The spending preferences of the average Indian gamer are crystal clear. Give them a choice between payment commitments and voluntary payments, and most of them will choose the latter. Give them the independence to choose where and when to pay, and they are more likely to be interested. That is why, a rummy game enthusiast in India typically prefers a free-to-play app, no matter how confident he is about his skill and knowledge of rummy rules.
It seems that, for the average Indian gamer, good things come in small packages - be it tiny shampoo sachets or low-value in-game purchases. Indian gaming companies know this too well and are banking heavily on these microtransactions.
The Love for Microtransactions
Back in 2019, a survey found that 62% of gamers in India prefer to spend on small-ticket purchases rather than subscribing to the game content in one go. Similar findings have come up in recent years. The Lumikai Interactive Media and Gaming Research 2024 has come up with the same clear mandate. In-app purchases are the top payment type in India. Subscription purchases and pay-per-use purchases are the other popular payment categories.
In the same research, it was noted that 47% of the users prefer microtransactions rather than paying for subscriptions. Their preference is so strong that they donโt even mind the advertisements that non-subscribed games display. Instead, Indian gamers prefer to spend on games to unlock new gaming content and upgrade in-game items.
A Major Revenue Churner
Presently, real money games churn the major revenue for the gaming industry, not microtransactions. In FY2023, the Indian gaming industry generated a revenue of $3.1 billion. Out of this, $2 billion was from real money games, while $0.5 billion was through microtransactions. In the year till FY2024, real money games grew by 20% while microtransactions grew by 40%!
Among the major sources of revenue in the gaming industry, microtransactions made through in-app purchases are seen as the ones with the fastest growth prospects. The expected five-year CAGR from real money games is 8%, while advertisement revenue is expected to grow by 15% during this period. In-app purchases, however, are expected to see a phenomenal growth of 44% CAGR in the next five years. By 2029, in-app purchases and other microtransactions will be โน4.3 billion, exceeding real money games by $0.7 billion.
The fast growth of in-app purchases has helped mid-core games in particular. The revenue in this game category increased by 53% during the year. Among the games that had a delightful year, largely thanks to microtransactions, are BGMI, FF Max, Clash of Clans, EA FC Mobile, etc.
While microtransactions seem to have taken the last lane forward, the industry as a whole has been growing too.
Change of Sentiment
In recent years, Indian gamers have been transforming their stance towards gaming. While free games continue to clock millions of downloads, freemium and premium models have gained traction in recent times.
Microtransactions have encouraged gamers to switch from one game category to another. Real money gamers like rummy game enthusiasts are the ones you will find on platforms like RummyCulture. These experts in rummy rules and tricks are now dabbling in other genres of gaming as well. For instance, 64% of them are also trying out midcore games. The same goes for paying gamers engaged in fantasy sports. 66% of them have shown similar interest in mid-core games.
After a fall in average revenue per paying user (ARPPU) in FY23, ARPPU increased by more than 15% in FY24. Apart from the average spending, the number of paying gamers in India has increased by 8 million to reach 148 million this year.
How Gaming Companies are Leveraging Microtransactions
Microtransactions have proved to be a steady income for Indian gaming companies. This has helped them to relax the financial strains and finance new developments. The new developments and expansions, in turn, help these companies offer content and updates. Thus opening the avenues for newer rounds of microtransaction revenue.
Successful companies are careful not to use microtransactions to interrupt gameplay. Adopting a player-centric approach, microtransactions are designed for cosmetic and optional items and purchases. In-app purchases that impede gameplay or the competitive balance may be seen as too aggressive by gamers.
Indian gaming companies are also privy to useful insights, thanks to industry reports and studies. For instance, the preferred in-app purchase cost for an Indian gamer who is a first-time payer is โน29 only. This is a small but vital pricing tip for the developers.
More Than Micro in Influence
Microtransactions have been a financial saviour for free-to-play games, particularly the ones by budding indie developers across India. A steady income flow through microtransactions absolves the game developers from the need to latch on to gamers through subscription or other one-time entry costs.
As predicted by various studies and industry reports, microtransactions are likely to become the largest revenue contributor to the Indian gaming industry.
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