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Media & Entertainment

Indian mobile gaming boom rewards homegrown developers

Dream Sports raises $840m on expansion fueled by cheap wireless and lockdowns

Nazara, developer of games like "World Cricket Championship 3," became the first Indian gaming company to go public last year. (Photo courtesy of Nazara Technologies)

MUMBAI -- One of the biggest beneficiaries of India's recent enthusiasm for smartphone games has tapped into a more traditional passion in this country of 1.4 billion: cricket.

On fantasy sports platform Dream11, users compete by choosing rosters of real cricket players -- or athletes in other popular sports such as football -- earning points based on their performance in actual matches. Joining a contest costs less than $1, and players who do especially well can earn cash prizes.

"It's a game that takes all your skills, knowledge and luck. It's addictive," said a 20-something man in India's western state of Maharashtra.

Developer Dream Sports, which boasts 140 million users across this and other sports-related internet ventures, has become one of the country's leading unicorns. Established in 2008, the company raised $840 million in November at an $8 billion valuation.

Unlike other markets such as Japan, where video gaming has deep roots in consoles, mobile gaming is king in India, thanks in large part to the proliferation of smartphones. After conglomerate Reliance Industries entered the telecom business in 2016, wireless fees plunged roughly 95% over five years. Smartphones are commonplace even in rural areas.

The pandemic has also fueled the boom in India's gaming scene. The average time consumers spent playing games rose from about 2.5 hours a week before the pandemic to 3.6 hours during the strict nationwide lockdown in spring 2020, according to consulting firm Redseer. Game downloads almost doubled over that period, and remained 50% higher than pre-pandemic levels last year.

Investors have taken notice, both inside and outside India. Game streaming and esports platform Rooter raised $25 million last month.

Fundraising by gaming companies soared from $34 million in 2016 to $412 million in 2020, according to Boston Consulting Group.

Game developer Nazara Technologies went public last March in what local media described as the first initial public offering by an Indian gaming company. The fact that Rakesh Jhunjhunwala -- a billionaire investor who has been called the "Warren Buffett of India" -- held a substantial stake in Nazara sparked interest in the company.

Boston Consulting puts India's gaming market at $1.8 billion in 2020 -- still small compared to China's $45 billion market, but growing fast.

India's growth has drawn attention from Japan, a longtime leader in game development. Square Enix Holdings, of "Final Fantasy" and "Dragon Quest" fame, returned to India last February after a brief, unfruitful venture that shut down back in 2014. It has published "Ludo Zenith," a mobile game developed by India's JetSynthesys based on a traditional Indian board game.

"The market environment has changed significantly due to the drop in wireless fees and the spread of smartphones, as well as broader use of digital payments," said Ryoma Matsui, director at Square Enix India.

Chinese companies, meanwhile, have been caught up in the border dispute between New Delhi and Beijing.

The Indian government banned a number of Chinese apps in 2020, including video platform TikTok. The list included the popular battle royale game "PlayerUnknown's Battlegrounds," which South Korean developer Krafton had distributed in India in partnership with Tencent Holdings. Krafton has since relaunched the game in India through a local subsidiary.

Dream Sports, which counts Tencent among its investors, is "not looking to raise money ever again from Chinese investors," CEO Harsh Jain told a local media last year.

"Chinese companies' difficulty breaking into the market leaves more room for local Indian players to expand," a market analyst said.

The unique traits of India's gaming market present some challenges, particularly how to make money in a market so heavily tilted toward mobile games that are often free to play. Indian gamers "pay less frequently for games than in Japan, possibly because they didn't go through a console game phase," Square Enix's Matsui said.

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