Gaming industry set to face significant drop in revenues amidst 28% GST impact: Report

India's gaming industry is set to face a significant setback in terms of revenues, due to the 28% GST that's now being imposed.

The revenue forecast of India's gaming industry has been slashed by Lumikai, a gaming venture fund. In its latest report, the Indian gaming market is expected to reach $7.5 billion in revenue by FY28, a drop from the earlier projection of $8.6 billion for FY27.

Previous year's revenue

In FY23, the Indian gaming industry generated $3.1 billion in revenue, marking a remarkable 19% growth from the $2.6 billion recorded in FY22. The report, a joint effort between Lumikai and Google, was presented at the India Game Developers Conference in Hyderabad.

It highlighted a $500 million increase in real-money gaming revenue for FY23. However, the imposition of the 28% GST is expected to pose challenges and lead to industry consolidation in the coming years.

Salone Sehgal, the founding general partner at Lumikai, expressed optimism regarding the future growth of the non-real money gaming sector in India. He pointed to rapid digitization, an influx of new gamers, and diverse gaming content consumption as key drivers behind the industry's positive outlook.

Increase in the number of gamers

In FY23, there were approximately 140 million paying gamers, reflecting a substantial 17% year-on-year increase from the previous fiscal year. India boasted an overall gamer population of 568 million in FY23, indicating a significant 12% year-on-year rise from FY22. These gamers constituted over 50% of all Indian internet users. Furthermore, the average time spent on gaming increased by 20% year-on-year, with gamers dedicating 10-12 hours per week to gaming activities.

India's gaming industry also experienced a notable demographic shift in FY23. About 66% of gamers hailed from non-metro cities, a considerable increase from 57% in FY22. The majority of gamers, approximately 50%, fell within the 18-30 age bracket, maintaining a male-to-female ratio of approximately 60:40.

Meanwhile, online gaming firms have recently received GST show cause notices worth ₹1 lakh crore.