Months Next 12 Months 3.5 3.9 3.3 +12% 30% 19% 69% 11% 62% 8%
  • 10. Improved hardware allowed evolution of complex games like Bounce & Prince of Persia on mobile etc. Pre-installed games like Snake were popular on mobile phones. PC & console games were considered aspirational. Early adoption of downloading games on phones; especially with popularity of Android; started. PC & Console games like Age of Empires, and FIFA were popular. 10 Indian Gaming Sector Timeline 2005-2010 Emergence of Digital Gaming Experimentation phase Monetization Phase Adoption & Crystallization Phase 2011-2015 2016-2018 2019-2020 2021 and Beyond A B Major Milestones ©RedSeer Note (s): The trend in India gaming reflects the inflection points in customer behaviors Source(s): RedSeer Analysis, Secondary Research The Indian Gaming Market has accelerated post-Jio, with Covid lockdowns boosting experimentation and social gaming; along with a rise on spending through RMG Launch of Jio Led to growth in game downloads and online gaming. Also thrusted India from an experimentation phase to a monetization of games phase. Emergence of RMG Real Money Games (RMG) like Rummy, Fantasy Sports and Poker became popular; proving the viability of monetization models. Growth of Social Gaming COVID-led lockdowns encouraged a growth in Social/community gaming C A Growth of Free-to-play Games B Emergence of Real money games C Growth of Social/Multiplayer games Adoption of Esports & Game streaming portals Access to affordable data encouraged gamers to explore, download and play more games on their mobile phones. COVID-19 lockdowns & social distancing encouraged the growth of users exploring social & multiplayer games including RMG Snake(mobile), Mario, Dave, Brian Lara Cricket Age of Empire, FIFA, Counter Strike, etc. Angry Birds, Temple Run, Candy Crush (Online) Rummy, 3 Patti, Ludo King, MPL
  • 11. 11 Gaming Market Structure India’s Gaming Market Structure PC & Console Games Mobile-based Games Esports & Streaming ©RedSeer Note(s): Game/Player examples are illustrative for respective categories; and follow no order or preference whatsoever. Source(s): RedSeer Analysis. India’s gaming market is segmented into three major categories: Mobile games, PC & Console, and Esports & Streaming Time to fun <20 secs, visually simple, higher churn. Simple, easily repeatable and accessible games. Simple to start with features for long tail retention. Complex, multi-faceted, games for enthusiast users. Games played with real money based on skill or chance. Popular multiplayer games usually played professionally. Tournaments run and attended or broadcast by media houses. Viewing game streams on channels like Twitch & Loco. Hyper-casual Casual Mid Core Hard Core Real-Money (RMG) Competitive Gaming Spectatorship Game Streaming Soap Cutting, Crowd City, HelixJump etc. LudoKing, CandyCrush, AngryBirds Battlegrounds Mobile India, Free Fire, Mobile. Genshin Impact, DOTA, League of Legends Online Poker, Rummy, TeenPatti, & Fantasy sports. Tournament & competitions Twitch, Loco, Youtube
  • 12. 12 AGENDA 1. Gaming in India: An Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment enabling growth in Gaming 6. Appendix ©RedSeer
  • 13. 13 ©RedSeer A B C D E F Gamers in India In Millions, 2018-2025P Structural Drivers Note (s): “Gamer” is someone who has played at least 1 digital game in the last 1 month. ^ P = Projected Source(s): RedSeer IP & Analysis. With 400 Mn gamers in 2020, India’s gaming market is the world’s 2nd largest by volume; and is expected to house ~700 Mn gamers in next 5 years Growth of internet users India has seen an exponential growth in the number of internet users over the last few years Increase in smartphone penetration Fueled by the availability of low-cost smartphones, the smartphone penetration also increased. High data consumption Usage of data has risen recently driven by the reduction in data tariff over the years. Technological innovations Several OEM & supply side advancements have boosted the usage of smartphones, apps & games COVID-19 lockdown Govt. imposed Covid lockdown accelerated the organic growth of digital games by boosting downloads by 50% Emergence of vernacular internet & games “Indian”-ization of games with introduction of vernacular language options has expanded the user base 2018 2020 2021P^ 2025P^ 250 400 450 700 +11% +150 COVID Lockdown accelerated the organic growth of users
  • 14. 14 ©RedSeer Over the past 5 years, the number of internet users in India accelerated significantly Internet Users Mobile Internet Users India’s internet users grew ~15% during the past one year; with a strong growth from rural areas # of internet users (Mn); CY2005-25 Mobile Internet Users (% internet user) Internet Subscribers in India 50% 82% 201 24 441 445 515 634 688 882 96% 89% 92% 94% 95% 98% CY05 CY06 48 80 278 323 368 460 500 560 ~680 ~750 ~950 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY25 100 80 60 40 20 0 Desktop Internet Internet enabled 2G phones Low cost 3G enabled smart phones Jio - Affordable 4G LTE COVID Lockdown-led boost Key Drivers of Adoption A Note(s): Personal electronics are shared & also have dual sim- slots, which results in identical number of mobile & internet users. Source(s): RedSeer Analysis, TRAI, Datareportal.
  • 15. 15 ©RedSeer ~ 38% India’s population owned a smartphone in 2020 that can access mobile games from app stores. OEMs are now targeting sub-USD100 users and the average cost of smartphones is reducing, which has led to the increased penetration. Longer replacement cycles result in higher retained/ownership period of phone. Better quality, affordable phones have increased the average period of ownership from 12-16 months to 16-20 months in India between 2015 & 2020. Note(s): P = Predicted Source(s): RedSeer IP & Analysis, Secondary Research. Moreover, the number of smartphone users in India has increased to over 500 Mn; driven by strong demand from Tier-2+ cities and increasing affordability of high-quality smartphones B 300 Mn 380 Mn 480 Mn 500 Mn 600 Mn 880 Mn 2016 2017 2019 2020 2021P 2025P # of Smartphones, % of Population, CY16-25P Smartphone Penetration in India Highlights CAGR ~40% Average selling price of smartphones and increased adoption in rural and vernacular users has boosted the smartphone penetration
  • 16. 16 ©RedSeer Note(s): 1. Time spent active consuming media, surfing or playing games (Active screen time) Source(s): RedSeer Analysis, TRAI & DataReportal Secondary Reports India has the world’s cheapest data tariffs resulting in increased data consumption per unique connection; in-turn improving access to games and media USD/GB GB/month C 0.4 3.24 $1.08 $1.4 $8 $0.6 0.2 0.1 0.1 0.1 0 0.1 1.1 4.1 7.6 9.8 11.7 13.5 25 2015 2016 3H 3H Boost due to Internet Affordability (Jio-launch) (Lockdown-led restrictions) Change in User Behaviour Rural Penetration 3.5H 5H 6H 4H 7H 8-10H 2017 2018 2019 2020 2021 2025 Avg. Daily Time spent on Internet1 Cheapest Data Tariff in the world Rapid Growth in Active consumption of internet, as seen by time spent USD per GB | GB/month; 2015-2025 P Average Data Consumption & Tariff After the launch of Jio in 2016, India consistently had lowest data-tariffs in the world, enabling data consumption to become 4X within a year. Currently, the data consumption is at 13.5 GB/month. As rural penetration grows, the average monthly data consumption is expected to almost double by 2025.
  • 17. 17 ©RedSeer Source(s): RedSeer Analysis, Secondary Research In parallel, India has emerged as the fastest growing gaming market in the world in terms of growth in new paying users (NPUs); now at over 50% C.1 Digital transactions in India have grown at a tremendous 50% CAGR in last 5 years (by volume of transactions). This enables and permits for strong monetisation amongst Gamers on RMG, In-app Purchases etc. on gaming platforms Multiple platforms observed strong organic growth of users; especially during the lockdown months of 2020. The past year also saw a jump in monetization conversions, as New Paying Users in gaming grew from ~40% in FY20 to ~50% FY21. FY2017 FY2018 FY2019 FY2020 FY2021 10 20 31 55 45 Number of transactions, In Bn. New Users & First Time Payers on Mobile Games Digital Transactions in India +50% First Time Paid User in FY2020 (YoY Growth) First Time Paid User during FY2021 (YoY Growth) +40% +50%
  • 18. 18 ©RedSeer Tech innovations driving growth Better hardware OEM focus on Gaming Smartphone Internet Penetration Source(s): RedSeer Research & Analysis Technological innovations from the supply-side are supporting continuous and healthy growth for the budding gaming sector. Higher RAM & better processing power in phones allowing better graphics. Storage capacity of mobiles have enabled users to store larger, complex games, encouraging developers to build games with better graphics. Modern screen technologies allows a superior experience and longer screen time even on phone. Companies like Asus, Xiaomi, Nubia have launched gaming-specific smartphones with high refresh rate screens, game modes, triggers, etc. to cater the growing demand of mobile gaming Game-focused accessories : A new accessory market is emerged with the growing popularity of mobile gaming Mobile data prices in India have consistently been low; leading to better access, thereby more game downloads and playing ability. With the introduction of 4G, mobile internet speed have increased from ~3 Mbps in 2015 to ~18 Mbps in 2021. <10k 10k-20k 20k-25k >25k 62% 22% 10% 6% 2015 2021 3.5 0.1 D Low cost smartphones with high specs Smartphone split by Price Buckets (INR) % of smartphones, CY20 Gaming-specific smartphones & accessories Internet Speed ~3 MBPS ~18 MBPS Data cost per GB and Internet Speed in India
  • 19. 19 ©RedSeer Game downloads in India 2020-21; Indexed to 100 Segment Casual Gaming 5X increase registered in the In-app purchases (IAP). Inactive users returned to platforms organically Casual games with social gaming feature performed better than games that didn’t have the feature India saw a spike in adoption and growth in the social games; especially during the COVID lockdowns Friends and family took to social gaming to maintain social connections The segment saw up 2X increase in userbase (a considerable increase in new users came in from Northern India) Increase in number of tournaments with a large growth from Tier 2+ cities Daily revenue increased to over 1.8X at its peak. Specific games in Hard core & Midcore games grew significantly, but the sector was relatively lower compared to the other segments Midcore and Hardcore Real Money Games Social Gaming Popularity1 Medium Low High Very High Observations Note(s): 1. Relative Popularity based on customer interaction & usage figures for the game segments Source(s): RedSeer Analysis & Secondary Research The nationwide Covid lockdowns led to a jump in gamers; and while all gaming segments benefitted, social games saw the strongest growth. E 0 50 100 150 200 Feb ‘20 Jan ‘20 Mar ‘20 Apr ‘20 May ‘20 July ‘20 June ‘20 Aug ‘20 Sep ‘20 Oct ‘20 Nov ‘20 Dec ‘20 Jan ‘21 Feb ‘21 Mar ‘21 Apr ‘21 May ‘21 June ‘21 July ‘21 +51% Lockdown 1 Lockdown 2 Sudden jump in downloads; with onset of lockdowns Downloads plateau-ed and returning to baseline post the lockdowns Despite COVID led surge in downloads and market corrections, monthly game downloads have increased by ~50% in the past 1 year
  • 20. 20 ©RedSeer Drivers of Growth How likely would you play a game if the central theme or character is from Indian themes / mythology / celebrities? N = 2180 Vernacular Offerings Current internet growth driven by new rural users in India at 13% (vs 4% urban growth) that prefer vernacular content Monetizable vernacular user base is estimated at ~400 Mn (by 2023) Streaming of esports tournaments in Hindi is growing in popularity. In 2020, PUBG tournament’s Hindi stream peaked at 449K viewers, highest in India (PMWL 2020) Further, introduction of vernacular languages and Indian themes on various apps and games are expanding the addressable user base to non-English speaking clusters. F Source(s): RedSeer Research & Analysis Indifferent Likely Highly Likely Unlikely Highly Unlikely ~ 60% of people would like to play a game with Indian themes. Overall Metro (N=834) Tier 1 (N=644) Tier 2+ (N=702) 8% 52% 18% 10% 10% 13% 45% 20% 12% 8% 6% 49% 17% 11% 14% 7% 57% 18% 8% 8%
  • 21. 21 ©RedSeer “India-first content” focused games Emergence of “India-first content” focused games Source(s): RedSeer Research & Analysis As penetration for gaming is increasing beyond Metro cities and towards mid-to low-income individuals i.e. “audience of the future”, preference for games with “India-first content” are increasing due to “relevance and familiarity” Multiple gaming studios have emerged and are building “India-first content” to tap the growing opportunity Case-study: Emergence of Midcore, “India-first” culturally relevant games. F.1 A new generation of studios are developing game adaptation of popular Indian mythologies or popular domestic sports with midcore, social gameplay. These titles are targeting increasingly sophisticated Indian gamers and are build to monetise primarily via IAPs versus ads. Market Indicators Leading Studio How likely would you play a game if the central theme or character is from Indian themes / mythology / celebrities? N = 2180 Will not play Least likely Less likely Indifferent Likely Very likely Indian Themes Mythology Celebrities 53 6% 3% 9% 19% 53% 17% 53 6% 3% 10% 8% 54% 17% 53 7% 4% 9% 7% 53% 18%
  • 22. 22 ©RedSeer India Gamers Funnel Millions of Users, CY20 – CY 25F Note(s): % refer to share of immediately higher level Source(s): RedSeer Analysis # of Gamers CAGR 16% Driven by multiple structural drivers, we expect the gamer base to expand to ~700 Mn by 2025, with a strong increase in paid gamers as a proportion of the total user base. Access to Internet Total population with access to internet Mobile Internet Users Access to Mobile data packs Smart Phone Users Uses a Smartphone/Tablet Gamers Users who play atleast one game Playing Gamers Users who have paid for a digital game or In-app purchases CY20 CY21 CY25 675 100% 94-95% 75-78% 80% 20% 100% 96% 87-90% 70-75% 21-23% 100% 98% 95-97% 75-80% 30-33% 635 500 400 ~80 -~950 ~882 ~860 ~700 ~234 720 689 600 ~450 ~96
  • 23. 23 ©RedSeer AGENDA 1. Gaming in India: An Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment enabling growth in Gaming 6. Appendix
  • 24. Pre-2019, the gaming sector was at an early stage & was dominated by international publishers and developers. RMG will be expected to contribute a significant source of revenue with growing expectation of regulatory clarity. IAPs are projected to grow ~40% by FY26 with the rise of paying users across casual and core genres ~$120 Mn revenue from ads is currently booked outside of India in addition to the ad revenue shown for 2021. A Mobile Games Most prevalent and rapidly rising mode of playing digital games, especially for casual & real-money games. B PC & Console Developing a niche amongst serious gamers for mid & hard-core games. C Esports Newest format of Digital gaming. Rapidly gaining popularity, especially amongst young and serious gamers 24 ©RedSeer Gaming in India - by Revenue Streams 2019-2026P, USD Bn Indian Gaming Ecosystem: Deep-Dive Source(s): RedSeer Analysis, Secondary research India’s gaming market is estimated at $2.2 Bn in FY2021 and is projected to become $7 Bn in next 5 years, with in-app purchases (IAP) being the fastest growing segment CAGR ‘21-’26 ~20% ~30% ~40% $~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn (27%) (17%) (26%) (15%) (31%) (53%) (11%) Ad Revenue In App Purchases (IAP) RMG Others (54%) ~0.3 ~0.5 ~0.9 25-30% ~0.1 ~0.3 ~0.6 ~1.2 ~0.1 ~0.7 ~2.1 ~3.7 ~0.3 FY19 FY20 FY21 FY26P
  • 25. 25 ©RedSeer Gaming Segments Description and profile Hyper-casual Casual Core Games Real Money Games (RMG) Esports & Streaming Mid-core Hard-core Description Characteristics Learning curve Difficulty Level Session Time Example Source(s): RedSeer Analysis The market constitutes of 6 segments based on their key characteristics – learning curve, session time and difficulty level. Simple mechanics which are very easy to pick up. Driven by multiple, very-short session times. Helix Jump, Ball Blast, Baseball Boy, Car Merger, High Heels! Hero Wars, Envoy-The King returns, Carrom Pool, 8 ball Pool, Ludo King, Yalla Ludo, Genshin Impact, Lord’s Mobile, Top War, Clash of Clans, Art of War, BGMI, Call Of Duty. Rise of Empires, FIFA Soccer, League of Legends RummyCircle, Dream11, Adda52. Loco, Twitch, YouTube Gaming, Rooter etc. Simple game mechanics and rules, easily picked up. Better graphics and gameplay than hyper-casual games. Usually features a multi-player experience and revolves around resource management skills. Good graphics & details make it engaging. Complex gameplan, mechanics and storyline providing a very high engagement by gamers. Usually played multiplayer. Games related to poker, rummy, casino, cards, and any other which involves real money when playing. Live streaming of gaming tournaments & viewership. Flat Negligible Very-Short (2 min) Short (~5 min) Medium (10-15 min) Long (>15 min) Long (>15 min) Negligible Medium to High Medium to High Low to Medium Gentle Gentle Steep Skill-based N/A N/A N/A
  • 26. 26 ©RedSeer Source(s): RedSeer Survey & Analysis The market is dominated by RMG, with Esports, Casual and Hyper-casual demonstrating the fastest growth CAGR ‘21-’26 25-30% ~10% 40-45% 30-35% 25-30% $~0.8 Bn $~1.8 Bn $~2.2 Bn $~7 Bn RMG Mid & Hardcore Casual & Hyper-casual PC & Console Esports 52% 19% 24% 50% 19% 27% 1% FY19 FY20 FY21 FY26P 72% 49% 12% 22% 8% 25% 7% 3% 1% 3% 2% 3% Gaming in India - by segments FY19-FY26P, USD Bn. Real Money Games have historically been the largest revenue source for India’s gaming. This segment is expected to grow at 25-30% CAGR with growing expectation of regulatory clarity. Non-RMG gaming segments are expected to grow faster, driven by growth in In-app purchases, subscriptions and virtual gifting. Esports & streaming is a nascent market but is witnessing strong adoption in the market. It is expected to grow at ~40% over the next 5 year period. 25-30%
  • 27. 27 ©RedSeer Source(s): RedSeer Research & Analysis ~20% of gaming users in India are paid gamers, with RMG, Casual and Core games the most popular amongst the paying user base Do you pay for playing digital games? N = 2180 Yes No RMG Real Money Gaming Casual Google Pay and PhonePe are the most popular means of payment for games Subscriptions Hardcore Midcore Virtual Gifting and Tipping In-App Purchases Hyper-casual Social Games Esports 41% 33% 14% 1% 1% 1% 22% 72% 56% 15% 17% % Respondents, N = 485 What type of games do you pay for? % Respondents, N = 485 What type of feature do you pay for? 78% 22%
  • 28. 25% 25% 50% 28 ©RedSeer The average gamer spends an average of ₹107 ($1.5) per month on games; with the average RMG gamer spending ₹250 ($3.5) per month. Our survey indicates that users are willing to pay as high as ₹ 500 ($7) to ₹ 1000 ($14) per month on midcore and hardcore How much money do you spend playing games in a month? Monthly Average Spend (N= 2180) Overall Hyper-Casual Casual Midcore Hardcore RMG 53 4% 6% 17% 39% 26% 5% 53 7% 5% 22% 38% 26% 1% INR 107 $1.5 $0.1 $0.6 $0.7 $2.4 $3.5 INR 10 INR 46 INR 54 INR 176 INR 249 INR 100-200 INR 50 < INR 50 INR 200-500 INR 500-1000 INR 1000+ 53 6% 3% 12% 53% 18% 7% 53 1% 1% 13% 53% 27% 4% 31% 1% 9% 30% 20% 8% Notes: Monthly Average Spend is the average spend across the total gamer sample Source(s): RedSeer Survey & Analysis 0% 0% 0%
  • 29. 29 ©RedSeer India’s mobile gamers are primarily young males; Casual & Hyper-casual formats are witnessing growing adoption amongst women A Source(s): RedSeer Research & Analysis. Overall Hyper- casual Casual Midcore RMG N=2,180 N=97 N=1,476 N=694 N=375 Female Male 77% 22% N varies by segment Demographic Trends – Split by Gender Split by Age 62% 37% 71% 28% 87% 12% 84% 15% Overall Hyper- casual Casual Midcore RMG N=2,180 N=97 N=1,476 N=694 N=375 <18 18-24 25-34 35+ 42% 1% 24% 32% 44% 3% 21% 30% 42% 1% 26% 30% 42% 1% 14% 30% 51% 32% 16% Split by City Tier Overall Hyper- casual Casual Midcore RMG N=2,180 N=97 N=1,476 N=694 N=375 North South East West 24% 23% 21% 30% 6% 22% 26% 44% 26% 22% 19% 31% 27% 21% 23% 28% 16% 25% 28% 29% Split by Region Overall Hyper- casual Casual Midcore RMG N=2,180 N=97 N=1,476 N=694 N=375 Metro Tier 1 Tier 2+ 29% 32% 38% 22% 28% 48% 30% 28% 40% 33% 32% 34% 22% 23% 53% Mobile PC & Console Esports & Streaming
  • 30. 30 ©RedSeer Across mobile gaming segments, India’s gamers are active users of social media, messaging and online shopping – these channels are the primary sources for gamer acquisition. A Source(s): RedSeer Analysis, Primary research Mobile PC & Console Esports & Streaming Categories (In decreasing order of overall usage) (N=97) (N=1476) (N=694) (N=375) Hyper Casual Casual Midcore RMG Social Media Messaging Online Shopping Video Banking and Wallet Audio Shortform content News N varies by segment Gamers overlap to other Digital Media Consumption 86% 82% 72% 70% 63% 41% 39% 78% 74% 71% 63% 64% 53% 39% 38% 67% 72% 71% 66% 65% 61% 48% 48% 69% 56% 62% 60% 56% 49% 26% 33% 59% 1 2 3 1 2 3 1 2 3 1 2 3
  • 31. 31 ©RedSeer Hyper-casual games offer a quick and easy means to pass time and have become a popular entry point for India’s first time mobile gamers. Hyper-casual games are easy to learn, and encourage players to come back for multiple short-durations. These games typically focus on a single task/activity, like running, parking a car or dunking a basketball etc. Top Indian Hyper-casual Genres Avg. Weekly Hours Spent Playing 1.8 Hrs Users who increased gaming in last 12 months Users who will increase gaming in next 12 months 20% 14% Arcade Puzzle Helix Jump Helix Jump JoinClash 3d SuperSonic Studios Rescue Cut - Rope Puzzle MarkApp Crossy Road Hipster Whale Worms Zone.io Azur Interactive Top Hyper-casual Games Characteristics of Hyper-casual gaming A Mobile Hyper-Casual Casual Core RMG Note(s): Player & game examples are for reference and not in any order or preference, Key Usage Characteristics refers to average metric figures for the Top 100 players in Q1-2021 Data on weekly hours spent playing, increased gameplay, and future outlook on gameplay based on survey data. Source(s): RedSeer Analysis, Primary & Secondary research. Key Usage Characteristics Typical # of Downloads for Top 100 ~ 6 Mn Downloads Typical # of MAU for Top 100 ~ 28 Mn
  • 32. 32 ©RedSeer India’s Hyper-causal gamers play to relax and past time; they discover new games through recommendations coming from friends and advertisements. A Mobile Hyper-Casual Casual Core RMG Source(s): RedSeer Analysis, Primary Survey & research. N = 97 Source of discovery of hyper-casual games N = 97 Motivation to play hyper-casual games Friends/Family recommendations Playstore/Appstore recommendations In App advertisements Advertisement other than apps Game reviews from various media Influencers/ Celebrities 76% 54% 26% 22% 11% 9% Relaxation and Destressing Time kill/ distraction Self-expression/ creativity Socialise with other gamers/ like- minded people Competition / thrill-seekings Personal growth To make money 95% 68% 45% 29% 28% 19% 11%
  • 33. 33 ©RedSeer India’s casual gaming sector was previously dominated by globally successful titles, although culturally resonant domestic games continue to grow. Casual games typically have simple game mechanics and rules, and can be picked up quickly. Audiences for casual games also spend less time playing than mid-core and hardcore audiences- playing more spontaneously or irregularly. A Mobile Hyper-Casual Casual Core RMG Note(s): Player & game examples are for reference and not in any order or preference, Key Usage Characteristics refers to average metric figures for the Top 100 players in Q1-2021 Data on weekly hours spent playing, increased gameplay, and future outlook on gameplay based on survey data. Source(s): RedSeer Analysis, Primary & Secondary research. Top Indian Casual Genres Candy Crush Activision Blizzard Ludo King Gametion MiniClip Carrom Pool Action RPG Simulation Sports Trivia Word Arcade Adventure Card Puzzle Racing Temple Run Imangi Studios Subway Surfer Top Casual Games Avg. Weekly Hours Spent Playing 3.3 Hrs Users who increased gaming in last 12 months Users who will increase gaming in next 12 months 28% 16% Characteristics of casual gaming Key Usage Characteristics Typical # of Downloads for Top 100 ~ 7 Mn Downloads Typical # of MAU for Top 100 ~ 30 Mn
  • 34. 34 ©RedSeer India’s casual gamers play to relax, but a large section seeks to socialize with other users and enjoys the thrill these games provide. Casual games typically have simple game mechanics and rules, and can be picked up quickly. Audiences for casual games also spend less time playing than mid-core and hardcore audiences- playing more spontaneously or irregularly. A Mobile Hyper-Casual Casual Core RMG N = 97 Source of discovery of hyper-casual games N = 97 Motivation to play hyper-casual games Friends/Family recommendations Playstore/Appstore recommendations In App advertisements Advertisement other than apps Game reviews from various media Influencers/ Celebrities 71% 47% 24% 24% 16% 15% Relaxation and Destressing Time kill/ distraction Self-expression/ creativity Socialise with other gamers/ like- minded people Competition / thrill-seekings Personal growth To make money 93% 57% 42% 39% 29% 18% 16% Higher % of gamers as compared to hyper- casual games who seek to socialise & compete Source(s): RedSeer Analysis, Primary survey & research.
  • 35. 35 ©RedSeer India’s midcore gaming sector is forecasted to see the biggest gains, as hyper-casual and casual gamers graduate to more immersive social formats. Mid-core games exhibit a significant considerable learning curve, game loops, and detailed graphics. They usually feature a multi-player experience and resource management skills which means that session durations are longer and there are monetization opportunities via in-app purchases. A Mobile Hyper-Casual Casual RMG Note(s): Player & game examples are for reference and not in any order or preference, Data on weekly hours spent playing, increased gameplay, average spends, and future outlook on gameplay based on survey data. Source(s): RedSeer Analysis, Primary & Secondary research. Mid-Core/Core Top Indian Mid/Hard Core Genres Avg. Weekly Hours Spent Playing 3.5 Hrs Users who increased gaming in last 12 months Users who will increase gaming in next 12 months 37% 25% Genshin Impact MiHoyo Clash of Clans SuperCell FreeFire Garena Battlegrounds Mobile India Krafton Lords Mobile IGG.COM Top Hyper-casual Games Characteristics of Hyper-casual gaming Monthly Average Spends on Midcore ~$0.7 Monthly Average Spends on Hardcore ~$2.4 Role Playing Games (RPG) Racing Strategy Action
  • 36. 36 ©RedSeer India’s midcore gamers prefer socializing with other people and hence also rely on reviews for finding new games. A Mobile Hyper-Casual Casual Mid-Core/Core RMG Source(s): RedSeer Analysis, Primary survey & research. N = 97 Source of discovery of hyper-casual games N = 97 Motivation to play hyper-casual games Friends/Family recommendations Playstore/Appstore recommendations In App advertisements Advertisement other than apps Game reviews from various media Influencers/ Celebrities 72% 45% 33% 22% 22% 19% Relaxation and Destressing Time kill/ distraction Self-expression/ creativity Socialise with other gamers/ like- minded people Competition / thrill-seekings Personal growth To make money 91% 53% 44% 40% 37% 20% 12% Gamers might indicate an unmet need of “social gaming” which is recently growing Indicates a preference & need for research before starting a new game
  • 37. 37 ©RedSeer Real-money games are strong cash-driven recreational channels for grown-ups A Mobile Hyper-Casual Casual Core RMG Note(s): Player & game examples are for reference and not in any order or preference, Key Usage Characteristic refers to average metric figures for the Top 100 players in Q1-2021 Data on weekly hours spent playing, increased gameplay, and future outlook on gameplay based on survey data. MAPU: Monthly active paying users Source(s): RedSeer Analysis, Primary & Secondary research. Includes all skill-based games that involvement of real money such as fantasy, rummy, poker, and competitive gaming platforms. Top Indian RMG Genres Dream11 Mobile Premier League Games 24x7 Winzo Adda52 Top RMG Players Casino Card Fantasy Avg. Weekly Hours Spent Playing 3.9 Hrs Users who increased gaming in last 12 months Users who will increase gaming in next 12 months 37% 27% Characteristics of RMG Key Usage Characteristics Typical # of MAPU for Top 10 Apps (monthly average paying users) ~ 300 - 500 K
  • 38. 38 ©RedSeer Mobile Hyper-Casual Casual Core RMG Indian RMG users are non-traditional gamers relying on friends and ads to choose their new games; Making money is one of the key motivation to play A Source(s): RedSeer Analysis, Primary survey & research. N = 375 Source of discovery of RMG games N = 375 Attraction to play RMG games Friends/Family recommendations Playstore/Appstore recommendations Game reviews from various media Influencers/ Celebrities In-App Advertisements Advertisement other than apps 59% 51% 42% 37% 35% 22% Relaxation and Destressing To make money Self-expression/ creativity Socialise with other gamers/ like- minded people Time kill/ Distraction Personal growth Competition/ Thrill seeking 86% 70% 58% 35% 26% 14% 10% Gamers seek to earn money but refrain from competition as this is usually their past-time activity
  • 39. Social distancing in COVID lockdown led individuals and gamers to remain confined to their households and need for social connection led to rapid adoption of social games. Adoption of games (e.g. Ludo, Teen Patti and Poker) with social feature skyrocketed during COVID lockdown. Social gaming features continue to be a key driver of retention and new usage for domestic, regional language gamers, including female audiences (e.g. Eloelo). Livestreaming of games provide gamers a unique experience of watching their favourite game played by experts. There is an emerging segment of gamers that enjoy the "vicarious" offering of live game streaming. Indian gamers increasingly consume live streaming content offered by their favorite influencers instead of traditional media. Commentary by live streamers are another key driver for growth as streamers provides reviews, commentary, humor, giveaways, and game tips. 39 ©RedSeer Emerging themes across gaming in India - Social Gaming and Live Game Streaming Source(s): RedSeer Research & Analysis. Mobile PC & Console Esports & Streaming Social Gaming and Game Livestreaming Key Games/ Platforms Games going “SOCIAL” “Livestreaming” Games
  • 40. 40 ©RedSeer PC & Console based games serve a premium and growing set of users in India who value high-quality gameplay, graphics and fidelity Mobile PC & Console Esports & Streaming Consoles based gaming market in India is dominated by Sony and XBOX accounting for 90-95% of the market. Gaming consoles are still a small market and is mostly restricted to Metros & Tier 1 cities. The PC and console gaming market is projected to grow at 10% YoY B PC & Console Games includes all video games played on computers (laptops, desktops etc.) and dedicated gaming consoles (PlayStations, Xbox, Switch etc.) Top PC & Console Genres Action RPG Simulation Sports Trivia Word Arcade Adventure Card Puzzle Racing Prominent PC &Consoles Prominent PC & Console Games Gaming Consoles in India (Market Share) Note(s): Player & game examples are for reference and not in any order or preference Source(s): RedSeer Analysis, Primary & Secondary research. Playstation Xbox Nintendo Other FY19 FY19 FY19 FY19 FY19 74.25 25.1 82.76 16.42 58.52 10.65 78.33 21.45
  • 41. Prominent PC &Consoles Prominent Esports Teams/Players 41 ©RedSeer PC & Console based games serve a premium and growing set of users in India who value high-quality gameplay, graphics and fidelity Mobile PC & Console Esports & Streaming C Esports includes all viewing, streaming and professionally competing in popular games. Announced & Predicted Prize Money from Esport Tournaments USD Mn Prize Pool (USD) Note(s): Player examples are for reference and not in any order or preference Source(s): RedSeer Analysis, Primary & Secondary research ESL and Nodwin- One Mumbai Battlegrounds Mobile India Series 2021 Free Fire India Championship ESL India Premiership Free Fire India Championship 2021 Spring DreamHack 2019 Free Fire India Championship 2020 Fall 300k 134k 100k 150k 103k 52k 68k Prominent Esports Tournaments (India) Esports Prize Money 2017 2018 2019 2020 2021 0.2 0.5 1.1 14.3 3.6 4x growth expected
  • 42. 42 ©RedSeer Live game streaming is rapidly growing as a source of mainstream entertainment for Indian users. Typical # of Subscribers for Top 10 ~ 10 Mn Typical # of Viewership for Top 10 ~ 1 Mn Mobile PC & Console Esports & Streaming C Game Streaming refers to the players recording or playing games live for others to view. Channel Total Gaming Ajay “Ajjubhai” 28.2 Mn 1.8 Mn Garena FreeFire, Minecraft and GTA V 6.8 Mn GTA V, Minecraft, PUBG Mobile, Garen. Ujjwal C. 20.8 Mn Sahil R. 14.2 Mn 2.4 Mn Garena Free Fire MineCraft, Garena. Dota 2, GTA V, Apex Legends, PUBG & BGMI Resident Evil Village, Cyberpunk, etc. 1.1 Mn 1.5 Mn Lokesh Raj 12.7 Mn Gyan Sujan 11.7 Mn Amit Sharma 11.4 Mn 1.3 Mn Adil Sawant 9.9 Mn 8.5 Mn CarryMinati 9.8 Mn 854 k Techno Gamerz A_S Gaming Lokesh Gamer Gyan Gaming Desi Gamers Dynamo Gaming CarryisLive & others like Soul, Mortal, MythPat , Tanmay Bhat etc. Streamer Subscriber Avg. Viewership Games Streamed Note(s): Examples are for reference and not in any order or preference unless specified, Top streamer characteristics are based on metrics for Sept 2021 Source(s): RedSeer Analysis, Secondary research Popular Platforms Key Streamer Characteristics Youtube Loco Rooter Twitch Prominent Streamers
  • 43. 43 ©RedSeer Live game streamers operate like influencers on social media channels and their major revenue sources are virtual tipping/ gifting, advertisements and sponsorships Mobile PC & Console Esports & Streaming C Note(s): Share of revenue is indicative of a typical revenue split for a player at the sector-level Source(s): RedSeer Analysis, Primary research. Revenue Streams Virtual Tipping / Gifting Ad/Media Revenue Brand Sponsorships Merchandise Description Mechanism Advantages Disadvantages Viewers can directly tip or gift the streamer. Tips feature on the channel / Direct sales. Brand recognition Direct sale & revenue Id of fan base. Tipping and gifting behaviour in the India market are still emerging forms of monetisation One-time payment only Heavily driven by viewership and can favour select influencers Highly dependent on brand budgets, can be subject to macro-economic fluctuations . Need strong relationships with brands, IP holders and media agencies N/A Upfront and recurring monthly payment dependent on viewership and reach Can be both upfront payments and long-term contracts. Brand recognition Direct sale & revenue Partnership/ Sponsorship Direct Sales Advertisement revenue is a major source as these streamers are able to generate large audiences & traffic on their channels. Popular streamers are sponsored to feature specific games or products. Sale of team or game merchandize to fans.
  • 44. 44 ©RedSeer For non-RMG games, advertisements are a large source of revenue alongside in-app purchases. With an increasing tendency to pay, in-app purchases are rapidly becoming a significant income source Note(s): Share of revenue is indicative of a typical revenue split for a player at the sector-level Source(s): RedSeer Analysis, Primary research. Current Monetization Methods & Revenue Sources in Gaming. Revenue Streams In-App Purchases Advertisement & Partnerships Direct to Developer/ Publisher Revenue Sources ~5% 90-95% ~1% 80-95% 80-90% 10-25% 5-10% 5-10% <1% 5-10% 5-10% <1% 10-25% 20-30% - - - - - 90-95% 45-50% 50-55% 50-55% 50-55% 5-10% 5-20% 5-20% 70-80% 20% 45-50% 55-60% 10-20% 10-20% 35-40% 5-10% ~5% - - - - - - Generally Nil <1% - - - - - - - - - - - - - - - - - - Generally Nil 60-65% 60-70% - 20-30% 20-30% 20-30% <1% - Generally Nil - - - - - Hyper-casual and Casual Mid-core/ Core Real Money Games PC & Consoles Esports Live streaming - - - - - - - - - - - - - - Player/feature upgrades, Ad-free versions, extra lives & other Micro-transactions. Season Passes & Downloadable Content. "Loot boxes" and Special Gifts/Items boxes. Advertising/Media Revenue Games Purchases Commission & Rake Subscriptions Tournament Entry Fees Virtual Tipping Donations to Developer - - - - - - - - Merchandise Sponsorships
  • 45. 45 ©RedSeer AGENDA 1. Gaming in India: An Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment enabling growth in Gaming 6. Appendix
  • 46. 46 ©RedSeer Technological innovations are democratising the game development and enhanced gameplay experience; AI-ML solutions are easing issues faced by Game developers to ensure better performance of games, improved user targeting and fraud detection Note(s): Non-exhaustive feature. AI/ML usage is continuously evolving to utilize the large amount of user data generated. Source(s): RedSeer Analysis, Primary research. Game Personalization User Monetization Content Generative Tools Fraud & Anomaly Detection Building more engaging and detailed games by Use of generative AI to build content Analyze user likings and personalize games - Using AI models to increase retention Increase LTV & improve monetization etc. Fraud & anomaly detection is a strong use-case with use of Graph databases; which can help identify fake users, account sharing and other such digressions. Usually inbuilt in the game’s back-end, but new options of managed services rely on AI and offer hosting on Cloud AI & cloud service enable smoother server management & load distribution for higher efficiency and stability of games. Artificial Intelligence (AI) & Machine Learning (ML) in Game Management. Game Management Non Technical Aspects Infrastructure Management Managing various components and the back-end of the game. Ensuring a smooth experience for players during a game/play Session Management & Matchmaking Functions and Tasks Use of AI/ML Application of AI & ML Deploying the game servers on virtual machines. Containerized game servers on “Kubernetes” Choosing a completely managed service for hosting Game backend In-built Or managed suites (continuous integration and continuous deployment )
  • 47. 47 ©RedSeer AGENDA 1. Gaming in India: An Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment enabling growth in Gaming 6. Appendix
  • 48. 48 ©RedSeer Gaming companies in India have seen a 500% increase in funding received during the last 4 years Funding in Digital gaming in India USD Mn Passive Phase # of gaming companies Sudden Surge 25-30 275 500+ 2015 2016 2017 2018 2019 2020 2021 15 4.35 34 135 415 820 156 +426% The sector has attracted $800 Mn in investments in the last 6 months; with approximately $1.3 Bn raised over the last 18 months. Number of India gaming companies has grown from 25 in 2015 to 500+ gaming companies in 2021; indicating strong potential in the sector. Note(s): Investments till September 2021. Figures include only publicly disclosed funding. Source(s): Crunchbase Data, Industry Reports, RedSeer Analysis.
  • 49. 49 ©RedSeer Private and public market funding led to emergence of large gaming players in India valued >$1Bn Indian Gaming Unicorns Public-led, Indian megahouse for games with active M&A and diversification. Founded in 2000, a leading diversified gaming and sports media platform with offerings across casual gaming, Esports, RMG, and early-stage learning. Market Cap1 - Total Funding - Key Investors - ~ $ 1.2 Bn $ 146 Mn Westbridge, IIFL, ESL Gaming, Sequoia. Valuation - Total Funding - Key Investors - $ 5 Bn $ 785 Mn Falcon Edge, Tiger Global, Tencent, Kalaari. Valuation - Total Funding - Key Investors - $ 2.3 Bn $ 389 Mn Sequoia Capital, Times Internet, MDI Ventures. Founded in 2008, India’s biggest multi-sport fantasy gaming platform with over 100 Mn + users playing. Founded in 2018, its an online mobile gaming and Esports platform offering 50+ titles. It has been leading the Esports push in India while also providing casual, fantasy, & RMG. Rely on love for cricket & traditional sports via fantasy & RMG games. MPL is driving the Esports segment in India with its platform-based offering. Note(s): Market Capital, Funding and valuation is taken as on October 13, 2021 after closing of markets; 1 INR = 70 USD, Source(s): RedSeer Analysis.
  • 50. 50 ©RedSeer The market has seen the successful public listing of Nazara Technologies, which was one of India’s first gaming companies. Source(s): RedSeer Secondary Research, Primary Interviews Nazara Technologies IPO Snapshot In USD Mn, FY 2016 - 20 Revenue Growth – Nazara Technologies In USD Mn, FY 2016 - 20 Existing Investor Exit Multiples Investor Gain Multiple Gain Multiple for Exiting Investors IPO Oversubscription 2nd Largest in 2021 Premium on issue price on opening 1.5x to 2.7x 174.46x ~ 80% 2016 2017 2018 2019 2020 30 29 26 37 27 Westbridge Capital (Pre-IPO Exit) IIFL Fund Good Game Investment Seedfund 2 International Porush Jain, Azimuth Inv, SeedFund2India 45x 2x 2.7x 1.5x 1.5x Being the first gaming company in India to launch an IPO, Nazara Technologies saw huge demand and captured a scarcity premium by investors looking to participate in a fast growing market. With the IPO funds, Nazara aims to continue investing and acquiring companies with high synergy with its existing portfolio. These synergy acquisitions has made the stock more valuable for the investors. The IPO saw huge interest from foreign and domestic investors alike, with major anchor investors being Goldman Sachs, Fidelity Investments, Nomura, Kotak Securities, SBI Mutual Funds, etc. IPO Insights
  • 51. 51 ©RedSeer AGENDA 1. Gaming in India: An Introduction 2. Dynamics and Opportunity 3. Market, Business Model and Segments Deep-dive 4. Technology Disrupting Gaming 5. Investment enabling growth in Gaming 6. Appendix
  • 52. 52 ©RedSeer Currency conversion 1 USD = INR 70 CY FY Metro Cities Tier 1 cities Tier 2+ cities Rural Areas Gaming Gamer Paying Gamers Hyper-casual games Casual games Mid Core Hard Core RMG Esports Streaming Streamer Calendar Year (January to December) Financial Year (April to March) Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Kolkata, Pune, and Ahmedabad (8 cities) Non-metro cities with population more than 1 Mn (20 cities) Non-metro cities with population less than 1 Mn (4400+ cities) Population less than 10,000 Digital Gaming (including PC/Console and Mobile games) A person who has the available resources (internet, mobile, PC/Laptop and/or Gaming console) and has independently played a digital game of any kind A Gamer who has explicitly paid for a game, game feature or any other direct form while playing (includes all In-app purchases & real-money gaming transactions Single-core mechanic, easy to pick-up, difficult to master; and uniformly challenging games e.g.; FlappyBird Games with engaging but simple mechanics and easy-to-learn rules. Enhanced graphics and gameplay over hyper-casual games; e.g.; Angry Birds, Candy Crush Games with detailed graphics and complex gameplay, often features a multi-player experience and revolves around resource management skills; e.g; Clash of Clans, Call_Of-Duty(Mobile) Intense & complex gameplays, detailed simulation, mechanics and storyline providing a very high engagement for gamers, e.g.; Microsoft Flight Simulator, Genshin Impact etc. Games related to casino, card or any involvement of real money or tokens against money like Dream11, Rummy Circle. Competitive digital gaming and live streaming of gaming tournaments & viewership. Live or recorded uploading of a game play (on Youtube, Twitch etc.); may also be called “Live-stream” Individual person who uploads and/or plays the Live- stream. Glossary of terms used in the document (1/2) Keywords Definition / Terms / Acronyms
  • 53. 53 ©RedSeer OTT/ Video streaming Over-the-top media content and videos which can be view on demand; e.g.; Netflix. Internet Subscribers Mobile Internet User Digital Transaction In-app Purchases Ad revenue MAU MAPU ARPU ARPPU LTV AI/ML OEM Lockdown IP OS A person who has access to any form from internet; broadband or wireless. A person who has access and uses non-cabled internet through mobile networks like 3G,4G etc. Financial transactions done through various digital channels like GooglePay, PhonePe, etc. Refers to purchases made by a user while playing or using an app for additional access, feature or any such activity. Income earned by displaying paid advertisements on their app/website surrounding their internet-based content. Monthly Active Users. Monthly Active Paying Users. Average Revenue Per User. Average Revenue Per Paying User. Lifetime Value : estimated total revenue that can be generated from a user during his/her lifespan as customer. Artificial Intelligence / Machine Learning technologies. Original Equipment Manufacturers. Unless otherwise specified; it refers to the period of complete restriction of businesses and movement imposed by the Indian government during March-May 2020 and Apr-May 2021 due to COVID pandemic. Intellectual Property. Operating System. Glossary of terms used in the document (2/2) Keywords Definition / Terms / Acronyms
  • 54. 54 ©RedSeer About RedSeer RedSeer is a research and consulting firm founded in 2009. We are headquartered out of Bengaluru and have presence in Delhi, Mumbai, Dubai, and Singapore additionally. Though we are focused on the consumer internet space in India, Southeast Asia, and the Middle East, we have deep experience in overall retail as well. Our primary business activities include providing research inputs (on market, consumers, other stakeholders) to corporations and funds, conducting due diligence for potential investments, publishing thought leadership pieces, and helping corporate clients solve strategic problems.
  • 55. 55 ©RedSeer Authors Anil Kumar is the founder of Redseer Consulting. He has been part of engagements in Internet, Private Equity, Retail CPG and Healthcare among others. He specializes in growth and investment strategies. Anil is a believer of the data-driven approach in solving business problems. His consulting approach leverages Data IP, sector expertise and the client’s core hypotheses. He holds a B.Tech from IIT-Delhi. He can be reached at anil@redseer.com Mukesh Kumar is the engagement manager at RedSeer and has 7 years of experience in growth strategy engagement across internet, gaming, education, healthcare, and consumer products clients across India, MENA, and North America. He holds a B.Tech from IIT Delhi. He can be reached at mukesh@redseer.com Anil Kumar Founder and CEO Mukesh Kumar Engagement Manager Jaladhi Surati is a Senior Consultant at RedSeer; and has over 5 years of experience in strategy & business consulting. He enables internet businesses in Gaming, eCommerce, FoodTech and other Platform-businesses across India, South-East Asia and MENA regions. He holds a Master’s degree in Business Administration from IIM Bangalore. He can be reached at jaladhisurati@redseer.com Jaladhi Surati Senior Consultant The authors would like to acknowledge the hardwork and support extended by Akshat Praneet, Muskaan Khetan and all others during the course of this report.
  • 56. 56 ©RedSeer Copyright © RedSeer Management Consulting Private Limited (“RedSeer”). All rights reserved. While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, all data and information provided in this report is intended solely for information purposes and general guidance on matters of interest for the personal use of the reader, who shall accept full responsibility for its use. The names, photographs and consumer quotes used are only for indicative / informational purposes and does not have any significance to a particular person. RedSeer does and seeks to do business with companies covered in its research reports. As a result, readers should be aware that RedSeer may have a conflict of interest that could affect the objectivity of the report. All information in this report is provided “as is”, with no guarantee of completeness, accuracy, of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchant ability and fitness for a particular purpose. Given the changing nature of laws and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in the information contained in this report. Accordingly, the information in this report is provided with the understanding that the authors herein are not engaged in rendering legal, accounting, tax, or other professional advice or services. As such, it should not be used as a substitute for consultation with professional advisers. This report cannot be sold for consideration, within or outside India, without the express written permission of RedSeer. In no event shall RedSeer or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any errors, omissions, or delays in the content of this report or any losses, injuries, or damages including any incidental or any consequential, special or similar loss or damages, arising out of, or in connection with the use of this report. Consequential, special or similar loss or damages, arising out of, or in connection with the use of this report. Disclaimer
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