Covering Recent Raises in India

Hi Everyone. We have a bunch of team updates that we’re excited to with you today! We’re stoked to welcome:

Jordan Phang: As the newest member of our Core consulting team, Jordan comes with 15+ years of highly versatile games industry experience, which includes art, programming, game design, economy strategy and publishing his own Hypercasual games! He will be consulting across a variety of verticals including market research, game design, economy strategy and tokenomics.
Devin Becker: From programming to game design, cybersecurity to esports commentating, and now blockchain game economy research, Devin brings an awesome and wide-ranging background to the table! Not only does he contribute to Naavik Pro's blockchain gaming content line, but also he has become a solid contributor to our Discord and podcast.
Alex Summers: With a strong 7 year background in finance and consulting to fortify his last 2 years working for Activision Blizzard across franchise strategy and live operations, Alex has been contributing strong research essays to the blockchain gaming content line in Naavik Pro over the past couple months. We cannot wait to see his future takes on key industry developments.
Niek Tuerlings: In short, Niek is a F2P analysis powerhouse. And he has a ton of game deconstructions on both Ludocious (his blog) and Deconstructor of Fun to show for it. As a contributor to Naavik Pro's F2P content line, he will be bringing insights from 10 years of games industry experience in companies like Wooga and Voodoo to our premium research subscribers.
Harshal Karvande: If “Game Design Post” rings a bell, then you're already familiar with Harshal's highly insightful, yet succinct work. With little over 10 years of games industry experience in companies like Zynga, Rovio and Reliance Games, he will be contributing to our F2P content line in Naavik Pro.

Finally, a quick reminder before we jump into this week’s issue — we’re always looking for more brands to sponsor Naavik Digest. If you’re looking to get your brand, product, or event in front of thousands of industry executives, fans, and analysts, please reach out. With that, let’s dive into today’s issue.

Crypto Corner: Web3 Gaming Business Models & The Future of Virtual Economies

In this Crypto Corner episode, BITKRAFT Crypto Team members Carlos Pereira and Jamie Wallace join Nico Vereecke to discuss:

The Ronin Exploit Update
Different Business Models in Web3 Gaming
The Future of Web3 Gaming Economies
Fun and Work in the Metaverse

You can find us on Spotify, Apple Podcasts, Google Podcasts, YouTube, our website, or anywhere else you listen to podcasts. Also, feel free to shoot us any questions here.

Check Out The Episode

Bombay Play and Games24x7 Raise Rounds

This past week was a positive omen for what’s to come for India gaming, with two funding announcements in Bombay Play (raised $7M) and Games24x7 (raised $75M at a $2.5B valuation). I’m sure we’ll be seeing a lot more of these announcements, larger and more frequently over the coming months. But in the meantime, let’s dive into a snapshot of these two companies.

*Source:* *BCG/ Sequoia; this is only a small landscape of the growing games market in India, and the infrastructure supporting the inflection.*

Bombay Play

An instant games publisher for mobile, Bombay Play is a pioneer in the ‘hypersocial’ space — decreasing development times and creating games in a genre between hypercasual and casual with social components. From the press release:

“Bombay Play’s games include titles like Dice Merge Puzzle, Card Party, and Daily Word Puzzle. These games take about three months or six months to develop. In that sense, they’re not as simple as hypercasual games, which can be developed in much shorter games. The company tries to soft launch its games as early as it can.”

Perhaps the most recent hit we can point to in this genre is Wordle, which was recently acquired by the NYT. For Bombay Play, development cycles are short, one can play socially, and there is inherent virality to the title. Bombay Play is also not too dissimilar from PlayCo, which also invested in this round. In a previous article we wrote about a few reasons why there’s bullishness around instant games:

1) They can be played instantly on a variety of platforms (for example browsers, within messaging apps, or directly on the app stores), without downloading an entire app.

2) Depending on the platform, one could invite his/her friends and family to play such games through a simple hyperlink or invite. Not only does that sidestep the huge adoption barrier of performing a download, but it also creates the opportunity for the game experience to be inherently social, which is arguably the strongest driver of player lifetime value.

3) Further, the user acquisition economics for instant games are entirely different (and potentially in a favorable way) compared to what it looks like currently on mobile. This is mainly due to the fact that instant games have the potential to sidestep app store click funnels and have access to many more forms of distribution, such as being offered within a widely used messaging app.

With 40M players reached and 24 games in pipeline, Bombay Play has hit its stride and will continue to expand globally (in SEA, India, and Europe). Its unique positioning in India and a surplus of development talent will make the unit economics of this publisher favorable at scale.

Games24x7

Founded in 2006, Games24x7 is now the largest multi-game platform in India. This $75M funding round led by Malabar Investments is testament to the inflection point the India games market is having. It previously raised an $18M Series B from Tiger Global and Raine Group.

To date, the studio has attracted more than 100M+ users, with a vast majority of them coming from My11Circle. Despite the massive player base in My11Circle, most of the $173M in income the studio generates actually comes from another game called RummyCircle (it only constitutes 10% of players). They also operate a suite of hypercasual games under their brand “UGames”.

With the overall gaming market down in recent months and rising CACs, Games24x7 will need to balance market headwinds with investor expectations, especially at its size. That being said, the studio has recognized an arbitrage in player behavior in the north and south of India, where RummyCircle is deeply embedded in daily lives in the South and played mostly on holidays in the North. And interestingly, the company’s strategy to bridge the two has been to hire key ambassadors to advertise the game. It’s a strategy that seems to resonate well in India.

Games24x7 touches on a variety of themes in India that are worth a deeper exploration — fantasy sports, skills-based and real-money gaming. Each have their own counterpart in India that is a sizeable standalone like MPL ($2.3B valuation), Dream 11, and FanCraze ($100M recent raise). Why are these genres taking such a strong hold on the nascent market?

We also briefly explored these themes few months back in an India market recap:

“Not only was it surprising to see RMG take up such a massive share of the market, but IAPs are also outpacing both RMG and ad revenue in terms of CAGR . Comparing these estimates to those of Sensor Tower’s, I can confirm that a ~40% CAGR for IAPs is very much realistic.”

It’s interesting to contrast Bombay Play and Games24x7 for these reasons, one riding an already massive market in RMG / fantasy sports and growing it, and the other very much taking the nascent but commanding IAP route. However, there are also market dynamics more broadly that are worth examining. GameMakers recently published an excellent history and forward look on the India Gaming market, of which the market size and growth portion caught my attention (republished with their permission):

Market Size and Growth

The Indian gaming market was valued at USD $1.8 billion by BCG and Sequoia in 2021. It is expected to reach USD $5 billion by 2026, per Mordor Intelligence. That growth rate is what makes gaming such an interesting market in the country. Gaming is growing faster than any other media sector in the country, including streaming video.

According to a survey conducted by Newzoo in March 2020, the total monthly users for leading games in Google Play in India was 481 million. That number is set to grow to over 650M users by 2025, and it doesn’t include PC or console gamers.

That makes India the #2 gaming market by the number of users. Quite impressive, but the average revenue per user is low. As a result, India is actually only the #16 gaming market in terms of dollar size.

But, all signs point to it rising rapidly up those ranks. India is forecasted to be the single fastest-growing economy in the world over the next 5 years. As a result, it should only be a matter of time before India’s per player revenue starts to catch up with Tier 1 countries.

The country has also had notable successes. Garena Free Fire was on track for making over $10M per month from India alone. Like PUBG before it, Singaporean shooter Free Fire was blocked for distribution by the Indian government in January.

This presents a fresh opportunity to see which games will step into the void left by a top game. All signs point to that opportunity growing rapidly.

In the upcoming months, I’ll be curious to dig into the proliferation of games studios in India and increased VC appetite to enter the space. There’s still so much to understand from a player behavior perspective on what content gets people excited and spending, and what will continue to increase APRUs. I’d argue that no one has yet cracked the code in a big way but we’re getting close. I’m sure we’ll be seeing some massive India-based studios in the near future. (Written by Fawzi Itani, with special s/o to Aakash Gupta and Joseph Kim)

📚 Content Worth Consuming

Google x Deconstructor of Fun Istanbul Event: Highlights and Videos (DoF): “Google and DoF brought together the most influential gaming investors, companies, and talents in Istanbul! Gaming expert speakers talked about the hottest topics in the gaming industry from 2022 predictions to rising game categories, from blockchain & NFT gaming to launch strategies. Friends at mobilegamer.biz summarised every talk and session and divided them up so you can watch each one by hitting play on the embedded video.” Link

How Epic Games is Changing Gaming — an Maybe the Metaverse (Fast Company): “Now, Epic has released the fifth major iteration of the graphics engine, Unreal Engine 5, which packages up a batch of new and upgraded features that let game developers and other creators design more realistic 3D objects, surfaces and people, and create more natural lighting and spatial audio effects. Experiences built on the tool won’t totally simulate reality, but they may cause you to forget you’re inside a sim for longer than a few seconds… The new fifth-generation engine—buoyed by refreshed software tools and a marketing tie-in with the team behind The Matrix franchise—will certainly enable more life-like games in the future, but it could go beyond that. At a time when lots of people in the tech world are talking about immersive “spatial” computing within something called the metaverse, Unreal Engine’s ability to simulate reality has some interesting implications. The new features in the gaming engine seem to be aimed at allowing digital creators in lots of different industries to build their own immersive virtual experiences.” Link

Bringing MMO Dynamics to Web3 Business Models (Messy Problems): “Web3 has been heralded as the future of how we engage with people and businesses. However, while the tech underlying Web3 is new, there are many behavioural parallels to be found in a 20-year-old medium: massively multiplayer online games (MMOs) like Fortnite, Second Life, and Runescape. Within these virtual worlds, hundreds of thousands of people—sometimes millions—socialize, create communities, content, and navigate a universe of games and activities.In particular, I wanted to dive into 3 characteristics of MMOs that have crossover potential and could expand access to and adoption of Web3: 1) Tutorial systems, 2) Navigation/curation platforms (like a Web3’s Steam Workshop or App Store), and 3) Competitive/collaborative incentives.” Link

The Future of The Gaming Industry Ft. Aaron Bush (Stock Club): “Listen in as James and Aaron chat about: the current state of the gaming industry, what’s behind all of the recent industry M&As, the future of Netflix’s gaming ambitions, and the role of blockchain in the future of gaming.” Link