Ways To Invest In The Gaming Industry – A Little Guide
India's gaming ecosystem is booming more than ever before. With more than 300 million active online gamers and over 400 gaming startups, the industry is poised for a meteoric rise. In addition to the country's extremely young demographic, rise in disposable income, more proliferation of smartphones, and affordable data plans moving outside of urban India, the pandemic has also played an important role in making gaming more popular. With millions of people being pushed indoors due to lockdowns, gaming was latched onto as a form of entertainment. It was reported that time spent on gaming apps increased by 21 per cent during the initial national lockdown months.
The rapid rise of the gaming market has been primarily due to segments such as esports, mobile casual gaming, and real money gaming. These streams bring in much of the audience and lead to the rapid multiplying of online gamers. What is also important to understand is the multiple streams of revenue at the disposal of gaming companies. Games today can be monetized using several strategies such as in-game advertising, play-to-win, and pay-to-play, merchandise, and much more. It is hence apparent that the gaming market is ripe for picking, and investors can and should venture into this space.
Below are some undeniable reasons why investors should look at the gaming industry as a serious investment option:
Mobile Gaming Growth: The gaming industry today stands on the shoulders of avid mobile game players all over the world. With mobile gaming companies demonstrating strong growth in user base and an even stronger revenue model, private equity (PE) and venture capital (VC) firms have pumped in large amounts of money into the sector with an eye on the long-term growth prospects. Recently HalaPlay, a daily fantasy sports platform, got approval from its parent company Nazara Technologies Ltd.'s board to raise Rs 18.02 crore. This is just one of the examples of the money being pumped into the gaming space.
Market Growth: The estimated expenditure from gamers all across the globe was expected to be around 139.7 billion dollars in 2018. With such amounts of wealth at play, investors should feel encouraged about investments and the high volumes of potential monetary returns.
India's Demographics & Pandemic: According to a Deloitte India report for 2021, India is one of the top five mobile gaming markets in the world. It is also home to more young people than anywhere else in the world – a demographic most involved in gaming. Added to this is the pandemic-induced shift in lifestyles. More people are working from home, and even after lockdowns ease, there is expected to be an adoption of hybrid work models. Hence, the pool of gamers will continue to increase and so will India's gaming market.
Ways To Invest In The Gaming Industry – A Little Guide
Unlike before, game development companies are now open to the idea of allowing external shareholders to invest in the business and earn profits at a later stage. This has opened up a lot of doors for a variety of investors; right from tech giants to small entrants, there is an avenue for profits and earnings for everyone.
This route should be opted for by investors who possess a basic understanding of the game development industry. There are lots of companies that invest their time, money, and resources into creating their own IPs. Investing in such companies makes sense as they already have strong foundations for creating games across genres and platforms. Hence, from an investment point of view, this is seen as a safe and secure bet.
If the concept of a new game is unique and convincing, then it could be a worthwhile shot to invest in it. Good initial funding can push a game towards commercial success, therefore, increasing the chances of better ROI for investors. Even if a game is ordinary, it can become popular with proper investment; hence, those looking for financial opportunities should always turn their attention to new gaming ideas.
This is antithetical to investing in new gaming ideas but yet a financially viable option for novice investors with little knowledge about gaming. Investing in already popular games will help to produce consistently high return volumes. It also reduces the risk factor and keeps investments in a relatively safe zone.
The gaming industry holds massive opportunities for investors and the best part is that the sector is far from peaking and the potential for stellar revenue growth is just beginning to reveal itself.
Author Milan Ganatra, the co-founder and CEO at 1Silver Bullet, is a prominent name in the investor community
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