Are VCs excited about the boom of mobile gaming in India?
Fantasy games, which enable users to create ‘fantasy teams’ during real-life matches, and e-sports platforms, which conduct tournament-style competitive sessions of casual games have all but solved the issues of the first wave of mobile-gaming startups, witnessing a surge in investment from VCs in this niche segment.
Mobile gaming is fast becoming India’s favourite pass-time. In the last two years, millions of Indians, from office commuters to college students locked away in their rooms, have spent their hours furiously tapping away on their smartphones in a sincere attempt to level up on Candy Crush or to win the ongoing battle at Pochinki on PUBG. One of the biggest causes behind this boom is India’s Jio-led data revolution. Jio’s aggressive pricing forced data costs to drop sharply across the nation and made the average Indian consumer able to stream music, watch videos, and play games without burning a hole in his/her pocket. In addition to affordable internet, smartphone penetration has grown from six percent to 23 percent in the last five years, enabling widespread access to the app ecosystem. With this, the population of gamers has touched 200 million, making India a major market for mobile gaming.
Casual social gaming has turned gaming mainstream
The dawn of mobile gaming in India can also be attributed to the mass appeal of games like Fruit Ninja, Candy Crush, and Temple Run. As these games usually do not need expert level skills, everyone from little Chintu to Sharma aunty next door can enjoy the “sugar rush”. The social nature of these games, with their engaging game design and multiplayer features, is a key ingredient to their appeal, as compared to the niche ‘hardcore games’ like Dota and Counter-Strike. Furthermore, the popularity of mobile gaming and the age-agnostic audience have brought back digital versions of family card games like Rummy with nostalgia running high.
Are VCs excited though?
Early stage VCs have rightly picked the trend and taken bets in this space. However, late-stage investors have been cautious to invest. Their hesitation stems from the limited predictability that casual gaming developers have managed to achieve owing to their short shelf-life and unpredictability of successful games (success of one game does not guarantee the performance of another).
The fantasy sports landscape in India has witnessed a significant transformation and the number of fantasy sports operators have increased by seven times over 2016–2018, whereas the number of users has grown by over 25 times from June 2016 to February 2019.
India’s gaming industry has attracted about $350 million in investments from venture capital firms between 2014 and first few months of 2020, growing at a CAGR of 22 percent, a report published by Maple Capital Advisors said.
By 2024, the gaming industry in India is set to be valued at a whooping $3.75 billion, it added.
Weighty investments
Some of the cash rich investments made over the last six years include Tencent and Steadview Capital’s $100 million investment in Dream11 (2016), Sequoia and Times Internet’s $41 million investment in Mobile Premier League (2019), and a $20 million in Paytm Games by One97 and AG Tech holdings (2020).
“We have seen growing investment traction in gaming with over $350 million of investments. With growing internet penetration, compelling economics, usage statistics and increasing ecosystem of entrepreneurs and developers focusing on this space, we expect good growth in investments, which are likely to at least double in this space in the next 1–2 years,” Maple Capital Advisors’ Managing Director Pankaj Karna said.
The report noted that there are over 400 gaming startups in India. There is also an increasing traction towards multiplayer games that has been observed post the onset of PUBG in India.
