Prime Minister Narendra Modi recently met with top gaming content creators and esports players in India. The entire gaming ecosystem celebrated this recognition from the Indian government and expected a boost to esports and gaming industry. However, the esports industry is currently experiencing a slowdown, causing some organizations to shut down and others to struggle with creating profitable revenue models.
According to a report by AWS and Lumikai, India’s esports sector is projected to grow from $40 million in 2022 to $140 million by 2027, with a Compounded Annual Growth Rate (CAGR) of 32 percent. The report also found that the number of esports players in India grew from 150,000 in 2021 to 600,000 in 2022, and is expected to reach 1.5 million by 2027.
Slowdown in Esports
In India, the esports ecosystem revolves around two major game titles, Krafton’s Battleground Mobile India (BGMI) and Riot Games’ first-person shooter (FPS) game Valorant. Valve’s Counter-Strike 2 has yet to make a significant impact. Several organizations that host esports tournaments have shut down due to a lack of brand sponsorships. In the recent past, esports organizations such as Enigma Gaming and 7Sea Esports have shut business operations. Dismantling entire roster for game titles such as Valorant has become quite normal for multiple esports organizations in India due to heavy costs involved to sustain a team of players.
Ashwin Haryani, Country Head at Ampverse DMI, said, “Esports was at an all-time high after BGMI was unbanned, and the industry was leaving no stone unturned. However, none of these intellectual properties (IPs) are profitable yet, even with brand sponsorships and media rights. Therefore, IPs are conducted by publishers and continue year after year, but other Tournament Organizers (TOs) only conduct IPs when there is enough brand support.”
Devam Vyas, Vice President-Esports at Gods Reign, explained the reasons behind the slowdown: “The slowdown in major esports tournaments over the past six months can be attributed to several key factors. Primarily, the regulatory landscape in India has been in flux, with the government working towards clearer guidelines for the industry.”
He added, “This period of uncertainty has made organizers hesitant. Moreover, the post-pandemic economic situation has led to more cautious spending by brands, impacting sponsorships and event funding. Together, these factors have created a temporary lull in large-scale tournaments.”
Rohit Agarwal, Founder and Director, Alpha Zegus noted, “Compared to last year, until 2022-23, about a year and a half ago, there were large-scale tournaments with 8-10 TOs in the ecosystem. There was a time when TOs were organizing tournaments with prize pool ranging from Rs 1 lakh to 1 crore. The frequency of the tournaments was such that esports players raised concerns about rest and stress.”
Agarwal continued, “Now the situation is such that these TOs have either shut down their operations or have reduced the frequency and prize pool. The outlook for esports appears grim.”
Toxicity Keeps Brands Away
Currently, only a handful of endemic brands are steadily investing in esports IPs in India, including Intel, AMD, Acer, HP, and Asus. While a few non-endemic brands such as Red Bull, Philips, and TVS have been actively shown interest towards esports properties.
When asked if toxicity in gaming and esports is deterring major brands from investing in tournaments, Shiva Nandy, CEO and Co-founder of Skyesports, said, “Toxicity has been a big issue since the inception of gaming. Online communities can be very positive but can also be harmful due to a few bad apples. Fortunately, with more brands and mature investors entering the space, we have seen a significant reduction in overall toxicity from gaming creators as they are now being held more accountable for their words. It will only decrease further from here.”
Varun Bhavnani, Co-founder of Entity Gaming, elaborated on toxicity being used as a tool to gain traction on streaming platforms and social media and said, “Gaming worldwide has never been free of toxicity. I don’t want to harp on it; it’s something you will see in all forms of esports and traditional sports. The love-hate relationship between fans is always going to be there. I have witnessed first hand how the industry has evolved, with individuals, in the name of content creation and free speech, building fans through trash-talking, cussing, and demeaning others for clickbait views.”
Bhavnani added, “But I am hopeful that a new wave of talent in our community will step back, find a unique identity, and innovate content creation in the true spirit of gaming.”
Who is to Blame?
Multiple stakeholders in the industry believe the slowdown in esports is due to various reasons, including lack of funding, exorbitant player salaries, restrictions from game publishers on hosting tournaments, reduced investment from brands, and short-term vision by esports organizations.
When asked who is to blame for the decline in esports revenue in India, Manoj Kasyap, owner of Velocity Gaming, said, “I believe the entire ecosystem is to be blamed for the decline in esports in India. Earlier, we used to play two tournaments a month, but now that has drastically reduced. In the last four years, we have seen atleast five different organizations shut down their operations in India, mainly due to short-term vision for quick gains. This has affected the esports ecosystem in India.”
Kasyap further said, “Publishers should give opportunities to TOs to organize tournaments. Currently, we don’t have too many game titles to rely on. We have also spoken to the Riot Games team in India about this issue, but that is the norm globally for them.”
Explaining the decline in the esports scene, Agarwal said, “Multiple stakeholders are to blame for the slowdown in esports. Tournament organizers at one point went overboard with the number of tournaments they hosted and raised the benchmark of the prize pool, but now they are facing issues in raising such huge amounts to organize large-scale events. Brands have decreased their spending on esports and are exploring new avenues to gain returns on investment (ROIs).”
Agarwal further said, “Another major issue was player salaries. An organization requires an investment of around Rs 15-20 Lakhs per month to sustain a roster. At some point, the organization’s owner would like to break even as they hardly recover from such investments. Failing to sustain for longer, they shut down operations.”
Haryani says, “The ban of BGMI definitely caused a thunderstorm in the industry. But post that, esports teams, tournament organizers, and players are definitely responsible for the declining scene. To some extent, even the publishers are to blame, as some games are still banned and not complying with Indian rules and regulations set by the government.”
Comparing the esports industry in the South Asia region with India, Haryani said, “Regions like Thailand, the Philippines, Vietnam, and Indonesia, where Ampverse is present today, are very similar to India in terms of being mobile-first nations in esports. Mobile games dominate there as well; however, esports is slightly more mature there. Brands are more open to investing in esports and have access to real talent as well. India has yet to catch up with other parts of the world, and the day we start doing so, the tables will turn quickly.”
Despite the slowdown, there remains a significant potential growth in India. It would be interesting to watch how the Indian esports ecosystem will leverage the festive season with multiple brands looking to gain eyeballs from GenZ and millennials.