As internet usage is on the rise in India, with almost half of the population having access, there are lucrative opportunities for making big business online. While internet usage remains low on a percentage basis, less than 50% of Indian’s population, India is still ranked as the second-largest online market in the world. On a pure numbers basis, India has over 500 million active internet users with an equal distribution between rural and urban areas. It is no wonder then that even legal grey zones online receive attention from investors.
Investing Through Loopholes in the Law
Alibaba Group Holding Limited, SoftBank Group Corporation, and Tencent Holdings Limited are all juggernaut sized companies which are investing hundreds of millions of dollars into mobile apps and websites that use loopholes in Indian gambling laws. Some of these laws are a hundred years old, dating back to India’s colonial era. In terms of the more recent laws relating to online gambling, India is a non-regulated market, where it’s illegal for Indian companies to offer services online. At the same time, there is no way to stop foreign companies to offer these gambling services online. And there is no stopping Indians from accessing these services and taking part in casino activities online. Through these apps and websites, people play live casino games, bet on sports like cricket and play online rummy. The young people consider gaming where they may reap rewards, as a better activity than watching movies or playing games that don’t offer any rewards.
These big-name companies are not directly investing money through Indian’s gambling loopholes though. Instead, they do their investments through subsidiary companies. In the case of Alibaba and SoftBank, they have a joint venture backing Paytm First Games, an app with games that includes fantasy sports, poker, rummy, and ludo. Paytm is a subsidiary of SoftBank. Alibaba, on the other hand, has a subsidiary named AGTech Holdings Limited that they use to pump money into Paytm First Games. Paytm is doing very well and has over 300 million players in and outside of India. Users play different games where winning players are rewarded with a cash prize, luxury vacations, new iPhones, and other gift prizes.
The Virus Outbreak has Been Good for the Gaming Industry
The current Covid-19 outbreak has proven to be a boon for gaming as more people are restricted to move around freely. As a result, people are spending more time on their phones at home. Paytm First Games is leveraging this situation further by making a huge push for fantasy sports, fantasy cricket in particular. Since the lockdown started, all sporting events were discontinued until further notice. With this temporary ban, there is a huge market opportunity to capitalize on by providing a substitute to all the sports fans with nothing to watch or bet on. For many Indians, the alternative is Paytm’s fantasy cricket app, named First Captains, where users can play for both real-money and for free. Normally fantasy sports such as First Captains are played alongside real cricket matches, where cricket fans manage fantasy teams while watching and following the real matches through the league season. This enhances the experience for sports fans as they engage and spend more time and consume more content.
Paytm also made its first foray into the esports industry in India by launching Clash Royale tournaments, again leveraging the sudden increase of gamers during the Covid-19 lockdown. Clash Royale is a real-time strategy game developed and published by a Finnish company called SuperCell. The game is the most popular mobile game title for esports worldwide, with thousands and thousands of active players in India. The Clash Royale tournaments offered by Paytm First Games gives gamers an opportunity to compete against each other on their mobile devices. In the first tournament that was played back in April, over 11,000 players registered and participated in the tournament, competing for a prize pool of 400,000 rupees.
Expecting Continuous Investments From Foreign Companies in the Future
Considering that India has the youngest internet population in the world and is the second-largest online market in the world, India is in a very good position for exponential growth in the gaming sector. E-commerce and on-demand video streaming are other lucrative areas for investments in the online market sector. However, online gaming is a better investment alternative due to the much higher frequency in financial transactions compared to the latter two alternatives. A significant benefit in gaming compared to e-commerce is that companies don’t have to worry about inventories and logistics since all content is digital.
As mentioned before, India has over 500 million active internet users today, many of whom own budget smartphones they use to play games. This is what leads the gaming revolution in India, young people with cheap mobile usage data plans, who like to play games and are comfortable carrying out transactions online. Companies like Alibaba and Tencent have their whole product range centred around internet usage, social media, games, and mobile phones and are sure to make continuous investments in this booming market in India.
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