Real Money Games Industry booms amid economic uncertainty

Economic uncertainties are anxious times for industries and businesses. The International Monetary Fund has portrayed an underwhelming economic projection in their April 2024 World Economic Outlook. The minimal flurry of growth in developed economies will be foiled by a similarly modest recession in emerging and developing economies. For any industry, the key question always is how macroeconomic factors like geopolitical uncertainty and rigid monetary policies cascade down to the business-level numbers. A gaming company, for instance, would want to know the impact on the active traffic in their online poker platform. For a retailer, the cause of concern could be a reduction in discretionary spending by consumers.

Be it the response to popular fantasy sports games, the traffic in rummy platforms, or the download of poker apps, economic uncertainties have had little or even inverse effect in the past. Amidst the present economic uncertainty, the impact experienced by the real-money games industry is worth observing.

Recent Economic Uncertainty and Real-Money Games

A look at the last three years alone covers the great uncertain spell triggered by the COVID-19 pandemic. From a global GDP growth rate of 2.59% in 2019, the world experienced a GDP fall of 3.06% in 2020. The 6.23% growth in 2021 was again offset by reduced growth of 3.09% in 2022. However, a look at the growth of the gaming industry in India tells a different story. 

Till the financial year 2023, the online games industry in India grew at a CAGR of 28%. Naturally, the number of gamers in India is also increasing every year, from 39.7 crores in the financial year 2022 to 42.5 in the financial year 2023. In the next five years, the number of gamers in India is expected to increase between 28% and 34% every year. 

The presence of real-money games in the Indian gaming ecosystem has been profound. It controlled 82.8% of the market share in the financial year 2023. The number of real-money game startups has exceeded 400, while it is more than 1400 in the entire ecosystem. Investments in gaming, too, have been significant during the financial years 2020 and 2024, with an investment of nearly ₹ 23,000 crores in India during this period.

Thus, the response from the real-money games sub-segment towards economic uncertainties has been largely indifferent in India. 

Past Uncertainties and the Growth of Gaming 

Although the industry was at its nascent stage during the previous major economic downturn in 2008, industry experts drew similar conclusions even back then. During economic uncertainties, people are not keen on spending a lot on discretionary purchases. Entertainment is a basic human need, and harsh economic conditions call for cost-effective alternatives. With real-money games offering control over your spending (unlike OTT subscriptions, for instance), there is a higher return on the funds used. Besides, many people have more time on their hands during uncertain economic conditions. Killing time has always been a key motivation for opting for real-money games. It is worth noting that the South Korean online gaming scene saw a boom during the 1997-98 Asian financial crisis.

How Will Real-Money Games Perform?

During the financial year 2023, the total gaming revenue in India crossed $3.1 billion. The revenue contribution of real-money games of around 83% is expected to remain above 80% for the next three years. 

The low contribution of in-app purchases and advertising revenue in the gaming market is likely to be explored in greater detail in the years to come, which will result in their higher growth. Nevertheless, real-money gaming will continue to dominate 3/4^th of the total revenue share till at least the financial year 2028. 

Paying gamers, a marker of spending made in real-money games, is also expected to be on the rise in the future. As the number of gamers in India rises to 53.8 crores by the financial year 2028, the percentage of paying gamers is expected to consistently increase from 25% in the financial year 2023 to 34% in the financial year 2028. An increase in the percentage of paying gamers would directly benefit poker app like Pocket 52, where gamers spend their funds while relying on their skill and expertise.

It must also be noted that a potential boom in the real-money games would also add to the government exchequer and employment. The gaming industry employs nearly one lakh people at present, and it is expected to swell to 2.5 lakh jobs by 2025. Real-money games contributed to a GST collection of ₹ 1,700 crores in the financial year 2023. As per projected growth, this is expected to grow at a CAGR of 113% to cross ₹ 75,000 crores by the financial year 2028.

Growth on the Cards

The real-money games industry has zoomed past the recent economic uncertainties with impressive numbers. Any further complications in the economy must not be seen as a cause of concern for the industry. If past patterns are any indication, gamers are likely to flock to online poker and rummy platforms in their numbers, even as the economy treads past the economic ebbs and flows.