Revisiting the gaming universe: New emerging opportunities and some challenges

The gaming segment in India is now a formidable force in the M&E sector, displacing filmed entertainment to become the fourth largest segment. As per FICCI-EY M&E Report 2024, almost a quarter of the 455 million gamers in India are engaging with online games daily. The robust growth of this segment is also expected to continue through to 2026, where it will become a sector worth Rs 388 billion. While there are pockets of distress in some States with respect to administrative oversight, the segment has a positive outlook in the coming times as the market now has greater acceptance towards paying for online gaming and the user base steadily growing to become the number one online gaming country in the world.

The FICCI-EY reports reveals that online gaming segment grew 22% to become the fourth largest segment of the Indian M&E sector in 2023, displacing filmed entertainment.

However, post the change in GST rules introduced from October 2023, large online gaming companies absorbed the impact, and by cushioning the player, ensured growth rates were not significantly disturbed, though margins were, and this caused layoffs and shutdowns among smaller gaming companies.

A joint report by Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF) sheds light on the profound challenges faced by India’s pay-to-play online skill gaming industry following the GST tax amendments levying 28% on deposits. The report states that since 2019, the Indian gaming sector has attracted FDI of $2.6 billion from domestic and global investors, 90% of the FDI was attracted in pay-to-play format of the online gaming sector. 2021 stood out as the most significant year in attracting investments. However, no capital has been raised in the sector since October 1, 2023. Some companies reported a complete withdrawal of global marque investors just at the onset of the new GST regime.

Amid new emerging opportunities, thanks to tech such as AI, AR, as well as some challenges, Adgully takes a fresh look at the online gaming industry in India.

Rohit Agarwal, Founder & Director, Alpha Zegus, noted that mobile gaming has exploded, but at the same time, PC Indie games are gaining more prominence. He added, “Cross-Platform Play and Cloud Gaming is coming in faster than we think, which will make all popular games accessible on any device. Compared to last decade, the gaming industry has made strides in promoting diversity and inclusion, both in terms of representation within games and in the workforce. Game streaming has become a viable career for content creators, who entertain audiences with gameplay, commentary, and live interactions. All in all, there are a lot more advancements just around the corner, but there have been major developments so far.”

Devam Vyas, Vice President - Esports, Gods Reign, observed, “Over the past few years, the gaming landscape has experienced remarkable growth despite of many backlashes, fueled by technological advancements. From the rise of mobile gaming due to India’s Digital divide fueled by Affordable Internet Access, the industry has diversified to cater to a wide range of player demographics, with an emphasis on immersive experiences and diverse game genres.”

Impact of Esports and Competitive Gaming

According to Agarwal, “Nothing makes us happier than the mainstream recognition and popularity that esports has gained, with major tournaments drawing millions of viewers and millions worth of prize pools in both online and in-person. It's become a really lucrative market, with players earning substantial incomes through tournament winnings, sponsorships, endorsements, and streaming revenues. While recognition and money is great, issues such as burnout, stress, and injuries are common among esports players. Even legal challenges related to player contracts, intellectual property rights, gambling, doping, and match-fixing is still a high concern.”

Vyas added here, “Esports has emerged as a dominant force, reshaping professional gaming into a global spectacle. While providing unprecedented opportunities for players to compete on an international stage, it also presents unique challenges.”

Addressing Diversity, Representation, and Inclusivity in Gaming

Not only are game development companies hiring underrepresented groups, but they are also increasingly prioritizing diversity and representation in the content they produce. This includes creating characters from diverse backgrounds, featuring LGBTQ+ characters and storylines, and exploring different types of race, ethnicity, gender, and identity in their games. “While all this exists, one critial factor of toxicity, harassment, and discrimination within gaming communities is also being tackled more carefully,” said Rohit Agarwal.

Devam Vyas said that the gaming industry is actively addressing diversity, representation, and inclusivity by fostering diverse development teams and creating inclusive content. “By incorporating characters from various backgrounds and identities, game developers are reshaping the gaming experience to be more reflective of the diverse global player base. Efforts to promote inclusivity within gaming communities further contribute to creating a welcoming environment for players worldwide,” he added.

Leveraging AI, VR, AR Technologies

Agarwal pointed out, “Game developers are leveraging VR to create fully immersive experiences, where players can interact with environments and characters in three-dimensional space. VR allows for incredible hand-tracking and gesture-based interactions, while AR overlays virtual elements onto the real world, creating mixed-reality experiences. I think the most interesting thing that VR and AR enable multiplayer experiences that transcend physical boundaries. Players can interact with each other in virtual spaces, collaborate on tasks, or compete in multiplayer games. Game developers are using all this to their advantage, while trying to optimize performance for lower-end hardware. Good thing is companies like Oculus and Sony are investing heavily in VR hardware and software development, while indie developers and startups are pushing the boundaries of what’s possible with these technologies.”

Along similar lines, Devam Vyas noted, “Virtual and augmented reality technologies are revolutionizing the gaming experience, offering players immersive and interactive gameplay experiences. Game developers are leveraging these technologies to create innovative mechanics and storytelling techniques, shaping the future of the industry.”