The India Opportunity: Tapping into One-Tenth of the World’s Gamers

India is now home to one-tenth of the world’s gamers and has the second-largest smartphone user base in the world. This year, 387 million Indian consumers will use smartphones, double that of two years ago and growing to 585 million in 2020. While the sheer size of India’s population and its potential for games have inspired many articles over the past years, now is the time for Western and Asian game companies to consider moving in. Importantly, a main threshold has only recently been lifted; the cost of data has gone down by a factor four in the past year. This solves connectivity issues that have plagued India in the past. Consumer demand for mobile content has surged since then. Additionally, accelerated economic growth is starting to surface in key monetization metrics of individual games. The average revenue per user on Android devices, representing 94% of all smartphones in India, has doubled in two years, pushing up the annual spend per paying mobile gamer considerably. Whether the moment to enter India is now depends on a wide variety of factors ranging from long-term brand-building strategy, genre, and business model to connectivity requirements, device specs needed to run the game, and desired monetization metrics.

Using data from our Consumer Insights*, Mobile Metrics Tracker, and Global Smartphone and Tablet Tracker, we will examine the current state of the Indian mobile games market and these factors to determine if your moment is now, in one year from now, or if you are already a year too late.

*Our Consumer Insights on India are based on the online population of the following cities: Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, Pune, Lucknow, Patna.

India and Its Mobile-First Culture

Our Global Tablet and Smartphone Tracker shows that in 2016, India overtook the United States as the second-largest market in the world by smartphone users. Since then, the number of smartphones in use continues to outpace global adoption. An additional 74 million smartphone devices were taken up in 2017 alone, or nearly one quarter (24%) of all new smartphones.

Data from our Consumer Insights confirms that India is a mobile-first country with mobile games as an exceptionally popular pastime. In 2017, there were 222 million mobile gamers and 89% of all game revenues in India were generated by mobile games. These gamers are highly engaged; almost one-third play five days per week or more, and nearly 40% spend more than six hours per week playing mobile games. Indian consumers’ engagement with mobile devices is not limited to gaming. Overall, more than 50% of these consumers prefer using mobile devices over other mediums for daily activities such as reading, listening to music, watching videos, social networking, and shopping. Their appetite for mobile-based services and media content on mobile is far higher than Western consumers. For instance, 54% of Indian consumers shop via their mobile device compared to 37% in the United Kingdom and 34% in the United States. Furthermore, 67% prefer to use their phone to pay in physical stores, far higher than in the United States where this is only 27%.

Mobile Game Revenue Growth Accelerates

Annual mobile gaming revenues in India are forecast to grow from $1.1 billion in 2018 to $2.4 billion in 2020 at a compound annual growth rate (CAGR) of +49%. This makes India the fastest-growing mobile games market in the world by overall revenue. Yet, even with this impressive growth, the average revenue per paying mobile gamer (ARPPU) in India in 2020 is far lower than established markets, and low compared to other emerging countries with similar market circumstances.

Like India, game revenues in regions such as Southeast Asia or the Middle East are driven upward by mobile, mostly due to increasing smartphone penetration combined with availability and affordability of mobile data. If mobile payers in India were to spend the same annually as they do in Indonesia, for example, the market could grow to as big as $5.2 billion by 2020.

Game Monetization Metrics Are Getting There, Finally

Absolute growth in gamers and mobile revenues as a whole mean nothing if game-by-game metrics do not make economic sense for developers to publish their games. Acquiring users is relatively cheap in India with cost per install (CPI) prices a factor of 12 lower than in the United States. Until recently, average revenue per daily user (ARPDAU) was a similar factor lower or even worse with an extremely low conversion rate and low average spend figures. Over the past two years, this key metric has doubled; this means there is “only” a factor of five difference between India and the United States on Android devices. This growth is even more remarkable considering that the number of smartphone users more than doubled in the same period, ultimately making the market much more attractive for individual game developers.

Why Now Could Be the Best Time to Enter the Market

While the potential of the Indian mobile market is impressive, it is important to note that the average smartphone is rather basic. According to our Global Tablet and Smartphone Tracker, India ranks very low when it comes to the share of high-end smartphones in use: 7.5% as of January 2018 (High-end smartphones are defined as those with minimum specs of 2 CPU cores, 2GB of RAM, 4G connectivity, NFC, biometric identification (fingerprint, face ID), and release year of 2014 or later). In comparison, this share is 17.5% in China and nearly 60% in South Korea. Some of the most popular models in India are budget devices, such as Xiaomi’s Redmi series, Samsung’s J series, or OPPO’s A series.

On the plus side, prices of devices with high-end specifications have rapidly decreased in the past months as Chinese smartphone brands, such as Xiaomi and Vivo, are looking to India as their next source of growth. As a result, the share of high-end smartphones in use in India has been rising and we expect more to be in use in the coming years. This, coupled with the fact that data costs in India will again drop to a quarter of the current price in 2020 (source: Analysys Mason), paints a bright picture for the country’s mobile gaming growth potential.

Now that revenues per user and required smartphone specs are growing in the right direction, Indian consumers need access to more mobile game content. Last year’s top 10 grossing games in India were predominantly casual games and localized card games, both types of games that monetize primarily through advertising. Compare that to Indonesia or Vietnam, where core mobile games, such as Garena’s Arena of Valor (a localized version of Tencent’s Honor of Kings) and Netmarble’s Lineage 2: Revolution, are driving conversion and revenues per user by employing a business model driven by in-app purchases. Our research confirms that mobile gamers are more willing to spend directly on core games than on casual genres. In India, the success of mid-core titles, such as Supercell’s Clash Royale, shows that there is a growing appetite for these types of games. Developing (or localizing) core mobile gaming content for Indian consumer preferences will help develop the emerging mobile gaming scene and drive the average spend per payer up to the levels of other emerging markets.

Publishing games in India could also prove easier compared to other Asian countries, as a large part of the population speaks English, particularly in tier 1 and tier 2 cities. Unlike China or Japan, there are no dominant local publishers, nor is there a need to find a publishing partner due to government regulation. As plans to enter the Indian market for Asian giants, such as Tencent and Netmarble, are quickly taking shape, now more than ever could be the moment for Western publishers to capture their share of the world’s second-largest mobile market.

Newzoo’s Unique Suite of Mobile Intelligence on India

Our services are traditionally geared toward supporting strategic, marketing, and product development challenges across many countries. However, the stack of various insights, data points, and metrics that we offer our subscribers gives an in-depth look into individual countries that is simply not possible with other one-dimensional solutions focused on app downloads and revenues. Contact us if you are interested in subscribing to our unique combination of mobile market intelligence, tracking India in a way that will determine the perfect timing for your entry into the country.