Game On - 15th edition

Have a query on online gaming in India? Write to [email protected]

Dear readers,

We bring to you updates from the world of Indian digital skill gaming in our 15th edition of Game On.

The last month brought significant hustle-bustle for online gaming operators, with multiple funding announcements. We are confident that the trend will continue in the coming months as well.

I also invite you to join ‘Gaming Shield’ the world’s largest and most influential international gaming insurance webinar, organised by AIGF and Alliance Insurance Brokers. The seminar will bring together gaming operators, affiliates, tech vendors, and game providers in a live environment to foster strong, trust-based partnerships. Gaming Shield will be held on August 22, 2024. See here for more details.

As always, we enjoy hearing from our readers. Share your comments or raise a query on online gaming in India at?[email protected].

Game on!

Roland Landers

• Government may clarify 100% FDI in online gaming to encourage global investors: As per a report, the Department for Promotion of Industry and Internal Trade under the Government of India (‘GoI’) is considering the introduction of 100% foreign direct investment (‘FDI’) in online gaming. It is pertinent to note that as on date there is no specific bar on FDI in online gaming. However, a clarification to this effect will likely encourage online gaming operators to attract foreign investors. Relatedly, the union budget presented by the Minister of Finance, GoI, in July this year had also proposed easing of FDI norms to revitalise overseas investments, which had seen a 3.49% decline in the last financial year.
• Report finds India’s online gaming industry to be a key employer and contributor to economic growth: A report titled ‘India's Booming Online Gaming Industry A Potential Powerhouse’ by Primus Partners India and EGROW Foundation , has demonstrated that online gaming is poised to become a key employer in India. As per the report, while the gaming industry currently employs 100,000 individuals, it is projected to employ an additional 150,000 jobs by 2025. The report also found that the workforce in the gaming industry increased 20-fold, at a breakneck growth rate of 97.56% CAGR. Female workforce expansion outpaced overall growth at 103.15% CAGR, promoting gender diversity, and with 2018 as the base year, the technical workforce demonstrated an exponential increase of 3900% by 2023. Furthermore, the CAGR of 109.13% exhibited the sector’s monumental growth. This momentum is projected to continue, with the market expected to surpass ?388 billion by 2026, reflecting a remarkable CAGR of 20.7% from 2011 to 2026. The full report is available here.
• Central university report recommends inclusion of online betting as a scheduled offence under the PMLA: A report published by the Rashtriya Raksha University (under the Ministry of Home Affairs, Government of India) titled ‘Curbing betting and gambling in India - A national security imperative’ has recommended online betting and gambling to be classified as scheduled offences under the Prevention of Money-Laundering Act, 2002 (‘PMLA’). Classification as a scheduled offence under the PMLA will mean that individuals as well as entities involved in online betting and gambling can be investigated for money-laundering by the Directorate of Enforcement (‘ED’) and PMLA courts, with penalties ranging from seizure of assets, rigorous imprisonment of up to seven years as well as monetary fines. Such a move, if implemented, will also allow the ED to collaborate closely with enforcement authorities in other jurisdictions, as most of illegal online betting and gambling platforms in India are operated from outside the country. See detailed report here.
• Supreme Court issues notice to DGGI in a challenge against 300 cr tax notice: On 2 August 2024, the Supreme Court of India issued a notice to the Directorate General of GST Intelligence (DGGI) in a plea filed by Xeta Networks Private Limited, challenging a tax recovery notice totalling INR 300 crores. Xeta operates the skill gaming platform under the brand ‘PokerDangal’. The order is available here. Xeta’s petition has been tagged with a batch of other petitions currently pending before the Supreme Court, which have challenged similar DGGI notices issued on account of retrospective application of GST levy on online gaming that was introduced in October 2023, under which a 28% GST will be levied on the total deposits.

• Nazara Technologies becomes 8th largest global gaming acquirer: Nazara Technologies Limited secured the 8th spot globally in gaming acquisitions, valued at $42.6 million, per Drake Star Partners’ report for Q2 2024. This is a significant milestone for the Indian gaming industry and sets the stage for further international expansion. Relatedly, earlier in July, Next Wave Multimedia, a subsidiary of Nazara Technologies, completed the acquisition of Ultimate Teen Patti, a free-to-play teen patti game. As per a report, the deal entailed acquisition of all intellectual property (IP) rights, softwares, and associated trademarks of the game. Nazara has also acquired UK-based Fusebox Games for a reported sum of INR 228 crores to fuel its global expansion.
• Mayhem Studios bags funding from Lumikai: As per a report, Mayhem Studios has received an investment from Lumikai Fund to develop its first AAA mobile game, Underworld Gang Wars. The game focuses on Indian culture through its storylines, characters, and locations. It is reported that the funds raised will be utilised towards scaling operations and accelerating game development. Mayhem had previously raised about $20 million from investors including Peak XV Partners, Steadview Capital, Truecaller and Hashed Emergent.
• Felicity Games secures $700K in pre-seed funding: As per a report, game publisher Felicity has raised investment from DeVC, Visceral Capital, and prominent angel investors. The company was founded in 2023 by Anurag Choudhary, a former Swiggy executive. In just a year, Felicity has launched over 10 game titles with a million monthly users across 14 geographies.
• Passion Gaming founders re-acquire ownership from investors: In a rare achievement in founder’s journey, it is reported that co-founders Bobby Garg and Priya Kumar have re-acquired full ownership of Passion Gaming from its investors. The co-founders view achieving 100% ownership as empowering, allowing them full autonomy to capitalise on the potential in the Indian skill gaming market.?
• Zerodha’s Nikhil Kamath launches WTF Gaming Fund: Zerodha co-founder Nikhil Kamath launched the 'WTF Gaming Fund' on X to support entrepreneurs in the gaming industry, highlighting the shift of younger generations from cricket to gaming and calling for investments to nurture gaming talents. The application can be submitted here.
• MPL to enhance employee wellbeing with Zen Leave: Mobile Premier League (MPL) has introduced 'Zen Leave,' for its employees. It is a paid leave program to promote employee well-being by facilitating complete disconnection from work during vacations, aiming to reduce burnout and encourage a healthier work-life balance. Read more here.
• Zupee and Gurugram Cyber Police conduct cyber security internship: Zupee partnered with Gurugram Cyber Police to organise the 11th Gurugram Police Cyber Security Summer Internship, offering cybersecurity training through workshops, a hackathon, and practical challenges, attracting over 500 participants. The program culminated in a successful event recognizing talented individuals promoting responsible digital citizenship and safe internet practices. Read more here.
• India’s gaming operator BigCash goes global with launch in Brazil: Pay-to-play gaming platform BigCash has launched its operations in Brazil. As per a report, the company plans to launch in Latin America, Asia and Africa in next 12 months, with a focus on tailored experiences, responsible gaming, and leveraging its tech strengths for success.

Our MVP for this edition is Marmik Mankodi , who is a member of the Investment Team at Blume Ventures . In this discussion, he shares some practical considerations from an investor’s perspectives when evaluating a startup. Marmik is excited about opportunities in consumer tech, consumer apps, consumer services & education. He has spent 9 years working at startups & scaling up notable brands in India & Southeast Asia. He likes to spend his spare time reading about personal finance, fitness & watching live sports (football, cricket, f1, tennis). He's always willing to try out a new coffee shop or a breakfast joint.

Method for evaluating potential of a gaming startup to scale, including localisation considerations: We evaluate very tactical metrics like the retention (Day 1 and Day 7) along with average time spent per day and maturity of a startup’s monetization journey. At the end of day, if a game’s lifetime value (LTV) is much higher than their customer acquisition cost (CAC) with strong repeats, it is very likely to do well globally, unless there are regional nuances to the game.? Further, localization may help reduce acquisition costs by some margin but at the end of day, it all boils down to the core gameplay mechanics and how well users are perceiving a game to be. As an example, except for BGMI, the highest grossing games on Google Play in India are not localised.

Gaming sub-sectors that are exciting: We are particularly interested in mobile gaming as of now. We believe that the Indian audience is opening up to making payments on games and there are a lot of new experiences that make payments more seamless.

Predictions on the evolution of gaming in India in the next 5-10 years: Will break it down into categories:

• Hyper-casual: I believe that a platform of hyper-casual games might be more valuable than the sum of all individual hyper-casual games. Consider it similar to the way it works with audio (Spotify) or video (Youtube).
• Midcore: A game that leverages and makes the best payments experience will end up making substantial revenues. Of course, this has to be supported by good game mechanics.
• AAA: We are likely to see a top gaming studio being built in India in the near future.
• We might see a moderately to very popular India focused console based game.
• We might see the speed of iteration for liveops and dev support increase in the coming years as AI can do a lot of trivial stuff which does not need a lot of manual interventions.

The All India Gaming Federation (AIGF) is the apex industry body for online gaming in India. Being the oldest, largest and the most diverse industry association for online gaming, AIGF’s overarching vision is the growth of the Indian online gaming ecosystem in an open, safe, and accountable manner, and making online gaming a cornerstone of Digital India. At AIGF we want to support and push the vision of Create in India and have the Indian gaming industry compete globally.