Editorial: Indian gaming seeks level-up

The gaming industry in India has been witnessing rapid growth, but it continues to face major structural, financial, and regulatory hurdles. Industry stakeholders who gathered at the India Game Developers Conference in Chennai sought concerted action to help Indian studios build sustainable businesses and compete in global markets.

The primary challenges faced by the industry involve access to financial resources and markets with higher revenue potential. Even though India boasts a massive player base of over 511 million users, the average revenue per user (ARPU) remains a measly $2.04. A vast majority of these users are free-to-play mobile gamers in Tier-2 and Tier-3 cities as well as metro regions who do not convert into high-engagement, paying "super gamers" at scale. This mismatch between a vast user base and low ARPU has become a major obstacle to raising capital and securing publishing deals — an issue highlighted in the GameDev Outlook 2026 report by the Game Developer Association of India (GDAI). The key question is how to build games for global markets, especially affluent Western markets where the ARPU is several times higher than India's. Tapping those markets, however, requires deep pockets to handle the heavy cash burn during development.

The industry has been lobbying for funding support for game development, which is capital intensive and involves long gestation periods. Developing complex, high-end games can take several months or even years, requiring substantial investment at every stage: production, testing, marketing, launch, user acquisition, and retention. At the heart of this structural crisis are debilitating cash burn rates and escalating break-even thresholds. Without low-cost, stage-specific funding and government-backed grants, Indian studios will struggle to build games for international markets.

On its part, the Indian government has announced a slew of initiatives covering policy frameworks, infrastructure schemes, and talent creation. Gaming — along with Animation, Visual Effects, Comics, and Extended Reality (AVGC-XR) — is recognised as a vital sector of the creative Orange Economy. Prime Minister Narendra Modi has championed it as a major growth engine and export driver, aligning it with his vision to "create in India, create for the world". However, the shared vision of the government and the industry to make India a global gaming hub cannot be fulfilled without addressing the underlying structural challenges that limit the ability of Indian studios to innovate, scale, and compete globally. To this end, the National AVGC-XR policy framework aims to drive game development, while a dedicated Promotion Task Force works to address structural barriers, incentivise Foreign Direct Investment (FDI), and encourage the creation of domestic Intellectual Property (IP).

Over the last few years, regulatory hurdles and tax ambiguities had even prompted some studios to consider relocating overseas. However, the enactment of the Promotion and Regulation of Online Gaming (PROG) Act, 2025, and the subsequent framing of the Online Gaming Rules, 2026, have cleared the air by establishing a structured system to govern the sector. These measures aim to give a fillip to industry growth while ensuring user safety and mitigating financial and social risks. Clearly, however, both the government and venture capitalists must do more if the Indian gaming industry is to truly go global.