When it comes to the world of sports and entertainment, nothing has really captivated the modern era like esports. Esports started off as more of an underground culture but has evolved today into a billion-dollar industry, currently demonstrating a 14.5% year-on-year growth. The sector has seen tremendous growth over the last decade especially in emerging markets with more tournaments, leagues, organizations, and most importantly more investments to accelerate the gaming industry.
India is a huge destination for esports as it is one of the fastest-growing markets in the gaming space and also a hub for foreign investment with estimates of $ 120-160 billion per year by 2025. This sector used to be overlooked with only just 25 game developers a decade ago but today is home to over 250 game developers in the country with the likes of Tencent, Nazara, Patym, and Alibaba. With the government promoting a new digital economy, an increase in accessibility to affordable smartphones and the penetration of high-speed internet, India is anticipated to be one of the largest markets in esports.
Mature markets like the US and Europe are certainly huge but have already seen their fair share of investments. High-growth markets that are poised for exponential growth like India are where companies aim to penetrate and establish a foundation for themselves.
Here are the top five reasons foreign companies are investing in Indian esports teams:
Thriving Economy and New Infrastructure
India has the fifth-largest economy in the world and is expected to be the most populous country in the world by 2025. Foreign companies are also getting more access to private capital with an improved digital infrastructure allowing start-ups and businesses with innovation to scale and grow. Having policies and favourable regulations opens up foreign investment into growing sectors, creating opportunities for esports organizations to form India-based teams. As of now, it is estimated that there are 60,000 esports teams in India and is expected to increase 4x to 250,000 teams by 2025.
The Next Era of Digital
In 2015, India used to rank at 81st place in the Global Innovation Index but has jumped 33 spots to reach 48th place in 2020. The government has also played a huge role in transforming what has been a largely offline nation into an online one, with strong developmental efforts to promote digital technology in various sectors such as banking, finance, agriculture, rural development, and e-commerce. Access to affordable and high-performance smartphones creates the democratization for gaming as 98% of all gamers in India are on mobile.
Investment Growth and Capital Market Shift
So far this year, startups in India have raised a total of $10 billion through IPOs, already exceeding the amount in the last three years. Indexes like NIFTY 50 are also expected to see more technology-focused companies in areas like e-commerce, internet, and digital media. Such sectors complement the growth of esports teams as monetization and revenue generation in the gaming industry relies hugely on technology including but not limited to online purchases, live streaming platforms, digital subscriptions, and even NFTs.
Rise of Popular Game Titles and Esports Prize Pool
Naturally, as more players and more teams participate in a specific game title, it will directly correlate with increases in viewership and audiences which ultimately leads to a higher prize pool. The arrival of PUBG (now known as Battlegrounds Mobile India) has created many significant tournaments such as the PUBG Mobile India Series with the latest 2021 prize pool of 10 million rupees. With more players and more popular games in esports, we will definitely see higher prize pools which will further incentivize organizations to enter the playing field.
Timing is Everything
The truth of the matter is that foreign companies want to see growth in their investments. As opposed to markets in the West, high-growth markets in the East like India prove to be a more enticing option for investors. Because India is still in a nascent stage, investing in esports teams now means there is more room for valuations to skyrocket and more untapped opportunities to be capitalized on. This also means less competition for the time being, but as the overall industry grows there will surely be more players entering the esports sector. Gaming has always been a part of our culture and the way we consume entertainment. Once the infrastructure has been established and the pieces are put in place, it will only be a matter of time before esports in India takes off.
Source: timesofindia.com