The uncertainty around the suspension of Krafton's popular battle royale game Battlegrounds Mobile India (BGMI) may cause a temporary slowdown in the growth of the e-sports segment and to some extent in the country's gaming industry, Nazara Technologies Joint Managing Director Nitish Mittersain said.
Last week, BGMI was pulled out of Google Play Store and Apple App Store following a government order under Section 69A of the Indian I-T Act.
While the e-sports industry and South Korean gaming giant Krafton are seeking more clarity around the app's suspension, its unavailability is worrying various stakeholders in the sector, since it was one of the most popular games in the country.
Nazara Technologies, which sees 46 percent revenue contribution from the e-sports segment, thinks that the ban will create disruption in the market.
"The game is popular with 100 million users. So, it (the ban) will slow down the overall growth that esports is witnessing," Nitish Mittersain, Joint MD, Nazara Technologies, told Moneycontrol in the interview.
He expects some impact on the tournaments as well sponsorships that BGMI games attract.
"If large games are banned, they do create a disruption in the market, because there are a lot of gaming creators earning money out of it, influencers, streamers, and they build a follower base on that product, and then they have to find another (game) now. But I'm hopeful that this is a transition and will stabilize in the next year or so" Mittersain said.
No material impact on Nodwin
Nazara's esports arm Nodwin Gaming recently brought the first ever televised esports tournament by broadcasting BGMI Master series on Disney Star's sports channels.
The tournament which aired for three weeks on television recorded over 1.2 million impressions and surpassed impressions of Australian Open Day 1, French Open Day 1 and UEFA CL Semi-Finals, Disney Star and Nodwin had noted last month. The BGMI series had clocked 12.3 million views through the first eight days of broadcast on television.
"Krafton is a partner and we started working more with the developer and BGMI and were hoping to build on this business. Hopeful that they (Krafton) will engage with the government and find a resolution for this," said Mittersain.
Despite the recent focus on BGMI, the joint MD said that they do not see any material impact of the BGMI ban on the company. "Nodwin Gaming works with multiple publishers and has a diverse business. It is not dependent on one game. Earlier, PUBG was banned when it (the game) was at its peak but that didn't impact Nodwin's business," he said.
Mittersain also pointed out that after PUBG, Garena's Free Fire game was also banned in India earlier this year but that has not stopped people from playing games.
"I think the trend of gaming and esports is secular. If one game gets banned, you'll quickly find another game and while there may be short term blips, the overall trend is not going to get impacted" he said.
He mentioned these suspensions could also create a window for other developers including Indian companies to step in and leverage this opportunity to gain a large audience for their respective games. Hence, they will continue to bet big on the esports segment.
"I think eSports is very much on track to become India's number two sport on an overall basis in the next two-three years" he said.
In Q1 FY23, the diversified gaming and sports media company saw a 92 percent growth in the esports segment, recording revenue of Rs 102.3 crore versus Rs 53.2 crore in Q1-FY22, and a 12 percent growth versus Q4 FY22 with revenue of Rs 91.6 crore. Nodwin Gaming's revenues grew by 68% in Q1 FY23.
"We are trying to build a whole ecosystem around esports but it is still 1-2 years away. It will be an important growth driver," he said.
Along with esports tournaments, the company is also looking at original gaming content and intellectual properties. Its first gaming show "Playground", which was co-produced with digital media firm Rusk Media, recorded over 400 million views across platforms.
In addition, Nodwin-backed gaming accessories brand Wings saw 150 percent growth YoY in Q1 FY23. Nodwin Gaming had acquired a 35 percent stake in Wings in April this year.
"It (Wings) did about Rs 20 crore revenue last (financial) year and is on track to do Rs 70-80 crore this year," added Mittersain.
Plans to scale up real money gaming play
The company is also looking to scale up its real-money gaming (RMG) portfolio and plans acquisitions in this space.
"We are a small player in RMG which has scaled up in India. So, there's huge potential for opening up a large growth engine. When we acquired OpenPlay last year, the idea was to build this (RMG) and make it a 20 percent contributor to our business. It can be a Rs 200 crore business compared to Rs 50-60 crore business today," he said.
He said that for OpenPlay, Rummy is growing and they would like to leapfrog their growth in the segment by acquiring other businesses and merging it with OpenPlay. "We have ongoing conversations and see many opportunities especially in Tier II level players," he said.That said, Mittersain said that they are waiting for clarity around GST rates as there is a recommendation of increasing GST on online gaming from 18 percent to 28 percent. "Where we stand today, unnecessarily taking a big risk and making a big acquisition before clarity comes and if there's 28 percent tax on entry fees then the whole business collapses. So, we are waiting and watching," he said.