The Monetization of Indian Mobile Gaming - Ad-Driven, Freemium, and the Future of In-App Purchases
The New Opportunity - With Real Life Rewards
India is home to the largest number of mobile game downloads globally, clocking over 15 billion app installs in 2022 alone. As the market matures, developers and businesses are exploring new ways to monetize this massive user base.
Ad-Driven Monetization- The Dominant Force
Advertising remains the backbone of mobile gaming monetization in India, with free-to-play games dominating the landscape. 95% of India’s mobile gamers prefer free-to-play games, making ad-driven models essential to game developers.
Revenue Numbers- In 2023, mobile game advertising revenue in India reached a staggering $1.1 billion, up 20% from the previous year. This figure is expected to cross $1.6 billion by 2025. In-game ads account for nearly 75% of the total revenue generated by mobile games in India, compared to just 25% from in-app purchases.
Types of Ads- The most common ad formats used in mobile games are rewarded ads (where players watch an ad to receive in-game currency or items), interstitial ads (which appear between game levels), and banner ads. Rewarded ads are especially popular in India, with an average completion rate of 85%, far higher than the global average of 63%.
User Tolerance and Impact- Indian gamers, particularly those in the 18-24 age group, are more tolerant of ads than gamers in other markets. Surveys show that 60% of Indian mobile gamers are willing to watch ads in exchange for rewards, rewarded video ads generate 30% higher click-through rates in India than global averages.
The Freemium Model- A Path to Revenue Growth
The freemium model is another key pillar in the monetization strategy for Indian mobile games. Freemium games are free to download but offer in-app purchases (IAPs) for premium content, skins, or unlocking additional features. While adoption has been slower than in Western markets, India’s freemium market is growing.
In-App Purchases on the Rise- India’s in-app purchase (IAP) revenue in 2023 stood at $370 million, a 30% increase from 2022. Although ad-based revenue dwarfs IAPs, this segment is expected to grow at a compound annual growth rate (CAGR) of 26% through 2025, driven by games like Garena Free Fire and PUBG Mobile, which offer premium content to millions of daily active users.
Player Spending Behavior- While only about 2-3% of Indian mobile gamers make in-app purchases, those who do tend to spend more per transaction compared to previous years. The average IAP transaction value increased by 22% in 2023, with users spending an average of ₹120 per transaction. As disposable income rises and gaming becomes more culturally ingrained, experts believe this percentage will grow steadily.
Freemium’s Hidden Strength- One of the strengths of the freemium model is that it allows game developers to build large user bases while monetizing a small percentage of players who are willing to pay for enhanced experiences. For instance, Ludo King reports that 1% of its 700 million global users contribute 15% of its total revenue via IAPs.
Subscription Models- An Emerging Trend
While still in its nascent stages, the subscription model is slowly gaining traction in India’s mobile gaming market. Subscription-based gaming services provide users with ad-free experiences or access to premium features for a monthly or yearly fee.
Current Market Size- India’s gaming subscription market was valued at approximately $90 million in 2023. While this is small compared to ad-driven and freemium revenue, the segment is expected to grow at a rapid pace, driven by platforms like Google Play Pass and game-specific subscriptions like PUBG Mobile Prime.
Future Potential- As Indian gamers become more accustomed to premium content and with rising demand for high-quality games, subscription services are poised to expand. Research suggests that by 2027, the gaming subscription market in India could surpass $400 million, capturing a larger share of the overall mobile gaming ecosystem.
The Future of Mobile Gaming Monetization in India and Beyond
While ad-driven models currently dominate, experts predict a shift towards more diverse revenue streams.
Increased Player Spending- As the Indian middle class continues to expand, disposable income for entertainment, including gaming, will rise. By 2025, Deloitte estimates that the number of Indian gamers willing to spend on in-app purchases will increase to 8%, with an average monthly spend of ₹200 per player, doubling the current average.
A New Opportunity- Rewards-Based Gaming Platforms: As South Asia and Southeast Asia continue to experience mobile gaming growth, a solution that integrates real-world rewards into gaming experiences has the potential to be a game-changer. Platforms that offer gamers the ability to earn tangible rewards, such as discounts, coupons, or exclusive products, in exchange for in-game achievements or engagement, can capitalize on a region where disposable income is rising, but consumer spending habits remain cautious.
Regional Potential- In markets like Indonesia, Thailand, and Vietnam, where mobile gaming penetration is high but in-app purchase conversion remains low, integrating real-life rewards can motivate more players to engage deeply with games while driving brand partnerships and collaborations.
Appeal for Brands and Gamers- With millions of gamers looking for value, brands could benefit immensely from tapping into gaming communities by offering exclusive deals through gaming platforms. In India, over 65% of mobile gamers expressed interest in receiving real-world rewards for in-game engagement. Such platforms create a win-win ecosystem, where gamers enjoy enhanced engagement, and brands reach new, highly engaged customers.
Localization and Cultural Sensitivity- To truly succeed in South Asian and Southeast Asian markets, gaming platforms must incorporate localized content and culturally relevant incentives. Offering rewards that resonate with local traditions, festivals, and daily life will boost participation and deepen player loyalty.
