How regulation and esports recognition reshaped India’s gaming industry in 2025

New Delhi: India’s gaming industry closed 2025 after a year marked by regulatory overhaul, structural change and market realignment, reshaping business models, investment priorities and the sector’s longer-term growth outlook.

The year saw the introduction of comprehensive regulation, the formal recognition of esports as an official sport and a broad industry shift away from real-money gaming towards esports, social gaming and original intellectual property. As the sector moves into 2026, it does so with leaner operations, stronger institutional frameworks and closer alignment with global gaming markets.

Regulatory reform reshapes operating models

The passage of the Promotion and Regulation of Online Gaming Act in 2025 led to a nationwide ban on real-money gaming formats, including fantasy sports and paid-entry skill games. The move marked a sharp break for a segment that had previously accounted for a significant share of industry revenues.

In the months following the legislation, several operators paused or exited the Indian market, early-stage startups shut down and job losses were reported across the ecosystem. At the same time, the law brought long-awaited regulatory clarity, prompting companies to reassess their long-term strategies.

Over the course of the year, video and social gaming segments consolidated their position, with global attention increasingly focused on engagement-led formats such as free-to-play games, social gaming platforms and competitive ecosystems designed for scale and sustainability.

Nitish Mittersain, Jt. MD & CEO, Nazara Technologies, said, “India’s gaming sector is at an inflection point, with scalable models, original IP and global distribution coming together. Strengths in video, free-to-play and social gaming position the market for durable, long-term growth. 2026 offers a compelling window for sustained value creation.”

Esports gains official status

One of the most significant developments of 2025 was the formal recognition of esports as an official sport in India. The move opened avenues for greater government engagement, regulatory alignment and participation from brands, broadcasters and educational institutions.

During the year, India hosted larger international tournaments, expanded domestic leagues and saw Indian players and teams gain higher visibility on global competitive stages. Esports continued its transition from a niche segment to a more structured and commercially viable industry, supported by sponsorships, media partnerships and rising viewership.

Kashyap Reddy, CEO and Co-Founder, Hitwicket, said, “Hitwicket was founded with the vision of building a cricket gaming ecosystem with original IP and a community that grows because players love the experience. The recognition of esports as an official sport further gives builders like us confidence that we’re moving in the right direction. Going into 2026, I believe India’s biggest opportunity lies in creating globally competitive games and that’s exactly what we at Hitwicket are committed to building.”

Industry formalisation and policy engagement

Beyond regulation and esports recognition, 2025 also saw deeper institutional development across the gaming sector. New industry associations were formed to represent publishers and developers, while existing bodies stepped up engagement with policymakers on talent development, exports and ecosystem growth.

Government and industry stakeholders also worked on longer-term frameworks positioning gaming as a creative, technology-driven export sector. This contributed to a broader shift in how gaming is viewed, increasingly linked to industrial policy, digital exports and creative infrastructure.

Sridhar Muppidi, Chairperson, GDAI, said, “2025 was a year of reset for India’s gaming industry. The Promotion and Regulation of Online Gaming Act has brought much-needed clarity and direction, and the next phase must focus on building real capacity - developing talent at scale, incubating new studios, and supporting them through government-backed acceleration. 

The next decade belongs to India if we make the right investments today. As the ecosystem shifts from consumption to global creation, India has a genuine opportunity to emerge as a major exporter of gaming content. At GDAI, we have been actively working with both central and state governments to help shape and execute many of these efforts.”

Investment shifts towards sustainability

Investor sentiment reflected the sector’s structural shift. With real-money gaming models no longer viable, 2025 became a period of capital recalibration rather than aggressive expansion.

While some investors exited the market, global gaming-focused funds continued to express long-term confidence in India. Investment increasingly flowed into game development studios, core gaming technologies, esports platforms and original intellectual property. Strategic acquisitions and partnerships pointed to a growing focus on scalability, content quality and international reach.

Anuj Tandon, Partner, India & UAE, BITKRAFT Ventures, said, “Regulatory clarity in 2025 has been a turning point for gaming investments in India. As capital moves away from short-term models, we’re seeing stronger opportunities in game development, core technologies, and gaming-influenced interactive media platforms. With the broader industry now projected to grow from a $2.4 billion market in FY25 and set to expand at an 18% CAGR toward a $4.3 billion digital gaming and esports industry by FY30, BITKRAFT Ventures is confident to double down on India as a long-term, globally competitive gaming market.”

Market growth continues amid disruption

Despite regulatory disruption, India’s gaming market continued to grow in 2025, supported by widespread smartphone access, low data costs, vernacular content and increasing acceptance of gaming as mainstream entertainment.

Gaming also deepened its links with popular culture, with more collaborations spanning film, television, sports and creator ecosystems. Streamers and content creators played a larger role in discovery, community building and audience expansion.

Platform economics come into focus

Alongside regulatory changes, platform economics emerged as a key consideration during the year. As publishers leaned further into free-to-play models, app store commissions particularly on mobile platforms, became one of the sector’s largest cost centres.

Anurag Choudhary, Founder & CEO, Felicity, said, “We’ve learned that lasting outcomes in gaming come from building for longevity, not spikes. At Felicity, we focus on evergreen games supported by infrastructure that compounds, where every title benefits from the ones before it. As we move into 2026, our priority is simple: keep building patiently and create a publishing platform that can scale sustainably for years.”

While companies explored alternative distribution channels, scale and discoverability remained ongoing challenges, with platform dependence increasingly viewed as a strategic issue shaping future business models.
Outlook for 2026

As the industry enters 2026, it does so at the start of a new phase shaped by the shifts of the previous year. The changes of 2025 accelerated a move towards more sustainable and globally aligned growth foundations.

Vidhit Mehta, Founder & CEO, Shortgun Games, said, “As we head into 2026, the focus for game studios is shifting decisively toward smarter scale. AI is already transforming how we design, test and work with games - shortening development cycles, personalising player experiences and improving live-ops efficiency. The next year will be less about chasing volume and more about building deeper engagement and globally competitive IP, with AI becoming a core creative and operational layer rather than a novelty.”