Why are VCs Betting Big on Indian Gaming Market?

Venture capital funding has been drawn to the enormous economic potential of skill-based gaming in India
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When Players Unknown Battleground (PUBG) was released in 2018, it gained immense popularity rather quickly. What PUBG did was give us a glimpse into the massive potential the Indian gaming industry had. In 2020, the pandemic hit and the Indian gaming industry went into an overdrive. The growth accrued from the wider availability of cheap data and smartphones, an increase in professional gaming events and eSports, and better connectivity and infrastructure.

On the funding front, the sector has attracted about USD 350 million in investments from venture capital firms between 2014-2020. This year, the industry looks to attract investments of around USD 513 million.

So, what drives the VCs to bet big on the Indian online gaming industry?

Online skill-based gaming

In the past few years, online skill-based games such as PUBG, Fortnite and Dream11 have garnered immense popularity in India. Dream11 has emerged as one of the most-popular fantasy apps globally, with nearly 10 crore users on its platform. Skill-based mobile gaming, a sunrise sector, has steadily maintained an impressive CAGR of 38%. It is on the path to achieving USD 5 billion in revenues by 2025. 

India has a very large young population and today, where more and more people are choosing gaming as a career, which was probably unheard of in India, a decade ago. “It is anticipated that India’s population of gamers will increase from 390 million in 2021 to 450 million in 2023,” Ankur Singh, CEO and founder Witzeal Technologies, told AIM.

Further, one of the major reasons why VCs are investing heavily in the Indian gaming industry is due to the growth of online skill-based games. “​​There is no doubt that venture capital funding has been drawn to the enormous economic potential of skill-based gaming in India. We will soon be home to a billion smartphone users, creating a massive gaming content market. The consistent history of growth in the sector is also attracting a wide range of investors,” Roland Landers, CEO of All India Gaming Federation, told AIM.

“Due to the online skill gaming industry’s rapid expansion, the investors are flocking the sector, realising the immense potential the sector provides in terms of tech innovation, employment and economic returns,” Singh concurred with Landers. 

Revenue growth and forecast ( Source: Statista)


eSports in India have forever been niche. However, with the availability of better infrastructure, it is seeing robust growth. The popularity of battle royale games like PUBG and Fortnite and first-person shooter games like Call of Duty are driving the growth of eSports in India.

According to a report by the Federation of Electronic Sports Associations of India (FEAI), India’s eSports segment could reach INR1,100 crore by 2025.

Prominent gaming companies are organising tournaments and game events with attractive prize pools. Also, these companies are making the content available in Indic languages. For example, eSports company Loco has been broadcasting tournaments in Hindi, Tamil, Telugu, Malayalam and Kannada.

In terms of viewership too, the segment is growing significantly. In 2021, the number of people streaming eSports events in India was around 17 million, almost double the count for 2019. In the next three years, that number is forecasted to reach 85 million, making India one of the fastest-growing markets in eSports viewership.

Further, “The industry is anticipated to expand as eSports debuts as an official medal sport at the Asian Games in 2022 and as a pilot event at the Commonwealth Games in 2022,” Singh said.


“India’s online skill-gaming industry owes a great deal of its success to the rapid digitisation of the Indian economy. Innovative government initiatives such as UPI, and more recently the 5G rollout, are significant contributors to the rapid growth of this sector,” Landers said.

Cloud gaming is another aspect that has the potential to shake the industry. Fundamentally, the cloud gaming service facilitates gaming without downloading the game to their device. Today, cloud gaming is capturing the imagination of gaming enthusiasts and investors alike.

“Tech-focused developments provide a route for gamers to choose a career in online gaming and streaming as the gaming business changes from traditional PC/consoles to cloud gaming and metaverse. 

“From a gaming entertainment and engagement perspective, the emphasis has changed to value-added experiences, play-to-earn games, and decentralised asset ownership, and hence the future prospects for cloud gaming in India are bright,” Singh said.

Now with 5G in the picture, it will further drive the sector’s growth. 5G ensures lower latency while gaming and high download speed, which are crucial for a seamless gaming experience. 

Landers said that as long as 5G services remain affordable, Indian gamers will benefit immensely from the paradigm shifts and new use cases of this technology. In the context of gaming, this will include low latency gaming, high download and upload speeds, cloud gaming, and virtual/augmented reality.

Adding to the discussion, Gaurav Agrawal, co-founder at Gamezop told AIM that one of the things that people don’t talk about, which is also probably equally important, is the improving quality of browsers. “Since these games are not just app level, but could also be browser games or html5 games, you would need strong browsers,” he added.

Web 3

According to NASSCOM, around 11% of the world’s crypto and Web3 talent is in India, making the country the third-largest market. India has around 450 Web3 companies till date and nearly 30% of them are into gaming.

Globally, Web3 has significantly changed the online gaming industry by permitting community-led growth. Being one of the biggest markets of gamers as well as crypto users, experts observe that India is most suited to lead the growth in Web3 gaming. 

The potential of Web3 in gaming is another reason VCs are splashing the cash on the Indian gaming market. Besides, there are several business models available for Web3 game companies. The majority of Web3 gaming companies create their own currencies to engage and incentivise their users. 

“Blockchain as a technology is interesting because it makes things very transparent. It’s also interesting because if a gaming studio is using blockchain, then through the distribution of tokens, they could make every game an earning activity. If gamers collect tokens and the value of those tokens rise, these could be resold in the open market, which would open the doors for monetisation,” Agrawal said. 

Landers believes another potential Web3 source of disruption for Indian gaming is blockchain-based play-to-earn (P2E) gaming. P2E centred around cryptocurrencies, or non-fungible tokens, is seeing increased adoption globally.

“P2E games reward players with real-world value currency for their commitment, or for completing specific in-game tasks. The P2E element will certainly encourage wider adoption in an emerging market like India because of its economic prospects for players. While India is the 5th largest economy, per capita income is presently only around USD2000,” he said.

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Pritam Bordoloi
I have a keen interest in creative writing and artificial intelligence. As a journalist, I deep dive into the world of technology and analyse how it’s restructuring business models and reshaping society.

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