The pragmatic shift of gaming as a mainstream entertainment source finally slid in the forefront when the country last year secured the number one spot in mobile game downloads worldwide. While the investors were oblivious to the potential of the industry, visionary Nitish Mittersain, who started Nazara Technologies in 2000, remained loyal towards his passion for gaming until it yielded the returns after patience and perseverance.
Since then the Nazara group has persevered over two decades to emerge as India’s leading gaming company with operations in over 70 countries and has acquired and invested in over 15 companies in various sectors of gaming including esports, fantasy sports, freemium games, etc. Nazara Technologies Limited recently released its IPO and recorded 84% of consolidated revenue over the previous fiscal year.
In a recent interaction with BW Gaming World, Nitish Mittersain, Founder & Joint Managing Director of Nazara Technologies, spoke about the challenges the company faced, its massive growth story, the recent revenue and IPO, and what worked in Nazara’s favor.
You have seen Nazara coalesce with your own growth. It has been two decades now we have seen a gamer turned into a successful entrepreneur. What do you think the journey has been like? Also, what have been the challenges that we missed out, under the triumphant glory of Nazara?
The biggest challenge for us was when we started Nazara in the year 2000, a time which was too early for a gaming industry opportunity in India, and therefore, it took us a lot of time to experiment, try, and find business models that would work in our favor. The early years were quite challenging for us, but, we stuck around.
I believe this decade is going to be the decade for gaming in India and Nazara is very well poised to take advantage of it. It has persevered over a long period of time when monetization was difficult and opportunities were smaller. There were macro-level issues in terms of data connectivity or device availability. A lot of these have improved over the years. I think now we will see much faster growth in the industry overall and I hope Nazara can contribute and play its own role within this evolving industry.
Nazara Technologies clocked an 84% jump in revenue in FY21. Gamified learning and e-sports have probably been the sectors for Nazara’s massive growth story the last quarter. However, to sustain the success narrative, how is Nazara working? How do experiments come your way in the entertainment or gaming industry per se when you become a successful brand?
Our industry is so dynamic or fast-moving that you have to continuously innovate, evolve, and be paranoid to sustain yourself. It is just like a treadmill. If you don’t keep running, you will fall off the treadmill. We cannot get complacent. Our IPO was successful; we received a lot of support and confidence from the investors but for us, it’s a new beginning. We have to double the efforts, be more paranoid about what few things we do and bring in new products and services to the market.
One thing which is working very well for us is the ‘Friends of Nazara Network’ that we have created. It allows us to acquire businesses within the gaming space and let us work with a lot of passionate founders and experienced management team, who are much focused on their vertical that they are going after. This allows Nazara to grow into an ecosystem, where there is constant innovation happening from one place to another and hopefully adding to the overall growth of this ecosystem.
The model which we have moved to in the last two years will help us a lot. Besides, it will allow us to grow faster and bigger – give more quality products to our consumers. Nazara will continue to drive that very strongly. In fact, post our IPO, we will continue to acquire many more companies, work with many more founders and management teams. This is what we have our focus on even today as well.
Nazara has become the first of its kind gaming company to go public with an IPO. While on one hand, it gives you an edge over other competitors, has it created some sort of pressure too as there can be other gaming companies too, who would be looking up to Nazara for the continuous inspiration?
We have been in the business for 20 years and we should be able to shoulder the responsibility that comes with becoming a public listed company. Whether it is in terms of corporate governance, transparency, or delivering quarter-on-quarter numbers – it comes with part and parcel of becoming a public listed company. Also, one cannot remain a novice and has to become an adult eventually. In the same way, we as a company have become an adult with the whole IPO process. Adults have to be responsible. We are excited about this new phase in life.
Could you also speak about your subsidiaries and their plans?
Many of the subsidiaries are being managed by the owners of those subsidiaries. They all have their own business models and products, teams, and funding plans. Even prior to HalaPlay, the Nodwin Gaming – an e-sports subsidiary, raised about INR 150-160 Cr from KRAFTON Inc. HalaPlay recently raised INR 18 Cr. We have got some very experienced investors on board to help the young team take the business to the next level. So, they brought in some capital for HalaPlay. Many other subsidiaries will also continue to do so.
The best part about our companies is, today all of them, at least the material subsidiaries, are profitable, cash flow positive, growing well, and not burning a lot of cash. Now, this is the kind of business model we like to run. You can call us old school but that’s our core DNA and that’s how all the subsidiaries are functioning. As I said, the acquisitions have worked well and so does the strategies. Also, with our user base, we can accelerate a lot of businesses that can patch onto our platform and we will continue to be aggressive in this M&A space post our IPO.
How did venture money begin pouring into the gaming ecosystem especially in India? And what does the future look for esports from Nazara’s perspective?
Investors obviously recognize India as a billion-plus nation. There are some important changes that happened in the country over the last decade. Low-cost data, fantastic penetration of android devices in the hands of every Indian, and a very much evolved digital payment ecosystem; these three macro factors are going to spearhead a lot of growth in the gaming industry in India.
Investors also see that this is an early stage in the country. It’s their job to spot the trends early. I think the sign of investors coming in is just the tip of the iceberg. You will see a lot more investments happening in the gaming industry, a lot more gaming businesses and giants coming into the Indian industry. You saw KRAFTON, a big South Korean gaming company enter India recently through investment in Nodwin. I think it is just a start. This is the decade of gaming in India that has just started.
If we see the American and Chinese market, and the scale at which they are operating, India is still a fraction of what the global gaming industry is.
India’s gaming industry is growing and attracting investors too. How much do you agree it would be a good decision to invest in gaming, especially in times when there is apprehension in the market? Also, does the gaming industry will become an investor’s dream in the times to come?
Every investor has to evaluate the opportunity of the gaming industry. I would say that investors should not just blindly jump into the gaming space because they think it is a big trend or opportunity. Investors need to understand the dynamics of this business well rather than following a herd mentality. All I can say is the tailwind for this industry is strong but it is very important that investors should see with due diligence individually rather than going on other’s strong recommendations. It is something worth looking at but along with due diligence.
What will be the priorities and new plans on board for Nazara this year?
One is to grow our existing businesses strongly and see how we can expand them since all of them have great opportunities. The second is to do additional acquisitions of businesses that can add synergies to our businesses and existing ecosystem. We are building a gaming ecosystem so these are just adjacent to gaming.