The online gaming industry in India has been on a transformational journey with a promising growth trajectory, despite regulatory ambiguities and a high tax rate. Not only has it been a major contributor to the broader media & entertainment space but has also become an integral component of the Animation, Visual Effects, Gaming & Comics (AVGC) sector in India, drawing significant government support, with many states crafting their own AVGC policies to give a boost to the sector.
With over 1,400 homegrown online gaming companies, India’s online gaming sector is uniquely positioned to support the goals of our country's economic growth ambitions, attract large foreign investments, generate sizeable employment, and spur innovation. Consequently, it has the potential and the necessary elements to become a global supplier and establish itself to become India’s soft power on the global front.
India hosts the second-largest community of gamers globally and has become a popular choice in the entertainment sector, which clearly reflects a transformative shift in the entertainment consumption pattern. With this being said, the online gaming industry goes beyond the premises of entertainment; it opens up opportunities in various other allied industries such as UI/UX design, data engineering, development, programming, testing, sales, branding & marketing, etc. It also fuels innovation in emerging sectors like AI/ML, cybersecurity & cloud, and fintech.
Currently, this sector alone provides over 1 lakh jobs to the skilled workforce of the country and is expected to add 1.5 lakh more by 2025. Further, with only 31% of the rural population using the internet compared to 67% of urban residents, as per the India Inequality Report 2022, there is a significant economic opportunity to increase internet access and digital inclusion in rural areas.
A recent report by the EGROW foundation and Primus Partners states that there has been a 20-fold increase in the workforce between 2018-2023, with a 97.56% compounding annual growth rate. In terms of workforce participation, the industry has significant male participation and was mostly viewed as a male-dominant industry for the longest time. But what truly stands out is the evolving gender dynamics in this space, with female workforce participation far outpacing male workforce participation, achieving a massive 103.15% CAGR in the same period.
Moreover, there has been a steady increase in female participation in gaming. As of 2022, about 43% of women engaged in online gaming daily, with most female participation from non-metro cities. Furthermore, the sector not only recognizes the contribution that women bring to the creative and business processes but also fosters a more inclusive environment for them to thrive. This is evident in the surge in female gaming content creators and streamers in the country.
The findings of the report also highlight the sector’s contribution to the AVGC industry, which is projected to rise 68% by 2026. The government has provided much-needed impetus to the industry by charting out a forward-looking path, constituting a task force, and setting up the first National Centre of Excellence solely dedicated to the AVGC industry.
However, for the industry to thrive and enter the next phase of growth, the government must come out with a national AVGC policy that has been in the works for some time.
Despite the tremendous growth seen by the industry, certain concerns pertaining to excessive screen time, addiction and financial fraud remain. This becomes even more critical in the context of teenagers and young adults who need to be made aware of responsible gaming practices. In this regard, the recent installation of 'Beware of Smartphone Zombies' signboards in Bengaluru is a stark reminder of the growing epidemic of digital distraction. While some of these concerns are being addressed by the industry, more can be done to safeguard vulnerable consumers. For instance, to limit exposure to screen time and mitigate financial risk for the consumer, features such as time limits, monetary limitations and exclusions have been introduced by several gaming platforms with the aid of technology.
Further online gaming platforms often require personal information such as name, age, contact details, and in case of real money gaming, also financial information. With this comes the risk of data breaches and related concerns such as identity theft leading to financial fraud. In this context, Know Your Customer (KYC) procedures play a critical role in helping protect both consumers as well as businesses from fraud. Further, online gaming intermediaries are required to process and store digital personal and non-personal data in compliance with the applicable data protection laws of India. However, until the Digital Personal Data Protection Act comes into force, this remains a voluntary effort.
Last but not the least, a sector which holds substantial economic promise deserves regulatory backing and clarity. For much of its existence, the industry has operated self-sufficiently, wherein the collective efforts of the industry have led the way for a more robust, responsible, and accountable ecosystem. However, regulatory ambiguities and uncertainties have time and again created roadblocks for Indian gaming startups, and therefore, it is necessary that regulatory clarity be provided, and as a first step, the amended IT rules be implemented.
With an encouraging regulatory environment, the online gaming industry, which has seen a 27.45% CAGR between 2019 to 2022, in its contribution towards the country’s GDP, can further enhance India's growth story and solidify its position as a disrupter in the global gaming landscape.
(The author is a Member of Parliament, Rajya Sabha, and former Minister of State for GAD, Education, Health, Maharashtra).
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
