The country, with 42.5 crore gamers, second only to China, saw a string of e-sports events this year with substantial prize money on offer. On 27 August, e-sports firm Nodwin Gaming, a subsidiary of the only publicly-listed gaming company Nazara Technologies, concluded the second edition of its Battlegrounds India Master Series (BGMS). The tournament set up its highest-ever prize pool of ₹2.1 crore (~$252,000), with ₹1 crore (~$120,000) earmarked for the winner. It was also broadcast live on traditional broadcasting platform, Star Sports Network, as well as on digital game-broadcasting platform, Rooter.

Pune-based gaming, media and entertainment firm JetSynthesys has also seen similar numbers in its ongoing cricket-based e-sports tournament, Global e-Cricket Premier League (GEPL). The tournament, which is set to conclude on 8 December, attracted more than 1.5 lakh participants, and offers a net prize pool of ₹2.51 crore (~$300,000). The tournament is also being streamed on Reliance group-owned Sports18, and digitally on JioCinema.

These statistics, industry stakeholders said, show that there will be significant business opportunities for gaming firms over the next five years. “E-sports has always been a significant driver of revenue for us, and over the next five years, the monetization potential of this sector is significant,” said Rajan Navani, founder and chief executive of JetSynthesys, in an interview with Mint. “Large-scale tournaments have showcased the opportunities that the sector offers, and since India has one of the largest bases of young users globally, the potential of e-sports tournaments as a business is proportionally significant.”

Sudhir Kamath, chief operating officer of Nazara Technologies, concurred. “Nodwin is the single-largest revenue contributor for Nazara, driven by the scale of its network in organizing large-scale e-sports events. This opportunity will only grow as more users come online, and the propensity to pay for games and gaming grows among users,” he said.

As with other new-age companies, the proliferation of mobile phones and cheap internet data are fuelling the gaming industry.

Salone Sehgal, partner at gaming-focused venture capital firm Lumikai, said a “progressive” policy approach is boosting game development across the country, which, in turn, will create multiple domestic titles, drawing in more users. “A push for mobile gaming, driven by affordability of data, has caused a boom in mobile gaming—which will contribute to the rise of competitive e-sports in the country. Developers are being funded to create their own titles, while monetization of these games is being realized right now. This will boost the overall sector,” Sehgal said.

Last month, Rooter chief Piyush Kumar told Mint that the company was on track to profitability, driven by an increase in monetized broadcasting audiences on the platform. Earlier this year, Kumar said during Rooter’s latest funding round that the company expected to hit profitability by next year, driven by this demand.

Despite tailwinds such as a large population with a younger demographic, challenges persist. For one, Indian users have a limited spending propensity, and the domestic market is relatively less mature.

“In comparison with the global market, India is still at nascent stages—in developed markets, e-sports events and tournaments present the highest monetization opportunity for businesses. In India, this is still at a nascent stage where real-money games, which are the easiest to monetize, contribute the largest chunk of the revenue,” said Nazara’s Kamath.

An industry report published by EY India and industry body Federation of Indian Chambers of Commerce and Industry (Ficci) appears to testify to Kamath’s view. As of FY23, real-money games accounted for nearly 84% of the Indian gaming industry’s ₹16,428 crore (~$1.97 billion) revenue.

The reason for this is a still-limited pool of gaming-enthusiast communities that drive e-sports engagements. Further, except for a few recent accolades, Indian e-sports teams have seen limited success and exposure when compared with global counterparts from Singapore, Korea and the US. This, JetSynthesys’ Navani said, will grow over time, as the industry matures, and gamers get access to better facilities, standards and training regimes.

“Like every industry, e-sports in India will take time to become mature—it is still a relatively young story here. Once the maturity kicks in, tournaments will bring with them a massive business opportunity,” Navani said.

It is this opportunity that’s prompting gaming ventures to make bets on e-sports. However, not all are rushing to join the bandwagon. For instance, Trivikraman Thampy, chief executive of real-money gaming firm Games24x7, said that while the company will look at ways to innovate, diversifying into e-sports is not on the cards. “The e-sports segment is completely different from online gaming—it is more about managing events. As a result, this isn’t a natural pivot for us,” he said.