Nazara is a leading mobile entertainment company that develops mobile content and provides solutions for the development, deployment, targeting and tracking of promotional campaigns on emerging mobile platforms. In an exclusive interview with TechCircle.in, Nitish Mittersain, CEO, Nazara Technologies talks about his company and the growth opportunities in the digital gaming market in India.
Analysts feel India will trace the path taken by China in many spheres of business including internet and gaming. How realistic is the proposition that India can overtake China and become the largest digital gaming market in the world?
I think it is too early to make that comparison because China's at least a decade ahead and also besides being ahead, China has gaming in-built into the culture whereas in India, digital gaming is a fairly new concept. So I think rather than comparing with China at this point of time, we should focus on how the Indian market can scale. Last few years there has been a lot of hype but very little that has actually happened, but I think in the next two or three years, we will see the change.
What needs to be done by the Indian companies to reach the level of success that say a firm like Zynga has achieved?
India does not have a market that is large enough to have an India specific Zynga so first of all the market has to grow. Zynga is operating in markets that are very large and have large customer expenditure. The other thing is that companies in India have to figure out how they will differentiate. A lot of content from the US works in India, whereas in countries like China there are a lot of differentiators and barriers, so I think content, platforms, building large communities, these are the areas that need to be focused on.
Which monetization model will work best for digital gaming in India?
I think the premium model which is working well across the world (especially in the US), is also coming into India. On the mobile front we see customer propensity to buy games upfront for Rs 50 and Rs 99 is not that high. There are transactions, but I think if you start giving these games free of cost with in-game transactions, that's where the maximum revenue is going to come from in the next 2 or 3 years.
Do you actually feel that the Indian audience will make in-game purchases?
Absolutely, we are already experiencing it, from my peers I see a lot of people making transactions sitting out of India using their credit cards on Facebook on games like Farmville. On a smaller scale, we as a company have launched a social network where people can spend small amounts like Rs 2, Rs 5 and Rs 10 for virtual goods and transactions and people are actually doing it. I think there is this big belief that people will not do it or people will not pay in India but I think that belief will be challenged once genuine content is available to the users.
What do you feel would be an ideal entry level price for these in-game transactions?
I think something like Rs 3 is a good price point and it is something that we are also experimenting with. You can go down to as low as Rs 1 but I have seen that it doesn't make a lot of difference in terms of transactions. End of the day, it has to be value of content, also a large enough community of players will be needed to give the users a challenge to spend money and compete among themselves.
How does Nazara generate revenues?
We generate revenues by selling mobile games to the end consumers; these are sold for an average price of Rs 50 but we are also selling day passes for example for Rs 3, so there are diverse price points. We are also getting revenues from adver-gaming where the games are given away free and ads are embedded, but that is still very small. It may grow nicely over the next year or so.
What payment methods are available for the user to make transactions?
It's still largely via the carrier (mobile billing), but we are also experimenting on alternate platforms. For example, we have just launched a G-cash card, which is linked to our G-city platform where customers can actually order these recharge from their homes which we deliver within 24 hours and collect the cash from them. The minimum value of the card as of now is Rs 250 while the maximum is Rs 500, but we are bringing out more denominations.
How much revenue do you expect to generate and what's the revenue share model between you and the carrier?
Our target for the next year which is FY2013 is about Rs 100 crore. At an average it is about 70 per cent that the carrier takes and 30 per cent that we get.
How do you promote your games?
We reach consumers today through multiple platforms, one is the carrier desk; one is advertising in off-deck channels, the third is through apps stores such as the android market place and other free app stores.
Are you planning to get into TV ads?
We would love to, but since the monetisation is happening through the carrier and they are paying only 30 per cent, affording TV ads become a problem.
What is your burn rate?
We don't actually have a burn rate; we have a strong track record of profitability over the last few years.
What are your investment plans? How much do you need more in funding?
Until now we have only raised a small amount of investment from Sequoia Capital and they have been very close partners with us over the last few years but going forward as this Indian market is scaling, we will be raising more money, but this time the amount will be larger, closer to $ 20-25 million. But we are not in a hurry; we are looking for a partner that can add value to us beyond just the financing bit.
What are the opportunities for the future?
I think that the Indian market is set at an inflection point where due to the growth of the smartphones and mobile internet, we are going to see a massive uptake of gaming on mobile phones. Since mobile phone provides the user with portable entertainment, the content is not actually competing with say a Bollywood movie, gaming consoles or some other entertainment options. I think mobile is going to drive a gaming revolution in India over the next few years and that is where the opportunity lies.