graphical user interface: Nazara Technologies eyes bigger pie of online skill games with OpenPlay acquisition

© Sunil Matkar
Nazara Technologies eyes bigger pie of online skill games with OpenPlay acquisition

Nazara Technologies, a gaming and sports media platform, recently acquired Hyderabad-based OpenPlay for Rs 186.4 crore to scale up its presence in skill gaming, which is currently a fragment of its business.

“The skill gaming vertical for Nazara has been very insignificant. For the external market, this is the largest segment with an 80 percent share (in the online gaming market),” Manish Agarwal, CEO of Nazara Technologies, told Moneycontrol.

Skill-based games including real money games like rummy, poker and fantasy sports dominate online gaming in terms of monetisation.

Transaction-based games contribute over 80 percent in revenue to the online gaming market.

In 2020, transaction-based games grew 21 percent on the back of fantasy sports, rummy and poker, EY noted in a 2021 report.

For Nazara, the contribution from skill-based real money gaming platforms like Halaplay and Qunami was 4 percent in FY21. The segment registered revenue of Rs 13.9 crore (unaudited) in FY21. In FY20, this segment had reported (audited) revenue of Rs 42.6 crore.

The decision to acquire OpenPlay was taken to increase the size of the skill-based real money gaming segment in Nazara’s portfolio.

“We want to make this segment meaningful and hit the Rs 100 crore mark in this financial year for this segment itself. Below that, it will be difficult for us to spend time on this segment,” Agarwal said.

Nazara’s Halaplay, a fantasy sports platform, currently has 10 million registered users. Comparatively, Dream11, the leader in fantasy sports, has over 75 million users, according to a Federation of Indian Fantasy Sports-KPMG 2021 report.

Agarwal said that by acquiring OpenPlay, Nazara is taking the first step in expanding this segment.

OpenPlay’s offerings

In 2012, OpenPlay started with rummy and then added fantasy sports. The platform currently has over 3.6 million registered players. This month, 12 games will be added to the platform.

“By September 30, we will be a full-fledged app like any of our competitors including Paytm First Games, Mobile Premier League and Winzo. New game additions will cover the universe of games that’s there in India,” said Sreeram Reddy Vanga, founder of OpenPlay.

OpenPlay’s revenue grew to Rs 53.48 crore in FY21 from Rs 39.26 crore in FY20 and Rs 20.88 crore in FY19.

Along with fantasy sports, online gaming platforms MPL and Paytm First Games put a lot of focus on rummy. No surprises here because revenue from rummy and poker last year stood at Rs 2,900 crore, up from Rs 2,400 crore in 2019.

Nazara has stayed away from skill-based games like rummy and poker because “we were not comfortable with the statutory landscape. Now, things are evolving and getting comfortable,” said Agarwal.

Tamil Nadu, one of the biggest markets for real money gaming operators, had banned online games such as rummy and poker with stakes under the Tamil Nadu Gaming and Police Laws (Amendment) Act of 2021.

However, the Madras High Court struck down the act earlier this month.

Since the ban on online games was lifted, OpenPlay’s revenue has grown 20 percent from July and the number of new players has doubled, Vanga said.

So, OpenPlay brings to the table new games and more users, but is that all?

Cue is consolidation

Agarwal pointed out that there are two approaches for Nazara to scale up the skill-gaming segment.

“Spend considerable amount of money on Halaplay (for new user acquisition) or create the network play by getting a lot of people and consolidate them on one platform and create a liquidity pool. And we are opting for the second instead of acquiring new users and burning Rs 100-300 crore,” he said.

In the UK, OnePlay’s Vanga had built CozyGames, a platform that hosted different brands offering the game of Bingo. CozyGames powered over 100 skins in the regulated UK market, which overall has 400 skins. Skins refer to the different brands that operate on CozyGames using their own logo and avatar.

“We had built a fantasy multiplayer console that is capable of hosting multiple brands on one platform while sharing the player liquidity,” said Vanga.

He is now looking to build a platform that “can do multilingual and multicurrency,” added Vanga.

According to Agarwal, consolidating operators on one platform will give gaming brands more users and a bigger liquidity pool.

“In skill gaming, it is all about scale of users and the money pool which you are creating because the larger the money pool, the more people it attracts and the larger the number of players, the more relevant matchmaking (for players) and that really helps you in better retention of the player on the platform,” Agarwal said.