Online skill gaming could be a veritable mine for India’s growing economy

The COVID pandemic gave rise to what I call the COVID Paradox: It slowed down the world, yet accelerated change. Economies around the world slowed down considerably with the aftereffects of the pandemic. Rampant inflation in nearly all major world economies, the ongoing conflict between Russia and Ukraine, general consumer downtrading to build some savings, and the pandemic-induced manpower disruption are some of the biggest post-COVID recovery blockers.

As Asia’s third largest economy, India has seen a well-calibrated opening of the economy and a budget-induced capital expenditure plan to spur domestic economic activity. Experts have pointed out that India’s next phase of growth will come from traditional pockets, such as the untapped rural economy, manufacturing sector and infrastructure development, but a multi-fold growth will be spurred by tech-enabled development. It is not surprising that edtech, fintech, agri- and health-tech companies are seeing both consumer and investor confidence.

The likely missing piece in our economic recovery narrative is the focus on ‘sunrise sectors’, one of which one is online skill gaming. This sector has seen exponential growth in the last 18-24 months on the back of India’s deep smartphone-led internet penetration and the growing interest of the Indian citizens in skill-based online games. As per a KPMG report released earlier in the year, India is home to approximately 420 million online gamers, and the e-sports market will grow 5x in the near future. Affordable mobile internet, a young demographic, smartphone penetration in rural areas and the general build-up of a sporting culture in the country will ensure that these projected figures translate to actual growth drivers.

Significantly, even in its nascent years, the online skill gaming industry has been a big contributor to the government exchequer. It is a huge driving force for investments, innovation and wealth creation in the country by channelling investments towards holistic development of the Indian startup ecosystem. Industry research estimates state that the sector’s enterprise valuation stands at Rs.150,000cr and is expected to double by 2025. 

This sector has attracted both domestic and global investors, with over INR 20,000 crore investments in the form of FDI, helping to bolster India’s forex reserves and currency, the figure is expected to touch 50,000cr in the successive 3 years. According to EY’s recent report on the media and entertainment segment of the country, it has been stated that the gaming industry’s annual revenue is projected to cross 40,000cr by 2025, with GST contribution standing at 6,000cr. These figures are a numerical indication of the push this industry is giving to India’s economy.

In a pandemic-inflicted economic downturn where job losses have been rampant, the online skill gaming industry has provided direct employment to thousands of professionals and created indirect employment avenues through a network of vendors and ancillary service providers. These include an informal network of apps, websites and privately run digital channels that provide research, tips, and community support to online gamers. The industry is also helping to develop a talent pool in emerging areas such as artificial intelligence, machine learning, animation, cloud, and other digital technologies. It is easy to foresee that this ‘make in India’ effort will eventually magnify to ‘make for the world from India’.

Unfortunately, the online skill gaming industry has had to face a confusing public narrative that has sometimes equated it with online gambling. This comparison is perhaps misplaced, as it attempts to draw a parallel between what is a game of skill with a game of chance. In games like fantasy sports, online rummy, chess etc, skill and knowledge play a significant role. A game of chance is a game whose outcome is strongly influenced by some random occurrence or probability. Games of chance use devices like dice, lottery, roulette wheels, or numbered balls. Given this conflation, the operating climate for the tax-paying online skill gaming industry, employing thousands of people, has not been conducive, with no Central framework for regulating the sector.

The proposed inter-ministerial task force to recommend policies for regulating this space is a good first step and has made the industry cautiously optimistic about its future growth. The industry looks forward to a balanced regulatory regime which provides an enabling environment for innovation in this sector, and with stringent action against games of chance like betting websites, gambling, etc. A clear and unified regulatory framework in the immediate future with the right checks and balances, combined with a progressive outlook from policymakers can help the online skill gaming industry unlock its full potential and contribute to the vision of Digital India.

Jaspreet Bindra

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Jaspreet Bindra is a thought Leader, Advisor, and Author on Digital Transformation, AI, Blockchain, Future of Work.