Real money gaming cuts back on ads, says report

The structural changes taking place in the gaming industry are likely to have a significant impact on the advertising world by the end of FY24. Ad spends in India are expected to grow at a slower pace of 6%, down from 12% the previous year, by the close of the year touching $16-17 billion.

A decline in consumer spending over the past five to six quarters has reduced private equity and venture capital funding for various sectors. There has also been the drastic impact of the implementation of 28% GST on online gaming, according to a new report from RedSeer.

However, the report ‘Breaking barriers: Rise of challenger platforms in the digital advertising landscape’ also identifies some positive trends. The e-commerce sector is the only one expected to see a significant increase in advertisement expenditure (adex), estimated at 15% in FY24. The other sectors that spent on adex were consumer durables, and travel and hospitality. Others like gaming dropped considerably, so did education as a category. Additionally, advertisers are expected to increasingly turn to alternative platforms like retail media and content platforms for their high conversion potential and wider reach. E-commerce, travel and hospitality, and consumer durables will increase adex because they will attempt to retain customers through advertisements.

The report predicts a rebound in consumption only by 2029, leading to a projected advertising spend growth of 9-10% CAGR over this four-five year period. Digital advertising is expected to outperform the overall market, growing at 11-12% and capturing a larger share of the advertising pie.