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Esports needs key growth drivers to flourish in India

In 2022, the Indian government officially recognized Esports as a sport, placing it on an equal footing with mainstream sports like cricket and football. In the same year, Esports debuted as an official medal sport at the Asian Games and as a pilot event at the Commonwealth Games. The Indian DOTA 2 (a multiplayer battle arena video game) team created history by winning bronze at the first Commonwealth Esports Championship held in Birmingham last year.

The Indian digital gaming industry is expected to grow exponentially, fuelled by increased digitization due to affordable data and smartphones, as well as the pandemic. A subset of digital gaming, Esports is at the forefront of this growth and is estimated to become a 1,100 crore industry by 2025 at a CAGR of 46%.

While they are often confused with each other, Esports are categorically different from casual digital gaming and real money gaming (RMG). Casual digital gaming entails interaction with video games at an informal level. RMGs, which include fantasy games, are online games where a user makes a deposit in cash or kind with the expectation of earning winnings.

Esports, on the other hand, involve skilled athletes competing individually or in teams for prize money and global recognition. While all Esports are video games, not all video games are Esports. Some popular Esports today include Counter Strike, Fortnite and Valorant.

Competitive gaming can be seen as the germination point for Esports. Alongside competition, other characteristic elements of Esports include a large player base and audience, score tracking features as well as backing from tournament organizers and video game publishers. A significant audience is particularly important. Like mainstream sports, Esports stakeholders such as teams and tournament organizers rely on audience monetization as a major revenue source.

Due to the viewership-heavy nature of Esports, the industry has found a place next to major entertainment avenues such as OTT and mainstream sports. For instance, an event organized by NODWIN Gaming, an Esports company in India, was televised on Star Sports 2 garnering 12.3 million views in the first eight days.

There are, however, some foundational requirements for Esports to reach its potential. First, the birth of local Esports tournaments is a critical starting point and growth driver for the industry. These tournaments act as avenues for athletes to train, compete and be discovered for larger competitions. A similar trend has been seen with mainstream sports where regional competitions like the Ranji Trophy for cricket and Subroto Cup for football have become training and scouting grounds.

The emergence of grassroots Esports tournaments in India has begun. This traction must be given a boost. For instance, startups like Gamerji and Tournafest offer platforms for Esports tournament discovery and engagement. As popular Esports athletes emerge in nascent tournaments, a strong fan following is expected to develop, paving the way for Esports to become entertainment much like mainstream sports.

Second, countries with a robust history in sports and entertainment have been able to integrate underpinning networks of broadcasting, journalism and content distribution into Esports. As Esports begin to gain interest from a massive audience, a strong commercial structure becomes essential for smooth operations of large-scale tournaments and leagues. These structures include digital platforms for viewer monetization, physical and virtual event management solutions, tech enabled ticket and merchandise sales and more. India is well positioned with a rich history in sports and entertainment and must capitalize on existing infrastructure for Esports. Third, recognition and support from educational institutions provide a boost to the industry. In 2022, a school in Uttar Pradesh became the first in India to offer Esports as part of extracurricular activities.

The recruitment of Esports athletes by marquee teams along with lucrative sponsorships have demonstrated the potential of Esports to provide legitimate full-time career opportunities. The average age range of Esports athletes across game titles is 20-27 years, indicating that fresh graduates could be a potential talent acquisition source for teams. Leading Esports teams in India include Revenant Esports and Orangutan Esports, which carry rosters across Esports like Call of Duty, Free Fire and Valorant, which are different video games under the first-person shooter genre.

Finally, government intervention for setting up a formal governing body and recognition will give a massive fillip to the growth of the Esports industry.

With the right foundational elements in place and growth drivers on track, Esports have the potential to create more than 11,000 direct and indirect jobs by 2025 and become a major contributor to the Indian digital gaming industry.

 (Aashna Sheth is analyst-seed investing and Vipul Patel is partner-seed investing at CIIE.CO, a startup incubator established by IIM Ahmedabad. Views are personal.)

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