The initial public offering or IPO of gaming company Nazara opened today. For the uninitiated, an IPO is when a company sells shares to institutional and independent investors and is usually seen as a sign of legitimacy. What’s interesting is Nazara is also the first gaming company in India to have taken the IPO route.
For a country that’s had somewhat of a storied past of game development both amusing and awkward, it’s curious that despite games being made in the country since the 8-bit era, it has taken so long for India’s first games company to go public with an IPO.
On the surface it would seem that the Nazara IPO should be a turning point for gaming in the country. But it feels far from it. Here’s why.
Is Nazara Even a Gaming Company?
Some argue that Nazara isn’t even a gaming company. A cursory check at its filings show that 39.24 percent of its revenue in 2021 comes from what it describes as ‘gamified early learning’ via edutainment app Kiddopia, while esports via Nodwin makes up 31.78 percent, and actual in-app purchase revenue from games like World Cricket Championship 3 clocks in at 4.50 percent. 3.14 percent of its revenue comes from 'real money gaming', aka gambling endeavours, though none of them are directed at India, making it one of the few Indian operators in space aware of social concerns around such offerings.
Furthermore, 21.33 percent of its revenue originates from legacy businesses such as telco subscriptions— games for feature phones as well as subscription services like Nazara Club for non-smartphone mobile devices. The company claimed in its IPO press conference that this was close to 80 percent in 2018 and has been rapidly dwindling.
PUBG Mobile’s India Investment Just Before Nazara IPO, and its Implications
Leading up to the IPO, PUBG Mobile company Krafton invested Rs. 164 crores (around $22.4 million) into Nazara subsidiary Nodwin with exceptionally vague reasoning for the deal being pedalled around at the time. One would expect that with Krafton’s own IPO in the works, it would want PUBG Mobile back in India, and an investment in an Indian company like Nodwin could help with that. However this does not seem to be the case.
“Our partnership with Krafton is not at all linked to the PUBG game,” Nazara founder and MD Nitish Mitersain said to IGN India during its IPO press conference last week. “It’s a far deeper, far more strategic partnership with a long term perspective in mind. Just to clarify, there has been no conversation at all during this entire period of discussing and signing this deal in terms of what this deal means for PUBG in India and what it does not.”
The fact that no discussions surrounding the return of India’s most popular game also puts a damp squib on proceedings. Granted parts of the local gaming community view it as nothing more than a distraction, PUBG Mobile’s part in growing esports and content creation in the country can’t be understated aside from well, bringing in 50 million people in India to play video games even if it was only on Android and iOS.
Is Nazara India’s Tencent?
What’s more is, the company is being compared to Tencent, EA, and Activision by financial analysts and the media. Odd when you consider that they have their own proprietary tech, development studios, and well, video games. Outside of the World Cricket Championship franchise that Nazara has via its acquisition of Chennai-based Nextwave, there aren’t any compelling game franchises or intellectual properties to speak of.
In fact Nextwave had said to IGN India recently that its number one in-app purchase for World Cricket Championship 3 has been its career mode. As the name suggests, it lets players go through the game’s single-player campaign. It’s a one-time purchase of Rs. 179. Considering that this is the biggest ticket transaction for most of its paying playerbase, it suggests that there needs to be more avenues to increase monetisation in some shape or form — a far cry from the international companies it has been benchmarked to.
All of this makes the comparisons to global giants seem facetious and expose just how little some actually understand about the company let alone the games business.
Nazara’s Future Is Missing a Big Made-in-India Play
A lot of Nazara’s present growth is a result of an acquisition spree in the years leading up to its IPO and it plans to continue such investments and acquisitions post-IPO as well as bringing offerings from Nextwave and Kiddopia to more territories. Its road map appears to lack any of the ambition you’d expect in terms of made-in-India games and franchises particularly with current government scrutiny. And that’s before you consider a litany of financial issues pointed out by those more well-versed in that domain than us.
Thread on Nazara IPO -
— Aditya Kondawar (@aditya_kondawar) March 12, 2021
Finally, got 4 years of standalone info (attached in img)
They haven't given standalone no's in RHP which is damn uncool (shows lack of transparency, anyways)
As suspected standalone numbers are not good 👇
(1/n)#IPOwithJST pic.twitter.com/hJ0yogcGZy
That said, it will be interesting to see how Nazara’s IPO impacts how other Indian game companies think about growth. Recent successes like Ludo King from Gametion and Raji from Nodding Heads were bootstrapped while past efforts had the backing of venture capitalist funding. Perhaps we won’t have to wait too long to see the next Indian gaming company take the plunge.
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