ONLINE GAMING
The Foundation for Economic Growth & Welfare (EGROW Foundation), a non-profit, multi-disciplinary public policy organisation, in collaboration with Primus Partners – India’s leading home-grown consultancy firm – has announced the release of their new research report, India’s booming online gaming industry: a potential powerhouse. The report highlights the exponential growth and potential of India’s online gaming sector and its contribution to the AVGC (animation, visual effects, gaming & comic) industry, which is projected to rise 68 per cent by 2026 from 41 per cent in 2019.
The findings of the research reveal that the online gaming industry is rising to become one of the key employment-generating industries in the next few years. The number of employees in the online gaming industry has grown at a CAGR of 97.5 per cent from 2018 to 2023, exhibiting a 69.88 per cent CAGR among the male workforce and an impressive 103.15 per cent CAGR among the female workforce. The sustained growth across gender lines indicates the industry’s increasing appeal and its potential to drive further economic opportunities in the Indian labour market.
“The Indian online gaming industry is a significant contributor to our economy and a vital source of employment and innovation,” affirms Charan Singh, CEO & founder-director, EGROW Foundation. “With 455 million gamers in 2023, India boasts the second-largest gaming community globally after China. This thriving industry offers significant opportunities to attract FDI, create employment across various sectors and enhance investment. Additionally, it is expected to stimulate allied industries such as fintech, cloud services, data analytics and cyber-security.”
Boasting the second-largest gaming community globally, India presents a lucrative opportunity for foreign investment, job creation, and allied industry growth. The online gaming sector, which employs 100,000 individuals, with projections for an additional 150,000 jobs by 2025, is expected to attract a significant investment of R25,000 crore by 2023-24.
Promising landscape
“Overall, the Indian online gaming industry offers a vibrant and promising landscape, full of potential for economic growth and job creation,” concurs Nilaya Varma, co-founder & CEO, Primus Partners. “However, navigating the recent changes in the GST framework will be crucial for online gaming platforms to maintain their growth trajectory.”
During the research, the surveyed companies highlighted several key issues hindering the growth of the online gaming sector. The most prominent was regulatory uncertainty in the sector, exacerbated by delays in establishing Self-Regulatory Bodies under the IT Rules, which is negatively impacting business operations and allowing offshore operators to gain market share. Also, the retrospective taxation measures, totalling R1.2 lakh crore issued to gaming companies, threaten to erode economic value and potentially devastate the industry.
Another persisting concern is the recent amendment, imposing a 28 per cent tax on deposits, due to which some firms are seeking a lower tax rate and a return to the earlier valuation method, based on gross gaming revenue to foster growth and attract investment. Companies recommend implementation of amended IT Rules to create a national regulatory framework, a clarification on retrospective taxation and the notification of the National Policy for Promotion of the AVGC sector.
Other key highlights of the report include facts like the online gaming sector’s contribution to the M&E (media & entertainment) industry, which is projected to rise from 3.4 per cent in 2019 to 10.5 per cent in 2024 and 12.6 per cent by 2026. The sector has recorded an astounding 168.06 per cent CAGR during 2018-23 in terms of annual turnover. Compared to other major gaming nations, the growth rate of India’s online gaming industry in the past six years has been the highest with a CAGR of 30 per cent during 2017-23.
The report captures the immense potential of India’s online gaming sector as a significant driver for economic growth offering employment and innovation opportunities too. However, the government and industry leaders must address regulatory uncertainties and taxation issues to maintain sustained growth. Backed by the right policy framework, India’s online gaming sector will thrive even more, attracting foreign investment and providing many opportunities across various aligned sectors, believes the report.