MONETISATION

• Ad Spends

  • Revenues are derived from displaying ads in games in various forms. Revenue received is based on the number of impressions, click-through rates or other parameters
  • Mostly present in Casual games
  • These ads incentivize a gamer to move up a level, and gain additional lives; essentially helping the gamer progress in the same; instead of watching an ad that cannot be skipped

• In-App purchases (IAPs)

  • Revenues that are derived from the purchase of virtual goods within a game, upgrading to ad-free models, battle passes, in-game currency, advancing to further levels of the game, power-ups, cosmetics, etc. are accounted for in the IAPs.
  • They are prevalent in mid-core and hard-core games and to a certain extent in casual games

• Subscription

  • This model involved subscribing to games through paying an initial fee which is typically considered for a fixed time (ranging from 1 year to lifetime access) which gives access to one or multiple games on a platform throughout the subscription period
  • Prevalent in cloud gaming and online adventure and RPG games

• Commission Income

  • Users typically pay a fee to take part in a game or contest and receive monetary rewards for winning.
  • This model is typically prevalent in the RMG and OFS segments
  • These RMG and OFS platforms retain part of the entry fee pool as a commission which is their primary source of income

KEY CHALLENGES:

• Low average revenue per paying user (ARPPU):

  • Spending on virtual purchases is considerably low in India (~ USD 5 to 10 in FY21) as compared to the global average (USD 130-140 in 2020)

• *Regulations:

  • Per an article in Forbes India dated Sep 2022, in May 2022, the Group of Ministers (GoM) had unanimously decided to recommend increasing the goods and services tax (GST) on online gaming, casinos and race courses
  • A GST of 28 percent is applicable on games of chance, and the skill gaming industry pays 18 percent GST on the commission or gross gaming revenue (GGR), the fee charged by online gaming operators. The GoM is still in discussions if the GST should be 28 percent for both skill and chance games
  • Additionally, the debate of whether online gaming, especially involving real money, can be categorised as a “game of skill” or a “game of chance” continues in many states
  • The Supreme Court has now reaffirmed the decisions of three different high courts—Punjab & Haryana High Court (2017), the Bombay High Court (2019) and the Rajasthan High Court (2020)—that nullified laws banning fantasy sports under the pretext of gambling or betting. At present, states, including Assam, Sikkim, Odisha and Andhra Pradesh, have banned fantasy sports

• Lack of scale for Indian studios:

  • Not many Indian studios have made a mark on the global stage due to the relative nascency of the Indian market, the low consumer spending on games, and relatively lower game design capabilities among others