India's online gaming sector likely to be Rs 33,000 crore industry by 2025

The online games industry in India has been on an upward trajectory, with a compounded annual growth rate (CAGR) of 28% over the past three years. This growth is expected to continue, with the industry projected to reach Rs 33,000 crore by 2025, according to recent reports. 

Several factors contribute to this remarkable expansion, including increased smartphone penetration, improved internet connectivity and a growing youth population. In this article, we explore the critical factors behind this growth and examine the role of app-based rummy games and the broader implications for the sector.

The factors driving industry growth

The online games industry in India has seen significant expansion, with revenues reaching Rs 16,428 crore in FY23. This growth is expected to continue, with forecasts suggesting the industry could more than double in the coming years. A report by Ernst & Young (EY) attributes this expansion to several critical factors, including:

• Smartphone penetration: With 94% of Indian gamers playing on mobile devices, the sector has a vast and engaged audience. The proliferation of smartphones has made gaming accessible to millions of people across the country.
• Improved internet connectivity: As India's internet infrastructure continues to improve, online gaming has become more accessible to a broader audience. This has facilitated a significant increase in mobile game downloads and user engagement.
• Youth demographics: India's young population is driving the demand for online entertainment. This demographic trend is expected to continue fueling the growth of the online games industry.

For instance, the popularity of app-based rummy games is a significant contributor to this growth. These apps have gained a large user base due to their ease of use and engaging gameplay. As a result, rummy app are playing a central role in the expansion of the online games sector in India.

Investments and job creation

Investments in India's online games industry have been substantial. Between FY20 and FY24 YTD, the sector is projected to attract INR 22,931 crore in investments from domestic and foreign sources. This influx of capital not only fuels growth but also drives innovation and job creation within the industry.

The employment potential within the online games industry is also noteworthy. Currently, the industry employs about one lakh people, but by 2025, it may generate employment for up to 2.5 lakh people. This substantial job growth underscores the industry's significant economic impact and its potential to generate employment opportunities across various roles.

Regulatory framework and legal stability

A stable regulatory framework is crucial for sustaining the growth of the online games industry. The Ministry of Electronics and Information Technology (MeitY) has implemented guidelines that provide clarity and support investor confidence. These regulations are also designed to ensure user safety and promote responsible gaming practices.

Raghav Anand, Partner at EY Parthenon, highlighted the importance of a stable regulatory environment for the industry's growth. He noted that with 42.5 crore gamers worldwide, there is a strong gaming community - second globally after China - the sector has significant potential to attract Foreign Direct Investment (FDI), create jobs, and drive investments across various ancillary industries.

Challenges and opportunities

Despite the positive growth trends, the industry faces some challenges. The GST Council's decision to implement a 28% Goods and Services Tax (GST) on the full-face value of online real-money games has raised concerns about its impact on the sector's growth. This higher tax rate could slow the expansion of the real-money games sub-segment.

Nevertheless, the industry's outlook remains positive. According to the EY analysis, the rise of auxiliary businesses, including finance, cloud services, data analytics, and cybersecurity, might be stimulated by the online gaming sector. This interconnectedness creates a dynamic ecosystem, fostering innovation and investment across multiple sectors.

The role of rummy apps

Rummy apps have become one of the major driving forces behind the growth of India's online games industry. These apps provide a convenient platform for players to enjoy a classic card game, contributing significantly to the sector's expansion in many ways. Their popularity has led to the proliferation of rummy-based apps, which have millions of downloads, attract a diverse user base, and generate significant revenue.

These rummy apps are designed for adults, with age verification and responsible gaming features in place to ensure compliance with regulations. The success of these apps demonstrates the appeal of traditional card games in the digital age and their potential to drive growth in the online games industry.

Conclusion

India's online games industry is poised for substantial growth, with projections indicating it will reach Rs 33,000 crore by 2025. Rummy apps play a significant role in driving this expansion, attracting a large user base and contributing to the sector's revenue. As the industry continues to evolve, addressing regulatory challenges and maintaining a stable environment will be crucial to sustaining its growth. With continued investment and innovation, the online games industry has the potential to drive economic growth and create employment opportunities across India. By maintaining a focus on responsible gaming practices and a stable regulatory framework, the industry can continue to thrive and play a significant role in India's digital economy.