Gaming and esports to see over 3x rise in ad spends in H2 2024: Experts

The Indian online gaming market is poised for exponential growth, with revenue expected to reach $2.4 billion by FY2029, driven by a robust 20% CAGR from 2017 to 2029, as per ‘India’s Booming Online Gaming Industry: A Potential Powerhouse’ report by Primus, With a gaming community of 455 million – making it the second-largest globally – India is becoming a lucrative hub for foreign investment, job creation, and allied industry growth, including fintech, cloud services, data analytics, and cybersecurity. The sector is projected to attract Rs 25,000 crore in investments by 2024 and create 150,000 additional jobs by 2025, reflecting its economic significance. The industry’s annual turnover saw a remarkable 168.06% CAGR from 2018 to 2023, bolstered by rising consumer engagement and market demand.

Moreover, GST collections from online gaming companies are expected to soar, with projections of Rs 140 billion by FY2024-25, further showcasing the sector’s growing economic impact. Finance Minister Nirmala Sitharaman at a press meet on Monday said that GST collection from online gaming increased 412 per cent in six months – from Rs 1,349 crore to Rs 6,909 crore – from October 1, 2023, when 28 per cent tax was levied on these services.

As the second half of 2024 unfolds, the gaming and esports industry continues to be a dynamic space, with new opportunities and challenges emerging across the sector. With the festive season already underway and with rising consumer engagement, H2 promises to build upon the momentum created in the earlier part of the year. The industry is evolving at a rapid pace, driven by technological advancements, increased internet penetration, and growing interest from brands, making it an exciting time for stakeholders.

Adgully delves into the key trends observed in the first half of 2024 within the gaming and esports sector. This article highlights the surge in mobile esports, the growing professionalization of teams, and the rise in brand sponsorships, particularly from non-endemic players. Additionally, the evolving consumer preferences towards narrative-driven and community-centric games mark a significant shift, as gamers seek new and immersive experiences. This has created a landscape ripe with opportunities for both developers and marketers alike.

Looking ahead to H2, the focus shifts towards monetization trends, consumer behaviour, and ad spending. With more gamers engaging in shorter formats, mobile gaming, and community-driven content, brands are expected to ramp up their investment in in-game advertising and esports sponsorships. The festive season presents a unique window for heightened ad spending and consumer engagement, positioning H2 as a crucial period for growth within the gaming industry.

Key trends dominating H1 2024

Anurag Choudhary, Founder & CEO, Felicity Games, noted the Gaming and Esports sector saw a surge in the first half of the year; he attributed this surge to the increased internet penetration and the popularity of mobile esports titles. He also noted the prize pools and sponsorships seeing an uptick, reflecting the growing interest from brands.

Further highlighting the trends seen in H1, Choudhary said, “Notable trends include the rise of mobile esports, the increasing professionalization of esports teams, and the entry of non-endemic brands into sponsorships. There’s also a growing focus on regional language content to cater to diverse audiences across India.”

According to Roby John, CEO and Co-founder, SuperGaming, “The first half of 2024 has been transformative for the esports and video gaming industry in India. We have seen a significant surge in engagement across a variety of gaming genres, not just limited to traditional esports titles. While mobile-first games continue to lead the charge, there has been a notable uptick in interest towards narrative-driven, educational, and casual games. The esports landscape that we see today is constantly evolving, with new games emerging as popular competitive titles. This diversification reflects a maturing market where gamers are exploring new experiences beyond competitive play. What we have also observed is that major gaming companies and tech giants have continued to invest heavily in esports organizations and platforms. We’re also witnessing a growing number of collaborations between esports organizations and traditional sports leagues in order to cross-promote events and tap into new audiences. 

Speaking about the trends, he pointed out, “One key trend is also the growing importance of community-driven content. Gamers are not just players, they’re creators, sharing, and engaging with user-generated content in unprecedented ways. This shift is influencing game development, pushing us to think about how we can better support player creativity and collaboration.”

On the other hand, Rohit Agarwal, Founder & Director, Alpha Zegus, felt that H1 has been a bit slow for the esports industry. He said, “There have been a very limited number of tournaments compared to last year, and the number of influencer brand associations have also been limited. However, we have observed some new brands stepping into the gaming space, and we are expecting them to unleash their spending in H2.”

Notable shifts in consumer behaviour for H2

Anurag Choudhary noted, “Consumers are increasingly spending more time on mobile gaming and esports content, with a preference for shorter, more engaging formats like quick matches and highlight reels. There’s also a rising trend of gaming as a social activity, with more people participating in community-driven gaming events and online multiplayer games.”

Speaking about the monetization trends, he said, “There’s a growing willingness among gamers to spend on in-game purchases, especially for cosmetic items and battle passes, indicating a shift towards a more mature gaming market.”

Roby John added here, “We see that there is a growing preference towards free-to-play models, particularly in regions with limited disposable income. These games offer a low barrier to entry, attracting a wider range of players while allowing developers to generate revenue through in-app purchases like cosmetic items, power-ups, and virtual currency. The trend of spending on these in-game purchases continues to rise, reflecting how players are willing to invest in enhancing their gaming experiences.”

He further said that while mobile gaming remains on the rise, it comes with increased scrutiny over ethical concerns. “Players are becoming more vocal about issues such as fair play during tournaments and responsible spending within games. As developers, these concerns are vital to address as they directly impact player trust and engagement,” John added.

Rohit Agarwal saw the ongoing festive season playing a huge role in the second half of the year for the E-sports and gaming sector. “Since H2 is filled with festivals across the country, consumers get into a zone of celebration and spending on new purchases. This is when brands create a stronger, deeper connection with audiences and drive maximum sales. Gamers also get more days off from their schools/ colleges/ offices (due to festivals), and use these days to spend more time gaming. It’s a win-win situation for everyone,” he remarked.

Growth and Ad spend expectations from H2

Anurag Choudhary predicted that ad spends in the gaming sector is expected to increase, particularly in mobile gaming, driven by higher engagement levels and the expanding user base. “Brands are likely to invest more in in-game advertising, influencer partnerships, and esports sponsorships. The growth trajectory is expected to remain strong, with more brands recognizing the value of tapping into the gaming audience,” he added.

In terms of ad spend growth for the second half of 2024, Roby John anticipated a strategic increase, particularly in areas that promote long-term brand engagement and community building. According to him, “This is largely driven by the fact that more people are now adopting gaming as a form of entertainment and hence, we see a corresponding rise in demand for advertising within the gaming ecosystem. The continued growth of the esports market, coupled with the rising popularity of gaming influencers and steamers, is turning these channels into avenues for brands to promote their content and have product placements.”

He further added, “Given the shifts in consumer behaviour, investments in marketing are likely to focus more on fostering player loyalty and less on traditional acquisition metrics. We expect to see a greater emphasis on influencer partnerships, content collaborations, and innovative in-game advertising that aligns with the evolving preferences of our audience. Furthermore, with the growing interest in diverse game genres, there will be more targeted ad campaigns aimed at niche communities. These campaigns will likely leverage data-driven insights to ensure that we’re reaching the right players with the right message at the right time. While the exact growth rate may vary depending on economic conditions and industry-specific factors, continued growth in advertising spending within the gaming industry throughout the second half of this year seems highly likely.”

Rohit Agarwal emphasized that brands will be opening their wallets for the e-sports industry in the second half of year. He noted, “Ad spends will be more than 3x in H2, considering that all brands will be putting almost 50% of their yearly marketing budgets into festive promotion campaigns. We’ll also see a rise in tournaments, influencer campaigns, ad films, and other marketing tools in H2 to maximize the festive rush.”

Also Read: 28% GST yields 412% jump in online gaming revenue in six months: Finance Minister