India has definitively emerged as a global gaming market that’s ripe with promise for ambitious game developers and publishers. Let’s take a brief look at what the market offers, how gamers in India make payments, some of the region’s tax and compliance challenges, and a few best practices to help your gaming business perform well there.
India’s gaming market has grown incredibly fast throughout the past several years, estimated to be worth $1.98 billion USD by the end of 2020. While the average revenue per paying user (ARPPU) is low when compared to more established regional gaming markets, its growth potential lies in its sheer volume of gamers — over 285 million and counting, representing more than 10% of all gamers in the world.
Since 2010, the Indian market’s rapid growth has been led by mobile gaming, with over 222 million mobile gamers accounting for 89% of India’s total gaming revenue by 2017. Mobile gaming remains massively popular and continues to gain traction, as the number of mobile gamers is projected to reach 368 million by 2022, with estimated earnings of $943 million. And the market has responded by delivering even more mobile games to choose from, as India is home to over three percent of all game publishers on Google Play — who publish five percent of all games on the service — all in a country where Android accounts for over 95% of the mobile operating system market.
Fantasy sports gaming (or fantasy gaming) has also surged in recent years, jumping from only a handful of platforms in 2010 to as many as 70 in 2019, offering a range of options for India’s estimated 100 million fantasy gamers.
The Indian gaming market’s incredible growth across the last decade can be attributed to several key factors, including its relatively low average age, increased average household earnings, greater smartphone penetration (mostly budget models), greater internet penetration, lower data costs, and a nationwide shift from cash-based payments to digital payment methods. These factors have also contributed to a sharp jump in the number of Indian gaming studios and the emergence of India as a robust back-end development hub, both fed by strong local engineering talent.
Because a large proportion of Indian citizens speak English, the market is widely accessible to game developers from other regions like North America, the European Union (EU), Oceania, Southeast Asia (SEA), and the Middle East and North Africa (MENA). However, gamers in India have also heavily adopted games written in some of its more widely spoken local languages like Hindi, Bengali, Marathi, Telugu, Tamil, and others. This is true whether the game was developed locally and written natively in those languages (such as Teen Patti by Octro or Ludo King by Gametion Technologies) or whether a AAA developer or publisher localized its content for Indian gamers (such as Clash of Clans by Supercell).
Among mobile gamers in India, the fastest-growing genres are puzzle, action, and adventure games. Also trending upward are fantasy sports and real-money gaming platforms, which have seen a marked rise in popularity — particularly for casual and localized card games. And between male and female online gamers, there’s no measurable difference in how much time they spend gaming per day.
Indian gamers actively engage with titles that employ a range of different monetization models, from free-to-play and freemium to mid-core. Whether a game is supported by advertisements, in-game purchases, subscriptions, or a combination, the key to achieving higher adoption rates is balancing access to engaging gameplay with its primary revenue driver(s). However, premium titles are harder to mobilize in the region, as many gamers feel that they deliver less value for the higher initial cost.
Indian consumers are increasingly making more purchases through digital payment methods in every sector, including gaming. This has a number of drivers in common with the growth of the overall Indian gaming market, including the nation’s young average age, increased smartphone adoption, and increased internet penetration. India’s burgeoning fintech industry — whose fierce competition has helped to lower fees while elevating service quality — and the government’s Cashless India initiative have also contributed to this growing shift.
Credit and debit cards account for 29% of all ecommerce transactions, the highest of any payment method category — though debit cards are much more widely used than credit cards, with 64% and 2% penetration per capita respectively. Almost all debit card transactions and 90% of credit card transactions are performed through the use of domestic card providers.
Among the most successful local payment networks in this category is RuPay, a card scheme created by the National Payments Corporation of India (NPCI) that’s partnered with more than 600 international, regional, and local banks across India. Today, RuPay processes 33% of all credit card transactions in the region.
Surging in popularity behind credit and debit cards are digital wallets, which are responsible for 25% of all ecommerce payments in India. Despite the fact that Indian consumers still use credit and debit cards more for digital transactions, the impressive growth rate of digital wallets — bolstered by loyalty programs that employ coupon- and cashback-style mechanics — suggests that it could easily become the leading category by 2021.
Far and away, the most popular digital wallet in India is the Paytm Wallet. Widely regarded to have had a revolutionary effect on the region’s overall ecommerce market, Paytm had more than 140 million monthly active users by 2019, and currently boasts over 300 million app downloads and over 350 million registered users. Other popular digital wallets include MobilKwik, PhonePe, Freecharge, and PayZapp.
Bank transfers are another popular category of digital payment methods in India, projected to jump from a 20% market share of ecommerce transactions to 30% by 2021. The most popular payment system enabling bank transfers is the Unified Payments Interface (UPI), a mobile-based real-time payment system launched in April 2016 that enables inter-bank transactions of up to 100,000 rupees. UPI has demonstrated remarkable success with ecommerce consumers in India, jumping from less than one billion transactions in April 2020 to more than 1.8 billion in September 2020.
As would be expected with all of these developments in digital payment methods, cash-based payment methods have steadily declined across the last several years — but still comprise 17% of all online payments in India. While this is a significant percentage, cash-based payment methods should not be heavily relied upon by game developers and publishers seeking long-term success in the Indian gaming market.
The tax system in India is both elaborate and aggressive, with ecommerce in particular drawing scrutiny from local tax authorities. Such taxes include:
As with any tax code, it’s possible that some of these taxes may fluctuate dramatically from state to state based on complex determinants, or the business may qualify for specified credits and/or exemptions. Familiarity with the intricacies of the Indian system is the only way to ensure that the correct amount of tax is calculated and paid.
Gaming in India falls under one of two legal classifications: games of skill and games of chance (which includes betting and gambling). The two central laws that govern gaming are the Public Gambling Act (PGA), passed in 1867, and the Prize Competitions Act (PCA), passed in 1955.
Per India’s constitution, each state has the right to pass their own gaming laws within their jurisdiction, any of which can supersede the PGA and PCA. To figure out which laws apply to games — whether it’s those that refer to games of skill or games of chance — each game must receive a determination by judicial pronouncement on a case-by-case basis.
Depending on a game’s content, laws that relate to obscenity, violence, intellectual property, and personality rights may also be called to attention. If any of these laws are applied to an online game seeking to operate in India, the ability to receive a license may be hindered or the process may become protracted.
No rating system nor any specific statutes exist which pertain specifically to video game content in India. However, legal provisions related to video games can be gathered from several articles in India’s constitution, sections of The Cinematograph Act (1952), and sections of the Indian Penal Code. These provisions largely relate to freedom of speech, but also designate its reasonable restriction on the basis of decency and morality.
In September 2020, India’s Ministry of Information & Technology banned 118 mobile games and applications. According to an official statement, this decision was made to “…ensure (the) safety, security and sovereignty of Indian cyberspace.” So it’s important for developers and publishers to consider a game’s content and onboarding policy before entering a stricter market like India.
Considering all that we’ve covered, here are some best practices for developers and publishers looking to get the most from entering the Indian gaming market:
As you prepare to venture into the Indian gaming market — and as with any adventure — it helps to have a guide. As your trusted partner, Xsolla can deliver everything you need to level the playing field and improve your odds of success in India, including:
If you’re not an Xsolla partner, contact us at firstname.lastname@example.org to learn about how we can help you break into one of the fastest-growing markets in the world.
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