Anushruti Singh
Recently, the Indian online gaming sector has attracted significant attention, primarily due to its exponential growth and soaring popularity. According to the latest FICCI-EY report, online gaming has surpassed filmed entertainment to become the fourth-largest segment. With over 450 million online gamers in India, approximately 100 million engage in gaming daily.
The online gaming industry is predicted to reach ₹388 billion by 2026, up from ₹220 billion in 2023. This increase will be seen in various verticals, including esports, fantasy sports, casual gaming, and games of skill.
But there’s another reason behind why online gaming in India has gained popularity: onerous tax demands. It is also grappling with regulatory issues related to the divide between skill-based and chance-based gambling.
The recent statement by Prime Minister Modi advocating for the industry to remain unregulated has sparked intense debate. To delve deeper into this issue, SME Futures talks with Soham Thacker, Founder of Gamerji, an online esports platform, which hosts over 400 daily tournaments across 22 titles.
Edited excerpts:
Prime Minister Modi recently stated that the online gaming space should remain unregulated. Do you agree or disagree with him, and why?
Having the PM of India speak about the gaming space gives mass to the matter as it has sparked a lot of discussion, be it positive or negative. For any new and thriving industry, a public figure talking about it can be seen in a positive light. However, I believe if the space is to remain “unregulated” then it should be really unregulated instead of GST laws & game banning being incorporated within the industry.
In my personal opinion, the space should have a regulatory body to govern the growth and clear differentiation between real money games and the esports industry, as they are both blooming. There is a clear need for rules and regulations defining and differentiating them from each other.
For those who support the idea of government intervention in the gaming industry, what specific regulations or measures do you believe should be implemented to ensure fair and safe gameplay?
Both e-sports and RMG have different target audiences and purposes. The rules and regulations that apply to one may not apply to the other. So there needs to be a clear set of guidelines on age, usage and tax norms, content regulations, addiction prevention, player safety, etc. on real money gaming versus other modes of online gaming. For example, the KYC mechanism is something that online gaming like RMG requires for fair play, but other online games may not require that.
Conversely, for those who align with the Prime Minister’s stance, how do you believe a lack of regulations fosters creativity and innovation within the gaming industry?
In 2022-23, the Government of India put a complete ban on popular games like PubG and BGMI. This move was the government regulating the gaming sector for the betterment of India. Saying lack of regulation will give free space for creativity and innovation, keeps the sector under the fear that government regulations can change anytime. On that point, there is a lack of trust between the government and the sector and not a lack of regulations which are fickle and can change anytime. For creativity and innovation to prosper in the sector, there should first be a clear definition as to what is included in E-sports, RGM and other sets of online gaming, and a set of rules for each to let them grow within the given bound of government defined rules, so that the rules to stop RGM addiction do not harm the esports sector or vice-versa.
The gaming industry is also planning a plea to review the GST regime on full face value on online gaming. What specific challenges are gaming start-ups currently facing due to the existing GST regime?
The GST regime has brought a lot of unrest in the real money gaming industry, forcing a few start-ups to shut down or relocate. The high tax rates increase costs for players who in turn lose interest, impacting the growth of the industry. This also creates an entry barrier and restricts the innovation and competition that is needed for players to thrive and for the industry to grow. The aggressive interest of international companies and funds planning to invest in Indian gaming start-ups has also taken a back seat. These factors have made it difficult for start-ups to operate and have jeopardised the industry’s visibility.
The change in the GST structure does not directly impact our business. However, I support the idea of there being a change in the computation methods and a clear bifurcation of different business models. This can help bring back the investors’ trust in the sector and encourage more businesses to enter the industry. Bringing in more players ultimately encourages tech and innovation in the industry.
Are there any other areas within the gaming industry that you believe require immediate attention from regulators, regardless of the Prime Minister’s stance? If so, what are they, and why?
Age, addiction and the impact on the social and mental health of children are areas where regulations should be placed and need attention from the government. If proper regulations are not implemented here, it will not only harm an individual or the industry but society at large. Underage players in RGM or game addiction in children or adults is a serious issue. An industry as thriving as online gaming should have a proper regulatory body for the interests of both the players and the businesses.
Looking ahead, how do you envision the future landscape of the online gaming industry, considering factors such as technological innovation, changing consumer preferences, and potential regulatory developments?
The future landscape of gaming is bright considering the number of companies that are emerging from India. Especially in the game development and the casual gaming space, there are multiple studios working on generating AAA games and content out of India.
