September 25, 2024
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Stock Market

Can Nazara Technologies Succeed and grow in the $397 Billion Gaming industry?

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Stock Market

Can Nazara Technologies Succeed and grow in the $397 Billion Gaming industry?

In the rapidly growing landscape of digital entertainment, gaming isn’t just entertainment; it’s a career-launching powerhouse in today’s digital age. As the Indian market embraces this shift, Nazara Technologies Limited stands at the forefront, poised to lead both locally and globally.

With a young population and widespread smartphone adoption, Nazara is aggressively expanding its footprint in the gaming sector. As Nazara forges ahead, it not only enhances its portfolio but also creates new opportunities for aspiring gamers and creators in an ever-expanding digital landscape. In this article, we are going to explain the aggressive expansion and acquisition of Nazara Technologies. Let’s Begin!

Indian and Global Gaming Industry

The global gaming industry is experiencing rapid growth, projected to expand from US$ 244.22 billion in 2024 to US$ 397.21 billion by 2029, reflecting a compound annual growth rate (CAGR) of 10.17%. This growth is fueled by a massive player base of around 3 billion, with significant revenue coming from in-game purchases.

India stands out as the fastest-growing gaming market globally, outpacing major markets like the USA, China, and Japan. This industry is expected to reach $3.1 billion in FY23 to $6 billion in FY28. India is expected to have 442 million online gamers as of July 2024, making it the second-largest gamer base globally after China.

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Additionally, India is the largest mobile gaming market in terms of app downloads. The average revenue per user (ARPU) is expected to grow from $8.80 in 2023 to $10.93 by 2027. India has around 6,00,000 eSports players and 1,00,000 eSports teams.

The image shows the Indian mobile gaming market revenue from 2021 to 2027.

Indian Online Gaming Regulations

The Indian government has introduced new regulations for the online gaming industry, specifically banning games that involve real-money betting. Under these guidelines, three self-regulatory organizations (SROs) will be established to oversee compliance and ensure that only games without wagering or harmful content are permitted. These SROs will consist of industry experts, psychologists, and child rights advocates, emphasizing the protection of users, particularly children, from addiction and financial risks.

The amended IT Rules of 2021 now include these gaming regulations, which aim to foster a responsible and transparent growth environment for the sector. This framework is expected to enhance investor confidence and encourage innovation while addressing concerns over gambling addiction and illegal offshore sites, ultimately supporting India’s burgeoning tech industry. In this industry, Nazara Technologies is a prominent player in the Indian stock market.

Company Overview Of Nazara Technologies

Nazara Technologies was established in 1999, over 25 years ago. The company was founded by Nitish Mittersain and headquartered in Mumbai, Maharashtra. Nazara Technologies Ltd is India’s largest listed gaming company with a global presence across India, the USA, and other international markets.

The company offers a diverse portfolio of popular gaming IPs including Kiddopia, Animal Jam, Love Island-the Game, mobile games like the World Cricket Championship and CarromClash, and Classic Rummy. Nazara has also established itself as a leading esports domain in India and South Asia through Nodwin and engages sports enthusiasts in India and the United States with its content platform, Sportskeeda.

The company has offerings across interactive gaming, eSports, and gamified early learning ecosystems. Nazara has positioned itself as a leader in the Indian market by being one of the first to enter eSports and cricket simulation.

Segment Analysis and Financial Overview of Nazara Technologies

Nazara Technologies Limited has diversified its segments into gaming, eSports, and AD-Tech.

Gaming segments

In gaming segments, Nazara Technologies Limited has operated in advertising, in-app purchasing subscriptions, and platform fees. The company has top gaming IP names such as Kiddopia, Animal Jam, World Cricket Championship, Classic Rummy, Halaplay, and Nazara Telco Distribution.

This segment contributes to revenue of 406.5 crore, which is 36% of the total revenue. The company has maintained its EBITDA margin of gaming by 19.9% in FY24.

Esports Segments

In Esports Segments, the company has operated in brand sponsorships, media rights revenue, and direct-to-consumer accessories business revenues. It has the top esports IP names such as NODWIN, Wings, SportsKeeda, Branded, Publishme, Pro Football Network, Planet Superheroes, and Rusk DC.

This segment is the largest revenue contributor to the company, which is 55% of the total revenue. The company has earned a revenue of 631.7 crore and maintained its EBITDA margin of esports by 10% in FY24.

Ad-Tech Segments

In Ad-Tech Segments, Nazara Technologies Limited has operated in programmatic advertising, digital media buying and planning, self-serve demand-side platforms, and publisher solutions like bidding tools and managing traffic. The company has top ad-tech IP names such as AdPrimus, Vizibl, and BidAmp. This segment is contributing to revenue of 103.8 crore, which is 9% of the total revenue. The company has maintained its EBITDA margin of ad-tech by 8% in FY24.

Financial Overview

Nazara Technologies Limited has a total revenue of 1138.3 crore in FY24 from 1091 crore in FY23, which has grown by 4.34%. The company’s net profit has also grown from 61.4 crore in FY23 to 74.8 crore in FY24, which has grown by 21.82%. The company’s revenue mainly comes from North America (44%), India (33%), and the rest of the world (23%).

Nazara Technologies Limited has incurred revenue from the different business models, which include sponsorships, media rights and retail (28%), advertising (36%), subscription (26%), platform fee (2%), and in-app purchases (7%).

Nazara Technologies Subsidiaries and Holding Percentage

Reason for Expansion and Acquisition of Nazara Technologies

Nazara Technologies Limited has engaged in acquisition and expansion strategies to strengthen its position in the rapidly growing gaming market. The acquisition and expansion strategies are expected to enhance Nazara’s revenue streams and market reach. It also helps to leverage synergies in marketing and user engagement over the next few years.

Nazara Technologies Limited aims to tap into proven business models and expand its portfolio across diverse gaming segments, which include eSports and skill-based gaming. This strategy not only diversifies revenue sources but also positions Nazara to capitalize on the increasing demand for interactive entertainment in emerging markets.

Recent Acquisition by Nazara Technology

Paper Boat Apps Private Limited: Nazara Technologies has acquired a 48.42% stake in Paper Boat Apps Private Limited for ₹300 crore. This acquisition, completed from the founders Anupam and Anshu Dhanuka, brings Nazara’s total ownership to 100%. The deal is part of Nazara’s strategy to enhance its gaming portfolio, particularly the popular Kiddopia app.

Esports Community Platform (Stan): On September 11, 2024, Nazara acquired a 15.8% stake in Stan, an esports fan engagement platform, for around ₹18.4 crore ($2.2 million). This investment is intended to enhance Nazara’s footprint in the rapidly growing esports market.

PokerBaazi Parent Company (Moonshine Technology): Nazara acquired a 47.7% stake in Moonshine Technology, which operates PokerBaazi, for approximately Rs 832 crore ($100 million). Additionally, Nazara plans to invest ₹150 crore into the company via compulsory convertible preference shares. This acquisition is aimed at bolstering Nazara’s position in the online poker gaming sector in India.

Absolute Sports: Nazara Technologies has acquired an additional 19.35% stake in Absolute Sports for ₹145.5 crore. This acquisition increases Nazara’s total ownership in Absolute Sports to 91%, reinforcing its position in the sports media sector. The payment was made with 50% in cash and the remainder in stock.

Nextwave Multimedia Private Limited: Nazara Technologies has acquired an additional 28.12% stake in Nextwave Multimedia for ₹21.6 crore, raising its ownership to 100%. This move aims to enhance the virtual interactive sports sector, particularly in mobile gaming.

NODWIN Gaming (Freaks 4U Gaming): Nazara Technologies NODWIN Gaming acquired a 57% stake in Freaks 4U Gaming. The deal, valued at Rs 271 crore ($32.5 million), was executed through a share swap. This acquisition enhances NODWIN’s capabilities in PC gaming and expands its global market access.

NODWIN Gaming (Comic Con India): Nazara has acquired a 100% stake in Comic Con India for Rs 55 crore ($6 million). The deal involves ₹27.4 crore in cash and ₹27.5 crore through a share swap. This move is part of its strategy to diversify and strengthen its presence in the gaming and entertainment sectors.

NODWIN Gaming (Ninja Global FZCO): Nazara Technologies’ subsidiary, Nodwin Gaming, has acquired Ninja Global FZCO for Rs 29.8 crore ($3.57 million). This acquisition enhances Nodwin’s capabilities in the esports and gaming sectors, particularly in the UAE and Turkey.

Fusebox Games Limited: Nazara Technologies, through its subsidiary Nazara UK, has acquired London-based gaming studio Fusebox Games for approximately Rs 228 crore ($27 million). This acquisition aims to enhance Nazara’s gaming portfolio, focusing on interactive story-based games that are monetized through in-app purchases, targeting markets like the US and UK.

Deltias Gaming: Nazara Technologies’ subsidiary has acquired a 100% stake in US-based gaming content firm Deltias Gaming for ₹7.5 crore. This strategic move aims to enhance Nazara’s portfolio in the gaming sector and expand its global reach in interactive entertainment.

IP Rights of Ultimate Teen Patti: Nazara Technologies, through its subsidiary Next Wave Multimedia, has acquired the intellectual property rights for Ultimate Teen Patti from Games24x7. The total acquisition amount is ₹10 crore, with ₹9 crore already paid. The remaining ₹1 crore will be settled upon completing specific transfer activities related to the IP assets.

Circle of Games (COG): Nazara Technologies has acquired an 8.5% stake in Circle of Games(COG) for Rs 4.17 crore ($500,000). This investment is part of a larger $1 million funding round that includes contributions from The Hashgraph Association. Nazara aims to leverage this acquisition to enhance its presence in the Web3 gaming sector and foster collaboration between the two companies.