The Parliament passed a Bill banning the advertising and operating of all kinds of real money games (RMGs) through any channel, imposing penalties and imprisonment on violators. The move has triggered praise and criticism from different players in the gaming industry.
Whether the ban is effective in curbing offshore criminal activities and transferring user base to other genres remains to be seen.
However, there is no denying that the RMG segment played a significant role in the industry’s revenues. Between 2022 to 2029 (estimated), the RMG segment’s revenues are forecast to make up at least 70% of total revenues. This is despite a fall in the share from 81% in 2022 to around 73% in 2029 due to taxation changes for the sector.
With this revenue gone, the industry will depend on three revenue sources – in-app purchases (IAP), advertisements in games and e-sports. IAPs have made up an increasing portion of total revenues in the non-RMG segment since 2022.
In-app purchases
However, not all gamers pay for IAPs. Of India’s 148 million gamers, 25% are paying users, according to Lumikai, an Indian gaming-focused venture capital fund.
This is reflected by the difference between the kinds of games played the most and those paid for the most. According to Lumikai, casual and hyper-casual games (like Candy Crush and Flappy Bird) are played for the most hours by Indian gamers. This is followed by midcore games (like Clash Royale and PUBG).
However, Lumikai also says that games that are paid for the most are those falling in the Midcore and RMG segments. While IAPs grew by 56% in the midcore segment year-over-year from FY23 to FY24, it grew by 10% in the casual and hyper-casual games segment.
This push from IAPs helped boost revenue from midcore games more than that from casual and hyper-casual games, especially shooter games like PUBG, where in-app purchases of game currency and battle game passes are popular.
Another way to understand gamers’ payment behaviour is through the Average Revenue Per Paying User (ARPPU). The number of gamers in India, as well as paying gamers, is increasing. The average amount that gamers pay is also increasing. However, India’s ARPPU was approximately $5 to $10 in FY21, while in the U.S., the ARPPU was between $130 to $140, as per a KPMG report. A combination of factors like India’s preference for mobile-based free-to-play games and lower GDP-per-capita can explain the gap, the report says.
Advertisements
Besides IAPs, advertisements are increasingly becoming primary revenue streams for casual and hyper-casual games, according to an EY report. With their high download numbers, these sub-segments are attractive options for IAAs. Advertising spends, across formats like print, television and others, is expected to increase at a CAGR of 7.5% from 2025 to 2027.
However, monetising advertisements within online games is not without challenges. Indian gamers’ tolerance for ads in games is between 45% to 55%. However, ad-fatigue is the top reason to stop playing and the top challenge faced while playing games.
This hints that while gamers are fairly tolerant of seeing ads, there is also a chance of them giving up on the game if there are too many ads. While that might seem contradictory, the KPMG report points out that gamers respond better to some kinds of ads than others, and are therefore more tolerant in some cases.
For instance, ads that give gamers a reward increase clickthrough rate, gamer control over ads and a more pleasurable experience than unskippable, intrusive image or video ads.
E-sports
The government’s support for popularising e-sports and recognising it as an international competitive sport gives the industry a significant backing. EY projected an increase in the number of tournaments, professional teams, e-sports titles, prize money and live broadcast hours.
Government backing is also crucial to reassure brands who sponsor e-sports tournaments. E-sports companies get 70% – 80% of their revenue from advertisements and partnerships – of which sponsorships make up 50% to 55%.
India’s youthful gamer base where 65% to 75% of gamers are below 35 years of age (EY) is another strength to promote esports where most players are below the age of 35. The popularity of mobile-based e-sports titles like PUBG can be capitalised on to grow the segment further, even if PC- and console-based gamers are fewer. PUBG tournaments alone accounted for 40% of all esports prize money in 2019, according to KPMG.
Overall, while RMG plays a large part in industry revenues at present, factors like increasing internet penetration (especially in rural areas), rise in disposable incomes, and increasing number of gamers are all strong tailwinds to support industry growth.
Published – August 23, 2025 01:58 pm IST