$250 million in-app purchases by Indian gamers

Who would have thought that online gaming would generate the billions of dollars it is generating today? At least not the 90s kids in India. You see, those were the times when video games were being introduced. You had to have either a PC/Laptop, dedicated console, or a handheld device to play games on. Which meant that if you wanted to play games, you had to spend a lot of money on it. It did not come as an “add-on” like it does today with smartphones. Also, not to forget that gaming was seen as a bad habit for kids back then. 

Today, people born in the 90s and 2000s have grown up. They have the spending power and the means to pursue their passion for gaming. The infrastructure and technology have advanced so much that you can play almost any game on your mobile phone. This ease of access, increase in purchase power, and interest in gaming, especially for online rummy and online poker, have led to a boom in the revenues of Indian gaming companies.

As per a report published by mint in August 2023, the revenues from in-app purchases were around $250 million in India. To put this in perspective, it is more than the revenue (in-app purchase) of OTT platform subscribers in India. These gamers are majorly paying on First Person Shooter games, war games, esports, fantasy cricket and real cash rummy. 

The rise of online gaming is not just because of the improved infrastructure or ease of access, there are a few other factors that play a pivotal role as well: 

Gaming content creators

If you have been following creators on YouTube, you must have noticed that most of them have tried their hand in gaming. The lockdowns during 2020 and 2021 forced creators to churn out content from their homes and gaming was the easiest way to do it. This led to more people trying their hand at gaming too. In-app purchases for these content creators are like an investment. Buy a unique skin in a game, create a video around it, and that’s it. They rake in way more through the views than they spend on a particular in-app purchase.

Esports

The popularity of esports is another major reason behind this exponential growth in gaming. When you have a prize pool that runs into millions of dollars, you are bound to attract a lot of people. Esports has catapulted people’s interest in gaming. Some have taken up esports as a profession. There are teams, managers, sponsors, franchises, just like any other sports league. To give a peek into the scale of these esports tournaments, the Fortnite Championship Series 2023 had a prize pool of $10 million.

Uniqueness

Uniqueness is arguably the biggest driver of in-app purchases in online gaming. Every player wants to create their own unique character that’s recognizable by other players and is not generic. Internationally, this trend has gone to another level. Fashion brands like Balenciaga and Ralph Lauren have partnered with Fortnite by Epic Games and released a clothing line specifically designed for the game. Players could purchase a virtual Balenciaga hoodie and use it in-game.

So, will the new GST policy affect the in-app purchases?

The new GST Policy on Online Gaming will increase the prices for in-app purchases but it is highly unlikely to slow down the rapid growth that we have been witnessing recently. There was a time when gamers were not willing to pay even a penny for a mobile game but now things have changed. This is why gamers will still buy new virtual products in order to increase the uniqueness of their characters and they will be willing to pay the price for it.