Are Indian Gaming Startups Monetizing the Right Way?

Over the past few years, gaming has been elevated to become a part of the lifestyle of many of the 2 billion+ online gamers in the world. In FY2020, India saw ~365 million of them, a number that is set to cross 500 million by FY2022.

Moreover, while the pandemic has accelerated the adoption of digital payments, the trend is only likely to grow. As more banks and fintechs join hands, more than 70% of all payments are expected to be digital by 2025.

Judging by these trends, the potential for monetization in gaming is huge, if cracked the right way. Here’s a look at the current monetization channels and how they work for users:

1. Ads

In 2020, 86% of apps in the play store monetized via advertisements. This traditional and widely adopted method will likely persist for most games and especially for casual ones where users play on the go, without the push to build a deeper virtual existence.

However, since ads are perceived as intrusive and require sharing ad revenue with ad networks, it becomes less lucrative and sustainable. Here, opting for more effective formats, such as playable ads and rewarded ads, and choosing the right ad network can positively impact user experience and returns.

2. Subscriptions

Subscriptions offer a steady stream of revenue, higher engagement (LTV), and a loyal user base. These work well for developers offering a range of games within a genre like AAA, distributors like Apple and Google that provide multi-category games, as well as manufacturers of console games.

At the same time, while this model has earned global success, it has not yet proven to be popular among Indian users, who would prefer to pay for physical products than virtual ones. However, with the likelihood of OTT marrying online gaming, we can expect the trend to tilt in favor of the gaming industry in the near future.

3. In-app purchases

In-app purchases are more promising because the revenue stays within the company. They may also provide something tangible to the user. Structured gameplay or casual games which require currency to level-up, revive characters, etc. or games that let users build virtual worlds can rely more confidently on such a model.

However, Indian gamers are yet to warm up to this method. For instance, PUBG, which depends on in-app purchases, received only ~1.2% of its revenue from India despite the country making for ~25% of its global downloads.

User initiation is more important at this stage, and startups might benefit from offering more flexibility in purchases, starter packages, and ease of navigation for the in-app store. More importantly, users who are invested in your game are more likely to pay than new users. Knowing the right time to encourage them to spend will significantly impact conversions.

4. Real money gaming (RMG)

Real money gaming might be one of the most lucrative sub-sectors. In India, it is believed that 4–5 companies control 85–90% of the RMG market. By 2024, the market is set to reach ~$3.8 billion.

The promise of winning their money back is more attractive for gamers than a subscription model, and is especially fitting for strategy as well as skill-based games. Today, Mobile Premier League also offers casual games like Carrom under RMG.

Micro transactions (<₹100) are the most effective in India today. Moreover, with increasing acceptance of virtual socializing, people are also open to giving virtual gifts in a social gaming environment.

The bottom line is that what works for one segment or genre, might not for another and what works for a global audience, might not for the Indian. Identifying how users respond to business models in their segment can help companies work on the right combination to maximize both sustainability and user experience.

For now, whether it’s RMG with micro transactions, virtual gifting or tipping, a better subscription model, mixed monetization models, or an out-of-the-box idea that we haven’t seen yet, the industry is waiting for game changers.

Reach out to us if you’re building something unique for the Indian gaming community.