According to a report by Iron Pillar, an investment fund, India is anticipated to birth over 250 privately-held start-ups or unicorns with a $1 billion or more valuation by 2025. The report continues to say that the Indian unicorns' aggregate valuation remains at $535 billion in 2022. It added that the country's total unicorns have increased by over twofold to 130 in the last fifteen months, including those domiciled outside India.
While India’s start-up scene has seen nearly 100 unicorns added from January 2019, this pace might reduce in the next two years, birthing 250 companies with more than $1 billion valuation by 2025. Since August 2020, the Indian gaming industry has seen an extra $1.5 billion in funding and about 450 million players in India, showing that companies, investors, and gamers are bullish about this industry. With regulatory uncertainties and other things still getting in the way, India's dream of running these profitable unicorns may remain just a dream.
Regulatory challenges
While India's online gaming market has the potential for running more profitable unicorns, regulatory challenges are still dodging the industry. Games played at Indian online casinos are taxed at a GST rate of 28%. This tax isn't levied on the margins but on the total transaction value creating a significant impediment to the sector's projected growth.
Progressive gaming brands like poker apps are proposing to maintain the current 18% GST tax slab, which will stabilize their services and operations without obstructing revenue. A tax hike can disturb the current industry’s economy, slowing its growth momentum.
According to news reports, the inter-ministerial group established by the Ministry of Electronics and Information Technology tasked with developing a framework for regulating online might introduce regulations governing the amount individual gamers spend in a game for gamer and consumer protection. If this rule is implemented, it could significantly impact players negatively.
In the whole gaming industry, the real money gaming part has a regulatory lacuna. And for the sector to grow, getting this clarity is vital. This insufficiency of regulatory clarity hasn't been easy, primarily for comparatively minor players. Taking the GST considerations as damaging sediments towards the online gaming market and the lack of regulatory clarity, most investors aren't sure about India's gaming future. Since gaming is one of the fast-growing sectors in the country, balancing regulation and taxation so that the industry's innovation isn't stifled would be a good move.
Cyberattacks
There’s a growing cyberattack trend on both large and small gaming firms. As more gamers spend real money on games while adding more to their digital wallets and personal data into gaming accounts, cybercriminals are focusing on such companies to steal their credentials, data, funds, and more. For example, Mobile Premier League (MPL), a domestically grown mobile gaming unicorn, has been experiencing increased failed cyber-attacks over a few months, including social engineering attacks involving hackers posing as company executives or employees to gain the internal system's unauthorized access.
Hackers constantly look for in-game assets and currency, credentials, personally identifiable data, and payment details. Gaming firms can conduct know-your-customer (KYC) checks to authenticate users and keep the information in internal systems. These firms have built-in digital wallets where players can easily save money to purchase digital items and use mobile numbers to sign in to keep hackers at bay.
However, the sudden demand increase calls for scalable platforms. Since most gaming industry players went to the cloud, the attack surface (the number of entry points a hacker may have on a firm's systems) has increased. In addition, the increased scalability has resulted in most security teams not having visibility over all their cloud assets, opening doors for new attack surfaces and vulnerabilities.
Most Indian gaming firms might have become unicorns. However, they remain small businesses that focus too much on growth over other things.
