Online Gaming Market

in India
-AN INDUSTRY REPORT
The report presents an outlook on the growing online gaming industry in India. We capture the favorable
macroeconomic & demographic evolution of India; which has led to the rapid growth of gaming as an accepted
form of entertainment, for which people are willing-to-pay. Real-money games are further dove into and a
holistic view on the industry, and its developments are presented for everyone to consume.

Redseer Strategy Consultants

June 13, 2022
 About RedSeer
RedSeer is a research and consulting firm founded in 2009. We are headquartered out of
Bengaluru and have presence in Delhi, Mumbai, Dubai, and Singapore additionally. Though
we are focused on the consumer internet space in India, Southeast Asia, and the Middle East,
we have deep experience in overall retail as well. Our primary business activities include
providing research inputs (on market, consumers, other stakeholders) to corporations and
funds, conducting due diligence for potential investments, publishing thought leadership
pieces, and helping corporate clients solve strategic problems.

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Disclaimer
The market information in this Report is arrived at by employing an integrated research
methodology which includes secondary and primary research. Our primary research
work includes surveys and in-depth interviews of consumers, relevant ecosystem
participants, and consultations with market participants and experts. In addition to the
primary research, quantitative market information is also derived based on data from
trusted portals and industry publications. Therefore, the information is subject to the
limitations of, among others, secondary statistics, and primary research, and
accordingly the findings do not purport to be exhaustive. RedSeer’s estimates and
assumptions are based on varying levels of quantitative and qualitative analyses from
various sources, including industry journals, company reports and information in the
public domain. RedSeer’s research has been conducted with a broad perspective on
the industry and will not necessarily reflect the performance of individual companies
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completeness and underlying assumptions are subject to limitations like
interpretations of market scenarios across sources, data availability amongst others.
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underlying data or this Report.
Forecasts, estimates and other forward-looking statements contained in this Report
are inherently uncertain and could fluctuate due to changes in factors underlying their
assumptions, or events or combinations of events that cannot be reasonably foreseen.
Additionally, the COVID-19 coronavirus pandemic has significantly affected economic
activity in general and it is yet to fully abate.
The forecasts, estimates and other forward-looking statements in this Report depend
on factors like the recovery of the economy, evolution of the client preferences, the
competitive environment, amongst others, leading to significant uncertainty, all of
which cannot be reasonably and accurately accounted for. Actual results and future
events could differ materially from such forecasts, estimates, or such statements.
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Contents
About RedSeer ............................................................................................................................. 1
1.Macro-economic Attractiveness of India .................................................................................... 4
2.India Digital Acceleration and Potential ..................................................................................... 9
3.India’s Gaming Landscape and Opportunities ........................................................................... 14
4.Deep Dive on Gaming in India.................................................................................................. 20
5.Policies and Regulatory Framework for Gaming in India ........................................................... 28
6.Competitive Landscape ........................................................................................................... 31
7.Appendix ................................................................................................................................ 34

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1. Macro-economic Attractiveness of India

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Overview Of Indian Economy

With a gross domestic product (“GDP”) of approximately INR 221 trillion (~US$2.9 trillion) in
CY2021, India is the sixth-largest economy according to the World Economic Outlook (“WEO”)
database. India witnessed an annualized GDP growth of more than 7% from CY2015 to
CY2019 and has consistently been one of the fastest-growing economies.

Figure 1: Real GDP and GDP at Current Prices

Note(s): 1. We have avoided showing FY data for all interim years to ensure readability
Source(s): IMF, WEO Oct 21’, CEBR

The period of sustained economic growth was interrupted by the COVID-19 pandemic. The
first wave of the COVID-19 pandemic severely impacted economic activities in CY2020. India
witnessed one of the most stringent nationwide lockdowns globally, resulting in its GDP
contraction by 7.3% in CY2020. However, India recovered strongly in CY2021 and grew by
approximately 10.7% due to a resurgence in the services sector, complete recovery in
manufacturing, and continued expansion in the agriculture sector. The Indian economy has
since been on a sustained recovery path. India’s GDP is projected to grow at ~8.5% from
CY2021 making it an INR 306 trillion economy by CY2025. As per ‘The Centre for Economics
and Business Research’, India is projected to become the third-largest economy in the world
by CY2031.

Multiple government initiatives have been driving the growth of GDP

The key Government policies and reforms that have been driving the growth are mentioned
in detail below:

Digital India Initiative

• The government has enrolled more than 1.2 billion Indians in its biometric digital
identity program, Aadhaar, and brought more than 10 million businesses onto a
common digital platform through a goods and services tax.
• Competitive offerings by telecommunication firms have turbocharged internet
subscriptions and data consumption, which has helped bridge a digital divide

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Ease of Doing Business

• India’s rank as per World Bank’s Ease of Doing Business (EoDB) report improved from
142 in CY2014 to 63 in CY2020 due to consistent, focused efforts of the government
of India.
• India improved on ease of doing business after implementing regulatory reforms with
efforts focused primarily on the areas of starting a business, dealing with construction
permits, and cross-border trading
• Key initiatives like the state and district reform action plan, in which government
identifies key reforms for improving EoDB and formulates an action plan for the states
to follow, have contributed to rising Improvement in EoDB.

Start-Up India Program

• Launched in 2016, initiative is intended to build to a stronger ecosystem for nurturing

India’s start-up culture that would further drive our economic growth, support
entrepreneurship, and enable large scale employment opportunities.

Foreign Direct Investment

• FDI policy provisions have been progressively liberalized and simplified across various
sectors in the recent past to make India an attractive investment destination.
• FDI Policy reforms have resulted in increased FDI inflows in the country, which year
after year is setting up new records

India’s GDP per capita has shown sustained growth and crossed the widely
regarded inflection point of US$ 2000 (INR 1,50,000) in 2019

Figure 2: Per Capita GDP Consumption in India at Current Prices

Source(s): IMF, World bank

GDP per capita has consistently grown during pre-COVID years at a constant growth rate of
5%. COVID-19 induced lockdowns resulted in a reduction on Indian economy, leading to a
drop in GDP per capita in 2020. However, Indian economy is expected to show exponential
growth in consumer expenditure after surpassing the US$ 2000 (INR 1,50,000) GDP/capita,

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traditionally seen as an inflection point for any economy- e.g., China’s exponential growth
since 2006; According to World Bank, Households and NPISH1s' Final consumption
expenditure for China nearly doubled from 2007 to 2014.

The rising consumption shall grow due to India’s favorable demographic dividend

Figure 3: India's Population Split by Age and India's Household split by Annual Income

Note(s): 1. Reference date- 1st July of respective years; 2. % total might not add to 100% due to rounding-off error.
Source(s): World Bank Databases, RedSeer Analysis

India is amongst the youngest nations in the world, with an average age of ~29 years, as of
2021, resulting in a young and tech-savvy population with a higher propensity to adopt new
trends. Population aged 0-12 years account for ~22% of the India’s population making India
home to largest child population in the world. Millennials (population born between 1981 and
1996) and Generation Z (population born between 1997 and 2012) are driving the digital
adoption and consumption growth in India as they spend significant time online and exhibit
higher consumerism behavior.
The emerging and mature income households in India accounted for ~68% of households in
India in CY2021 and are projected to become ~72% of total households in India by 2027.
These household segments are expected to drive the consumption in the future

COVID-19 lockdown led Consumer Internet market to dip due to restriction on

movement of goods, but quickly bounced back and led to a 53% YOY growth to reach
~ INR 10,125 Bn in 2021
India’s consumer internet1 market experienced a ‘V-shaped’ recovery in gross transaction
value (“GTV”) terms through the course of CY2020. The consumer internet market dropped
90% from pre-COVID GTV in April 2020. The drop was due to both supply-side (vehicle
unavailability for transporting shipments) and demand-side (Govt. enforced decline in demand
constraints. Demand for non-essential category were impacted to due COVID-19 lockdowns
as only essential products were allowed to be delivered online) constraints. However, it
recovered steadily month on month and completely recovered to pre COVID levels by
December 2020.

The India consumer internet GTV was ~INR 10,125 billion in CY2021 and crossed triple digits
GTV for the first time. It is eventually projected to reach INR 40,000-45,000 billion by CY2027,
growing at a CAGR of 26-28%.

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Consumer internet refers to online retail of mobile, electronics, fashion, grocery and other sectors like Food
Tech, Fintech (ex-payments), eHealth, Bill Payments and Recharges, Stay, mobility, EdTech, Classifieds etc

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Owing to the large scale and population coupled with the high growth rate of the economy
Indian market is on track to its strong recovery from the shocks of COVID-19 led lockdown.
With the growth of income levels across various strata of the society, spending on non-
essential leisure categories such as entertainment and gaming is also rising. These sectors
are expected to grow rapidly as India matures as an entertainment consumption market
compared to global peers.

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2.India Digital Acceleration and Potential

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India’s digital landscape is changing rapidly with several enabling factors driving
growth of Internet economy

Increasing access to internet

• The Indian internet user base has shown sustained growth in the last 5 years, from
~370 Mn users in 2016 to 700-750 Mn users in FY 2022
• The rise in Internet adoption has been majorly driven by growing access to fast internet
at low cost. The average cost of data in India was INR 52/GB against a global average
of INR 307/GB in 2021
• Development of optical-fiber infrastructure, primarily driven by rise in investment, is
supporting the exponential growth in data demand

Increasing smartphone affordability

• Around 41% of India’s population owned a smartphone in FY2022 and the penetration
is expected to increase to 60% in near future
• Decline in average selling price of smart phones and increased adoption in rural and
vernacular users has boosted the smartphone penetration
• OEMs are now targeting sub-INR 7,500 users, and the average cost of smartphones
is reducing, which has led to the increased penetration

Favorable government policies & initiatives

• Digital India Initiative has brough millions of Indians under the digital ecosystem which
has helped bridge a digital divide
• Other government initiatives such as Start-up India Program, Aadhar has enabled the
growth of internet economy

Increasing focus on 5G infrastructure

• India is expected to be one of the early adopters of 5G connectivity with mobile
operators expected to conduct 5G trials in India in the coming months across both rural
and semi-urban settings in addition to urban areas
• The Government of India is planning to chalk out a roadmap towards a 5G India

Furthermore, the disruptive digital infrastructure and growing smartphone penetration

is driving exponential growth in digital payments in India

Digital payments volume in India is currently at 66 Mn and is expected grow at a CAGR of 29-
31% to reach 185-190 Mn by FY2026. The growth in volume is expected to be driven by
improvements in mobile payments infrastructure which increases consumer trust and
adoption, increase in smartphone penetration due to greater affordability, increasing
penetration of digital banking products such as UPI, payment wallets, BNPL, etc. especially in
underpenetrated rural India where 16% of users access the internet for digital transactions as
compared to nearly 45% of urban users.

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Despite the growth in volume, the UPI transactions are expected to contribute only 10% of
total digital payments by value as majority of the transactions through UPI are expected to be
low value.

Figure 4: India's Digital Payments by Volume and Value

Note(s): Digital payments here include all categories classified by RBI including ECS, PPI, Card Payments, NACH, IMPS, UPI,
NEFT and RTGS Source(s): Reserve Bank of India, RedSeer Analysis, IAMAI

Time spent on digital media spiked amid COVID-19 lockdown as users stayed home
during lockdown

Figure 5: Time Spent per Daily Active Users on Digital Media Channels in India

Note(s): Time spent indicates total time/day/DAU across all Digital Media channels viz; Social Media, Audio Streaming, Video
Streaming, ShortForm Video, and News Aggregators
Source(s): RedSeer Analysis

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 • COVID-19 lockdowns & social distancing encouraged the growth of users exploring
social & multiplayer games. Time spent on gaming increased significantly during the
first wave and active users spent around 78 mins per day on an average.
• Time spent on gaming remained high beyond the first wave as users developed a habit
and saw gaming as alternate source of entertainment.
• Gaming has become an integral part as users are spending as much time gaming as
they are on social media or video streaming platforms.

COVID-19 lockdowns led to a strong new-user growth across digital categories

- Lockdown catapulted the digital penetration of India by several years in all categories
of internet businesses

Users have been rapidly adopted various forms of ecommerce and digital services at an
unprecedented rate during the COVID-19 lockdowns. Almost all sectors on consumer internet
have witnessed multi-fold growth in userbase and user engagements.
This maybe visualized in the form that while in the pre-COVID lockdown era, a typical user or
persona interacted with 2-4 sectors of consumer internet services or players, while post-
COVID this would be 4-6 sectors per persona.

Overall, this has manifested by the growth of long tail segments in eCommerce where
customers are comfortable buying products and services across electronics, fashion, gaming
etc.; increasing customer adoption of online channels across categories especially long tail
segments like gaming, media & entertainment etc.; and rise in time spent on online channels
across sectors, especially in Gaming, Media & Entertainment etc.

Figure 6: Growth in users of consumer internet players

Source(s): RedSeer Research

Overall, the rising smartphone userbase has created a massive pool of internet
users in India…
India’s digital growth story is expected to remain robust due to key factors such as low-cost
smart phones provided by local as well as global brands, and low-cost reliable broadband
internet (4G and 5G connections), along with key government initiatives like Jan Dhan,
Aadhar, UPI, etc., These growth factors are expected to drive the rise in total internet users
from 700-750 Mn in FY 2022 to 970-1,000 Mn in FY 2026. Majority of the internet users are
from tier 2+ cities and are below 24 years old. These user cohorts are expected to dominate
the digital ecosystem and drive the growth in the future.

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 Figure 7: Digital Service Adoption in India

Note(s): Users here indicate an estimated number of unique individuals; and estimated based on various public sources and
databases
Source(s): RedSeer Analysis

COVID-19 induced wave of digital adoption, supported by the development of digital payment
infrastructure, will drive the growth in online service users and online shoppers in the next few
years.

Rising access to internet and smartphone, increasing familiarity with online platforms and
digital payment methods, and COVID-19 induced rise in adoption of gaming platforms are
expected to drive the growth of digital gamers from 425-450 Mn in FY2022 to 690-710 Mn in
FY2026.

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3.India’s Gaming Landscape
and Opportunities

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Digital gaming in India has witnessed several inflection points triggering growth in new
users, user spending and ecosystem development

Emergence of Digital Gaming (Early 2000’s): India witnessed the emergence of digital gaming
market during 2005-2010 as improved hardware allowed evolution of complex games on
mobile like Bounce & Prince of Persia. Through the next five years, early adoption of
downloading games on phones, especially with popularity of Android, started.

Experimentation & Monetization: Entry of Jio (2016), increased the access to affordable data
and encouraged gamers to explore, download and play more games on their phone, leading
to growth in game downloads and online gaming. This also boosted the monetization through
games as development of digital payment infrastructure, like UPI, increased the propensity of
users to pay and usage of real money on online game platforms.

With the advent of COVID in 2020, users started viewing online gaming as an alternative form
of entertainment, leading to development of new formats of gaming such as social/community
gaming.

Digital Immersive Era (Post 2020): In the coming years, Web3.0 technologies like metaverse
will revolutionize the way internet and online gaming is consumed as it aims at a more secure
and decentralized internet with high immersive user experience. India’s evolving gaming
market is driven by an entrepreneurial ecosystem; characterized by aggressive, young
companies with rapid growth.

Figure 8: Timeline of Indian Gaming Sector

Source(s): RedSeer Research

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Indian Gaming Market has emerged into a structure of two major categories: Real
Money Games and Non-Real Money Games. These categories constitute several
segments based on the game characteristics

India online gaming market is broadly divided into Real Money Games (RMG) and Non-Real
Money Games (Non-RMG). RMG refers to games based on skill with an option to play with
real money. Non–RMG includes games where in there are no real money involved.

Real Money Games (RMG):

Rummy was the first game offered as Real-money-game; when it was first launched in India.
The exponential growth in popularity of these games among Indian consumers led to the
expansion of the business, as well as the emergence of new online card games like Poker.
RMG gaming has undergone continuous evolution as a result of the introduction of new
offerings; the most recent addition to the genre is fantasy sport (especially Daily Fantasy
Sports (DFS)). The RMG industry continues to be well-liked and growing as a prominent
gaming area.

Currently, Rummy, Poker and Fantasy are the leading games in the RMG category. RMGs
are offered to users through SGP and MGP. SGP are single player games offering only one
game on their platform whereas MGP means multi-player games which offer a bouquet of
games to the users on a single platform. RMG platforms majorly earn through commission &
rake rates while other revenue streams such as In-app purchasing, virtual tipping and
merchandising have a minimal contribution.

Non-Real Money Games (Non-RMG):

Non-RMG is divided into hyper casual & casual, and mid & hard-core games based on learning
curve and difficulty level. Hyper casual & casual games have simple mechanics which are
very easy to pick up and have multiple, very-short session times while Mid- & Hard-core games
are complex, detailed and offer multi-player experiences with high difficulty levels to master.
Non-RMG games majorly earn through advertising on platforms while In-App purchases, to
get additional skill, gameplay sessions, hints, and often to remove ads, is on the rise.

With an estimated ~400 Mn online gamers in 2020, India is the world’s 2nd largest
gaming market by userbase; and is expected to have 690-710 Mn gamers in next 4-
5 years

Digital gamers in India are projected to grow at CAGR of 12% to reach 690-710 Mn in FY 2026
from 425-450 Mn in FY 2022. The growth is expected to be driven by mix a systemic, demand-
side and supply-side growth drivers, which are mentioned below;

1)Systemic growth drivers

Improved access to internet, regulatory support coupled with recent boost due to COVID-19
lockdown has led to growth of Gaming in India
• Reducing internet & smartphone costs is improving access to internet and enabling
more users to come online
• COVID-19 lockdown led to a boost in adoption of gaming & digital services and
increased the usage. Game downloads has increased by 50% from January 2020 to
December 2021
• Rising investors focus on gaming sector (500% Increase in funding over the past 4
years) have helped gaming company improve their products and achieve scale

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 Figure 9: Number of Digital Gamers in India
Source(s): RedSeer Analysis

2) Demand side growth drivers

Evolutions in user behavior has led to increased time & money spent on games in India, as
Gaming is becoming an acceptable form of entertainment
• COVID-19 induced cultural shift towards accepting games as form of entertainment
and social activity, instead of pass-time has increased user base and usage of online
games. This increased adoption has further boosted acceptance due to network effect
• Development of robust digital payment infrastructure and increasing familiarity of
digital payment platforms have Digital transaction volumes have grown at a CAGR of
47% between FY2017-2022. The past year also saw a jump in monetization
conversions in gaming, as New Paying Users in gaming grew from ~40% in FY2020
to ~50% FY2021.
• Development of games with vernacular content and of India centric games supported
by rising internet and smartphone penetration have increased the user base in lower
tier cities, with 32% of all gamers coming from Tier-2+ cities.
• Women gamers are on the rise, in both Metro and Tier -1 cities, due to rise in adoption
of smartphones and digital services among women, especially during the pandemic,
with share of women gamers form 20-30% of the overall games.
3) Supply side growth drivers
Gaming companies are developing ‘better’ games and deliver a greater experience to users.
Entire supplier ecosystem has also evolved significantly to support this
• Development of user-friendly features, vernacular and India centric games, and new
game titles have improved game quality & relevance
• Affordable smartphones and development of gaming-specific smartphones, and
growth in cloud gaming are expected to drive demand
• Rise in implementation of real-time cheating and financial fraud detection algorithms
have ensured a fair gameplay experience to all players and increased
• Consumer trust in the platform

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Growth in time spent by online gamers in India is faster than in other countries

Figure 10: Average Time Spent on Online Gaming in India and Other Countries

Note(s): Time spent indicates total time/day/DAU; Time spent for USA, UK, etc includes time spent on PC/Console gaming as
well. Source(s): Datareportal databases & Redseer Research

COVID-19 has played a major role in increasing the average time spent by online gamers
across the countries. India witnessed a higher growth of 47% between 2020 and 2022 when
compared to that of other major countries as the average time spent on internet gaming in
India has gradually increased from 45 minutes per DAU in FY 2020 to 66 minutes per DAU in
FY 2022.

In addition to spending more time online, India is expected to witness more new
paying users and increased spending from existing users
Paying users across RMG and Non-RMG sectors are expected to increase from 95-100 Mn
in FY 2022 to 230-240 Mn in FY 2026 at CAGR of 25%.
Even though APRU is less when compared with that of other countries, it is expected to grow
at 20% in the next 4-5 years to reach INR 750-770 by FY2026.
Growing digital sophistication with higher adoption of digital payments and other digital
services have increased the consumers’ willingness to pay.

Figure 11: Number of Paying Users for Gaming in India, Average Revenue per User in India and Other Countries
Note(s): 1) Paying users includes users who use real money, perform In-App Purchases, Subscriptions etc
2) ARPU refers to average revenue per overall user, excluding Advertisement revenue
Source(s): RedSeer Research

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Real-money games dominate the market by revenue and will continue to occupy
majority of the market share in the next few years

Figure 12: Gaming in India split by Type of Games

Source(s): RedSeer Analysis

Overall gaming market in India was valued between INR 149,000– 150,000 Mn in FY 2021
and between INR 201,000- 202,000 Mn in FY2022. The industry is expected to grow at a
CAGR of 32% and reach INR 600,000 - 630,000 Mn at the end of FY2026.
Non-RMG gaming segments are expected to grow rapidly, driven by the recent growth in
revenue streams such as In-app purchases and subscriptions etc.; majorly accelerated by the
rise in the number of casual, non-RMG gamers during the COVID-19 lockdowns in India.

While casual games attract the largest number of users and have been crucial in growing the
mobile gaming culture in India, while real money gaming attracts the highest paying users in
mobile gaming. As a result, real money games have been the largest revenue source for
India’s gaming. This segment is expected to grow at 30% CAGR with growing expectation of
regulatory clarity. Rise in propensity to pay among gamers and increase in ARPU will drive
the growth of RMG games in the future.

This anticipated growth in the market size of the online gaming industry and real money
gaming is driven by certain favorable macro-economic factors, such as the rise in the usage
of smartphones, geographic penetration of internet access to an increasing number of
locations across India, including remote areas, and adoption of digital payment instruments,
such as the United Payments Interface, digital wallets, etc. The Indian internet user base has
shown sustained growth in the last five years, from nearly 300 million users in 2016 to nearly
720 million users in 2022. Further, the decline in the average selling price of smart phones
and increased adoption in rural and vernacular users has boosted smartphone penetration
substantially.

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4.Deep Dive on Gaming in India

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Online Non-RMG segments revenue is majorly driven by advertisement revenues
and In App Purchases

Figure 13: Online Non-RMG games in India split by Revenue Streams

Note(s): 1) Others include sponsorship, Subscription, Loot box and merchandise
Source(s): Public Industry Articles & reports, RedSeer research

The Non RMG market is projected to grow from INR 75,000-85,000 Mn in FY2022 to INR
240,000-260,000 Mn in FY2026 at a CAGR of 34%. The Non-RMG market, in terms of
revenue streams, is majorly dominated by In-App Purchases and advertisement revenues.
Advertisement revenues refers to the revenues from advertisements in the form of banners,
reward videos, interstitial ads, etc. while In-App Purchases includes the purchases to get
additional skill, gameplay sessions, hints, and often to remove ads.

Rise in In-App Purchases is expected to drive the growth of the non-RMG market in the future.
Unlike other mature markets, revenues through advertisement are still significant in India as
advertisers are increasingly targeting online gamers and a relatively low proportion of paying
users. New innovations like rewarded advertisements, which provide an opportunity for users
to watch a video or engage with a playable ad in exchange for a reward within the app, enable
high clickthrough rates and will drive the growth in monetization.

Non-RMG games attract the largest number of players and have been crucial in
growing the gaming culture in India, while RMG attracts the highest paying users
The Non-RMG market has two major categories in terms of game type- Casual & Hyper-
casual, and core games. Casual& Hyper casual games offer a quick and easy means to pass
time and have become a popular entry point for India’s first-time mobile gamers. As a result,
this segment has the highest number of overall users – 350-420 Mn- with very low paid user

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conversion rate (8-10%). With the development of robust infrastructure & multiple new game
titles, Core games have become popular in India. Currently, there are around 150-160 Mn
core users with very high conversion of paid gamers (36-43%)

Figure 14: Overview of Users of Gaming in India

Source(s): RedSeer Analysis

Even though real money games have limited number of total gamers and paid users when
compared with those of non-RMG segments, the amount spent per user is far higher, leading
to higher revenue contribution.

Online Non RMG in India has been growing across various key performance
indicators such as MAU, downloads and time spent – and is expected to continue
growing

Figure 15:Downloads and Monthly Active Users and Time Spent by Users of Online Non-RMG Segment in India

Note(s): Time spent indicates total time/day/DAU; MAU are average MAUs of top 5 casual games, (Candy Crush, Subway
Surfers, etc.)
Source(s): RedSeer Analysis

After COVID-19, people across demographics and social strata have begun adopting gaming
as a means of entertainment and socializing as during COVID-19 people were having a lot of

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free time and limited physical social interactions. Virtual social interactions replaced the
physical interaction time between family and friends during COVID-19 induced lockdowns,
manifesting into a strong interest in multiplayer games with a social element to them. This
COVID-19 induced change in behavior has led to rise in new casual non-RMG gamers.
Moreover, average time spent on gaming has increased from 43-45 mins per day in 2020 to
60-70 mins per day and number of downloads increased from 11-12 Mn in FY 2020 to 17-19
Mn in FY 2022.
These new causal users often start with exploring free, casual games. With the introduction
of Hyper-casual games, a portion of already gaming users who started with Casual games
moved towards simpler Hyper-casual games. As a natural progression, some gamers mature
into serious core gamers and players start paying for the games including the RMG & non-
RMG games.

Online RMG in India has enjoyed a strong ~61% growth and is expected to continue
at ~31% for the next 4-5 years; due to several growth drivers such as …

Figure 16: Real Money Gaming Market in India

Source(s): RedSeer Analysis

The RMG market is expected to increase from INR 120,000-130,000 Mn in FY2022 to INR
360,000-380,000 Mn in FY2026 at CAGR of 30%. The growth of RMG market is driven by
multiple factors which are mentioned below

1) Improved digital payment infrastructure

Real money gaming platforms have benefitted from integrating the fast-evolving digital
payment gateways on their platforms, by making transacting on these platforms quick and
simple.

2) Increased propensity to pay

Real money gaming market has seen an increase in paying users. This trend will continue as
income levels rise in India.

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3)COVID-19 Impact
Government imposed lockdown forced people indoors. As a result, people started playing real
money games, which were an important part of their social lives, online.

4) Adoption of blockchain technology

As blockchain technology develops, real money gaming can benefit from increased level of
trust these technologies provide. Additionally, these technologies are now opening up new
revenue streams in terms of NFTs.

5) Development of a favourable regulatory environment

Regulatory challenges for the sector are improving as states remove blanket bans on RMG.
(e.g. Madras High Court struck down the Tamil Nadu Gaming and Police Laws (Amendment)
Act of 2021, which bans playing of online betting games like rummy and poker with stakes)

Online RMG market is segmented into 3 game types (Online Rummy, Poker & Fantasy
Sports) and by platforms into Single game (>91%) & Multi game (~9%) - collectively growing
at a CAGR of ~61% for the last 3 years

Figure 17: Online Real Money Gaming Market split by Segments

Note(s): Only major categories under RMG are included

Source(s): RedSeer Research

Rummy, Fantasy and Poker are the major games under RMG sector. Rummy is currently the
largest segment and is expected to dominate the RMG market in the future due to rising
number of new rummy users from north India and increasing propensity to pay of existing
users. Rummy market is expected to increase from INR 74,000-75,000 Mn in FY2022 to INR
177,000-178,000 Mn in FY2026 at CAGR of 24%

Poker has the least penetration when compared to rummy and fantasy, indicating a very high
potential for growth in the coming years. Poker has the highest user retention rate and highest
revenue per user among the three games considered here. Poker market is expected to grow
from INR 11,000-12,000 Mn in FY2022 to INR 35,000-38,000 Mn in FY2026.

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Fantasy segment is heavily driven by cricket with limited contribution from other games. Online
Fantasy games were heavily affected by COVID-19 induced lockdowns as no games were
played during that period. However, Fantasy games are expected to recover and grow from
INR 38,000-39,000 Mn in FY2022 to INR 150,000-160,000 Mn in FY2026. Increasing
popularity of other sports leagues and rising user willingness to pay cash will drive the growth
of the market in the future.

Industry Evolution Towards MGP Platform: Advantages and Potential Growth Drivers for MGP

While Single Game Platforms (SGP) currently dominate the market with (~90%) market share;
the upcoming format of Multigame platforms (MGP) may get popular in the future. MGPs offer
a wider variety of games to users; and is therefore able to attract gamers from a wider set of
interests and abilities. It should conceptually also be able retain them more by keeping them
entertained and engaged for a longer time due to the wide array of game offerings.
Furthermore, with the addition of a large number of new casual gamers, and rising popularity
of social & multiplayer games, an organic growth of platforms with broader offering may be
expected, as well. Gradually as these casual gamers evolve and mature, their spending is
also expected to increase; which shall benefit the earning capability of gaming platforms,
especially Multigaming platforms (MGP); due to their nature of design.

The expansion of MGP can also be attributed to the following factors, which are promoting
various gaming companies towards expanding in the space, ;

1) Greater Variety of Game Types: MGPs provide a vast selection of games on their
platforms; across game genres and types. This provides the companies to offer and trial with
a large selection or assortment, thereby increasing the chances of a successful gaming title.

2) Greater Audience Reach: Another core benefit of MGP platforms, is its potential to attract
a larger and more diverse user base. The large variety of options available to users on MGP
systems attracts users from varying ages, geographies, and preferences to join the same
platform to play games, as there is something for everyone.

3) Increased User Stickiness: Apart from more users joining the platform, users also tend to
play longer when compared with SGPs, due to the variety of options available. It is observed
that on an SGP, users often churn out due to boredom or as new game types gain popularity,
but on an MGP, the user can transition to another game on the same platform, allowing him
or her to remain on the platform for a longer period of time.

4) Options for Developers: Independent developers are also increasingly choosing to host
their games on MGP platforms, due to its advantages in terms of user base and user retention.
This is an intriguing and a rewarding idea for the majority of game creators who host their
games on app stores directly.

5) Distributed Costs: From a financial standpoint, MGPs may be able to reduce their
marketing and advertisement costs per user compared to SGPs. In the case of MGPs,
marketing and advertising expenditures are incurred at the platform level, whereas in the case
of SGPs, they are incurred at the game level, following the principle of economies of scope.
This further helps gaming businesses.

6) Synergies on the MGP Platform: MGP platform has a double advantage compared to
SGPs. They are able to attract users through offering diverse casual gamers and are able to
convert them into paying users by also offering them games from RMG category on the same
platform. This allows MGPs to leverage advantages of all game genres, while simultaneously
reducing costs; and thus is gaining popularity amongst Indian & global gaming companies.

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In its current state, MGP is growing at ~40%; which is the highest across various segments of
RMG; and is expected to be ~12% of the market by 2026. While, the relative share appears
low, in absolute terms this translates to nearly INR 43,000 Mn (viz. ~4x in 5 years) by 2026.
This explains the observed interest amongst Gaming companies to explore and grow as
Multigaming Platforms.

Overall, there is a positive outlook for real-money games both for the present & future
scenarios; with expected growth rates of 25-40% across different formats and platforms.

Online Poker draws the highest ARPU across RMG ecosystem; despite having a
lower familiarity compared to Rummy and Fantasy Sports in India

Figure 18: Key Characteristics and Performance Indicators of Real Money Gaming Market in India

Note(s): Player & game examples are for reference and not in any order or preference
Benchmarks are based on empirical observations and may not be a true representation of actual data.
Source(s): RedSeer Research, Public Media articles

Even though Single game poker platforms have the lowest MACU, these platforms have the
highest ARPU indicating the prevalence of mature players with high willingness to spend a
large amount of money.
Fantasy Game platforms have the highest number of users with the lowest ARPU as it is
dominated by casual users who follow cricket.
Rummy is very popular in southern part of India with very high government scrutiny. It has a
balanced mix of MACU, ARPU and retention rate when compared with other segments.
Across the games, Multi Game Platforms (MGP) have lower ARPU when compared with
Single Game Platforms (SGP) as generally Casual gamers, comprising of beginners and
amateurs, typically prefer MGP while mature professional players prefer SGP platforms.

RMG witnesses a MACU of 12-13 Mn of the total 26-30 Mn real money gamers and it
expected to reach 60-80 Mn real money gamers in the upcoming years

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 Figure 19: Online Real Money Gaming Market Funnel
Note(s): Player & game examples are for reference and not in any order or preference
Benchmarks are based on empirical observations and may not be a true representation of actual data.
Source(s): RedSeer Analysis

In the next few years, the number of Real money gamers and Monthly Active Cash Users is
expected increase exponentially due to increasing propensity to pay, and development of
seamless payment process through robust digital payment infrastructure.

RMG market in India follows a consolidation pattern allowing market leaders to

capture the growing GMV

Figure 20: Competition Intensity in Online Real Money Gaming Market in India
Note(s): Top 3 players include Rummy culture, Dream 11 and Rummy circle.
Source(s): RedSeer Analysis

Largest 3 players of the Indian RMG segment (by revenue) occupy roughly 73% of the total
market indicating a strong consolidation in the Indian RMG market. Furthermore, sub-
segments such as online poker, online rummy and online fantasy also showcase strong
presence of incumbents with almost 85-90% (varying) occupied by the leaders of the
respective sub-segments.

Globally, this segment has witnessed high rate of mergers and acquisitions amongst players
with an intention to further consolidate the market, grow the user base and often leverage
cross-game activity. (Cross-game activity refers to leaders in a subsegment acquiring players
across other games/subsegments to increase the engagement and the number of active users
on their platforms.)

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5.Policies and Regulatory Framework for
Gaming in India

28
Regulatory Market Environment Overview

From a regulatory standpoint, online games are broadly divided into ‘Games-Of-Skill’ and
‘Games-Of-Chance’. Games-of-skill includes those games in which success substantially
depends upon the superior knowledge, training, experience of the player while in games-of-
chance, the outcomes are completely uncertain and based on luck.

As of April 2022, different states maintain separate and multiple state gambling laws
(Example- The Telangana Gaming Act 1974, Assam Game and Betting Act 1970 etc.) and
have their own understanding on gambling which has led to multiple inconsistencies.

Games are considered as skill-based when there is preponderance of skill over chance even
though they may include stakes and real money. High Courts use this dominant factor test laid
out by the Supreme Court to distinguish between games-of-skill and games-of-chance.

While multiple states have considered Rummy, Poker and Fantasy games to be games-
of-skill various states have legislations which do not exempt games of skill. Please see
a list below:

1)Telangana
Telangana has a blanket ban on games-of-skill which have part- elements of chance and does
not consider them as ‘skill-games’. It has banned these games in both offline and online
channels. However, as of April 2022, the state is in the process of drafting a new regulation to
regulate games-of-skill.

2) Andhra Pradesh
Andhra Pradesh's government has taken a stance similar to that of its neighboring state,
Telangana, in that it has banned any forms of games that involve real money and made the
play of such games as illegal.

3) Assam
Assam stand is very clear on real money games. It says all the games which include money’s
worth on the happening or determination of an unascertained event are banned- both offline
and online.

4) Odisha
The Odisha Act does not permit any play or game for money with the reason stating that
mostly poor people will suffer financially. It has banned these games in both offline and online
channels.

5) Tamil Nadu
Tamil Nadu banned online gaming with stakes in November 2020 but the provision was struck
down by the Madras high court in August 2021, which held that the amendment to the Tamil
Nadu Gaming Act was in violation of the Constitution. As of June 2022, the government has
set up a committee to give recommendations for the promulgation of an ordinance to regulate
online gaming.

The states which have regulated online gaming are listed below

1)Sikkim
Sikkim is one of the states where offline and online gaming is legal. Casinos and online games
& sports games are under the administrative control of the Directorate of Sikkim State Lotteries
and is governed by the Sikkim Online Gaming (Regulation) Act, 2008 and the Sikkim Online
Gaming (Regulation) Amendments Act, 2009.

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2) Nagaland
Though Nagaland has formed a law which legalizes online skill gaming but due to enormous
annual fees, no online player has showed interest in serving this region.

3) Meghalaya
Through the Meghalaya Regulation of Gaming Act, 2021, the state of Meghalaya has decided
to implement a license-based system for regulating gaming and gambling inside its borders.
The Act seeks to regulate both "games of skill" and "games of chance" involving the betting
or wagering of money or the value of money.

Gaming companies have taken self-regulatory steps to promote responsible gaming in

India. Some of the steps are mentioned below.

1) Self-Regulatory bodies
All India Gaming Federation (AIGF) is a not-for-profit organisation, the oldest and only apex
self-regulatory body whose self-regulatory charter includes all online skill gaming in India.
AIGFs objectives include creating awareness, about the socio-economic benefits of the online
skill gaming industry through reports, research, surveys, events and seminars

2) Restrictions to Avoid Misuse of Platform

These restrictions are aimed to avoid money laundering, minors playing in the industry, single
user having multiple accounts, and gamers playing in these states. All India Gaming
Federation (AIGF) has formulated a chart to regulate all online RMG games-of-skill like poker,
rummy, fantasy, among other games.

3)Features Given to Limit Money Spend

Self-Exclusion – Player can lock their account for 48 hrs to 6 months, or even permanently.
Set Deposit Limits – Daily and monthly deposit limits can be placed on the players.

4)Precautionary Measures
Companies do not advertise in the banned states. Also not prefer to advertise on regional
platforms or in small tier cities to discourage social and economic weaker sections. Some
rummy players even call users if they exceeded their daily spend limits.

Gaming market in India is expected to develop strongly with clearer regulatory framework,
better policies around gaming & more recognized industry associations. Exclusion of ‘games-
of-skills’ as gambling from all state laws, introduction of a central unified policy to reduce the
uncertainty, recognition of an industry association to help the gaming industry and ensure
companies follow best practices, identifying scientific mechanism to identify games-of-skill,
among others are some of the key market expectations regarding the regulatory market.

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6.Competitive Landscape

31
Competitive Landscape – Overview

The Pure-play poker industry is a nascent sector in India and is alone estimated to be valued
over INR 5,600 Mn at the end of FY 2022. It has several players such Adda52, Pokerbaazi,
SpartanPoker etc. There are also players like MPL & WinZO which offer Online poker on their
multi-game platforms.

Deltatech Gaming Limited, which operates Adda52, is one of the earliest companies in the
RMG segment in India. Adda52 is India’s first online poker platform offering multiple poker
variants with a super-gaming experience for its users by combining simple and attractive
designs and engaging features. Deltatech Gaming Limited has consistently retained over
34.5% market in Online Poker for over 7 years. Since its debut, Deltatech Gaming Limited has
outperformed its direct competitors in terms of operating revenue and as of 31st March 2021.
Adda52 is India’s number 1 pure-play poker platform in terms of revenue. The company’s
ability to remain a market leader in its field of operations despite new entries in the same
category and competition from peers in other segments is indicative of the high brand loyalty
of its customers.

As Adda52 is a purely pure-play poker platform, it only accepts poker enthusiasts, making it a
niche participant in the RMG market. This feature allows them to attract customers who are
not true beginners in the game. On their site, professionals and experts have a similar
experience to playing in an actual casino. They have assured minimal pain points for clients
by providing a high-quality user experience, several poker variations that appeal to diverse
users, nearly all payment methods for the smooth processing of transactions, and an RNG-
certified gaming ecosystem that ensures fair play.

Global Benchmarking and Advantage to Indian Companies

Poker is significantly more popular in international markets; although very few multinational
online poker companies are currently operating in India in the real-money gaming sector. This
may be mostly due to regulatory uncertainties in the past, which discouraged large foreign
businesses from entering the nascent; but highly lucrative Indian market. This has allowed
Indian companies to seize the market despite the uncertainties. Indian companies, like
Deltatech Gaming Limited, hold a significant advantage as the regulations become clearer
and recent rulings stress the distinctions between games-of-skill and games-of-chance.

As a category pioneer in India, Deltatech Gaming Limited has a large user base in India and
controls more than 34.5% of the market share for over 7 years. (A category pioneer can be
understood an organization which innovates in the form of a new product or a service to the
marketplace or which develops a new space within a particular market). Deltatech Gaming
Limited’s EBITDA has also increased at a CAGR of 6.4% from FY2019 to FY2021 to reach
INR 280 Mn and is the highest amongst the peers in the pure play poker segment of the
gaming industry in absolute terms. Due to the recent judgements which resolved some
uncertainties of the real money gaming industry’s regulatory environment, the company can
gain a major advantage in terms of recruiting players and users to its platform. Observing
organizations that operate in more stable marketplaces and determining how they have
developed over the past several years is one method for determining how a business can
expand in the future. Benchmarking is one of the techniques which can be used to gauge
Adda52’s potential for future growth.

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 Figure 21: Competitor Benchmarking - Cash Spend Analysis

Note(s): 1) The financial year ending for Super Group (SGHC) Limited and Entain Plc is 31 st December whereas for others are
31st March.
2) Information for the players have been sourced from the MCA and annual reports as available.
3) Ratios for Nazara Technologies Ltd, Super Group (SGHC) Limited and Entain Plc are calculated at consolidated level
whereas others at standalone level
4) Brand names included beside the company name are for ease of reference and are not exhaustive
Source(s): Annual Report, MCA filings, RedSeer Analysis

Currently Deltatech Gaming Limited spends around 58% of its operating revenue towards
advertisement. This is higher when we compare it with other global players who have been in
the industry for around 8-10 years more. The company currently focuses on customer
acquisition which is one of the reasons for the increased ratio on comparison with global peers.
As more and more users join the platform, the company is likely to reduce its dependency on
marketing expenses for customer acquisition which would eventually reduce the cost-factors
of the company.

Deltatech Gaming Limited is one of the companies that followed the global trend of declining
operating cash flow from FY 20 to FY 21. This is due to the fact that greater advertising and
other marketing expenditures boost client acquisition. With the shift in user behavior from
offline to online activities, online real-money gaming companies were given with an opportunity
to capture new clients seeking enjoyment within the confines of their homes. This decline is
transient, as seen by the increase in cash flow in the years preceding COVID-19.

India is a very young market compared to other regions where these multinational corporations
operate. Consequently, there are a great number of prospective clients who can join RMG
platforms. Although the scale at which Indian enterprises operate is minor in comparison to
global giants, there is room for growth and potential for companies such as Deltatech Gaming
Limited, which has defined pure-play poker in India, in the domestic market.

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7.Appendix

34
Competitor Benchmarking: Revenue from Operations

Figure 22: Competitor Benchmarking – Revenue from Operations

Note(s): 1) The financial year ending for Flutter Entertainment Plc, Super Group (SGHC) Limited, Entain Plc and Evolution AB
(publ) are 31st December whereas for others are 31st March.
2) Information for the players have been sourced from the MCA and annual reports as available.
3) The amounts have been converted into INR Mn at average RBI reference exchange rates from January to December for the
respective years for necessary players for comparison purposes only.
4) Amounts for Nazara Technologies Ltd, Flutter Entertainment Plc, Super Group (SGHC) Ltd, Entain Plc and Evolution AB (publ)
are at consolidated level whereas others are at standalone level
5) Brand names included beside the company name are for ease of reference and are not exhaustive
Source(s): Annual Report, MCA filings, Investor Presentations

The table exhibits the revenue from operations of Deltatech Gaming Limited and other
companies from the online RMG industry.

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Competitor Benchmarking: Operating Expenses

Figure 23: Competitor Benchmarking – Operating Expenses

Note(s): 1) The financial year ending for Flutter Entertainment Plc, Super Group (SGHC) Limited, Entain Plc and Evolution AB
(publ) are 31st December whereas for others are 31st March.
2) Information for the players have been sourced from the MCA and annual reports as available.
3) The amounts have been converted into INR Mn at average RBI reference exchange rates from January to December for the
respective years for necessary players for comparison purposes only.
4) Amounts for Nazara Technologies Ltd, Flutter Entertainment Plc, Super Group (SGHC) Ltd, Entain Plc and Evolution AB (publ)
are at consolidated level whereas others are at standalone level
5) Brand names included beside the company name are for ease of reference and are not exhaustive
Source(s): Annual Report, MCA filings, Investor Presentations

The table exhibits the operating expenses for Deltatech Gaming Limited and other companies
from the online RMG industry.

36
Competitor Benchmarking: Operating Expenses as a percentage of Revenue from Operations

Figure 24: Competitor Benchmarking – Operating Expenses Analysis

Note(s): 1) The financial year ending for Flutter Entertainment Plc, Super Group (SGHC) Limited, Entain Plc and Evolution AB
(publ) are 31st December whereas for others are 31st March.
2) Information for the players have been sourced from the MCA and annual reports as available.
3) Percentages for Nazara Technologies Ltd, Flutter Entertainment Plc, Super Group (SGHC) Ltd, Entain Plc and Evolution AB
(publ) are at consolidated level whereas others are at standalone level
4) Brand names included beside the company name are for ease of reference and are not exhaustive
Source(s): Annual Report, MCA filings, Investor Presentations

The table exhibits the operating expenses as a percentage of revenue from operations for
Deltatech Gaming Limited and other companies from the online RMG industry.

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