Online gaming ready to hit the big league

Increasing smartphone penetration and convenient digital payment options will drive the online gamers' base in India

Graduating from ordinary graphics and slow game play, the mobile and online gaming industry in the country is fast turning into a top-dollar money spinner. The space is attracting marquee names ranging from Chinese tech major Jack Ma to ace investor Rakesh Jhunjhunwala. The new scale is also apparent from the celebrities — Virat Kohli to Hrithik Roshan — endorsing gaming brands.

According to a recent report by Google-KPMG, increasing smartphone penetration and convenient digital payment options will drive the online gamers’ base in the country to more than double to 310 million by 2021. It also projects that the online gaming industry in India will gain momentum and grow at 20 per cent to $1 billion by 2021, from the current $360 million. In fact, a 22-fold growth is expected this year in revenue generated by top 100 ‘freemium games’ over paid apps.

The high rollers

In the top league is IPO-bound Nazara Technologies run by Nitish Mittersain, the managing director of the company. In just two weeks, the company managed to raise around Rs 550 crore from asset management firm India Infoline Finance Ltd’s (IIFL) Special Opportunities Fund and Jhunjhunwala who bought a minority stake in the company for Rs 180 crore.

According to Manish Aggarwal, CEO at Nazara, the mobile gaming industry works primarily on three revenue models. “Any gaming company works on  subscription, in-app purchase and advertising model. Mobile gaming is all about providing immersive and interactive experience. The best part is there is no age group limitation. Advent of smartphones in India has just made the gaming industry grow at rapid speed,” he said.

Nazara, which aims at delivering profit after tax (PAT) of Rs 100 crore for financial year 2019, managed to cross gross customer billings of more than Rs 550 crore with a PAT of Rs 66 crore. The company which operates in 61 countries and counting also has the licensed mobile gaming rights to popular IPs such as Virat Kohli, Hrithik Roshan, cartoon character Chhota Bheem and IPL cricket team Royal Challengers Bangalore.

It also has monthly active user base of 10 million. The company has plans to go for an IPO by next year.

Alibaba play

Realising the potential of the sector, Alibaba Group in July announced its first formal joint venture with mobile wallet company Paytm, to set up an online gaming company. Paytm would hold 55 per cent stake while the rest is with Alibaba’s Hong Kong-based private company, AGTech Media. Alibaba Group even called it the ‘’first significant strategic international expansion’’. For the JV, Paytm set up a new company, Paytm Group, under Paytm Holding.

“The (Alibaba) Group believes this JV company will enable it to tap into the significant potential of the fast growing mobile entertainment market in the world’s second most populous country,” the company said.

Others stepping it up

In the last few months, Delhi-based online gaming start-up 9stacks raised seed funding of $1.55 million. Gaming start-ups such as Smaaash and Passion Gaming also secured funding to the tune of $3.8 million and $3.7 million, respectively.

Then there’s U2opia Mobile, which recently announced the launch of Reycreo, a platform geared to help game discovery and adoption in frontier markets. Subscribers to Reycreo have an option to dive into an ‘all–you–can–eat’ offering of over 500 browser-based bite-size games. This also serves as a simplified initiation to the world of gaming.

“Indians are opening up to gaming in a big way. We handhold first-time gamers through the game content,’’ said Sumesh Menon, Co-Founder and MD, U2opia Mobile. But there are challenges such as bandwidth speed, handset compatibility and access to payment channels, that are in some ways curtailing rapid game adoption, Menon pointed out.