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Nazara Technologies Says It's Confident To Outstrip Peers On Growth

Nazara Technologies CEO Manish Agarwal said the company will outstrip the gaming industry's CAGR of 30-35% over next three years.

<div class="paragraphs"><p>(Photo: Florian Olivo/Unsplash)</p></div>
(Photo: Florian Olivo/Unsplash)

Nazara Technologies Ltd. is confident it will outstrip the online gaming industry's compounded annual revenue growth rate of 30-35% over the next three years.

Such growth is possible not just for Nazara Technologies but for other players too because the gaming industry in India is still in its infancy, Chief Executive Officer Manish Agarwal said Nazara Technologies has to outpace its peers in the near term if it is to achieve the objective of raising market share, he said.

The Rakesh Jhunjhunwala-backed firm's consolidated net profit rose 17% year-on-year to Rs 4.9 crore in 2021-22. Revenue from its real money gaming business more than doubled to Rs 29.7 crore. But revenue fell sequentially in the fourth quarter even though it rose 42% over a year earlier.

Last year's revenue surge has created a strong platform for the company to grow in 2022-23, according to Agarwal. The company's diversified portfolio helped it realise strong numbers, he said, pointing out that the nearly-flat 1% revenue growth in the gamified learning segment was offset by 89% growth in e-sports.

Agarwal credited the Sportskeeda and Nodwin Gaming businesses for the jump in the share of e-sports revenue to 49% in the fourth quarter.

The Nazara Technologies CEO said the Sportskeeda business had grown very fast in the U.S. and was now among the top 10 sports websites in the American market.

He blamed seasonal factors for Nazara's revenue performance in the fourth quarter. There are usually no major sports events and Nodwin does not conduct any white-label events in the fourth quarter, he said.

He attributed loss of 19,000 Kiddopia subscribers in the fourth quarter to the "seasonality of high churn" in January and February. He expects 3-4% sequential growth in subscriber addition in the coming quarters. Agarwal, however, expects headwinds to persist for the gamified learning segment.

In 2022-23, the company could focus on the direct-to-consumer business, through which it could sell gaming accessories, merchandising and licensing. Nazara Technologies had invested heavily in the business over the last couple of months and would "press the accelerator" this fiscal, he said.

And he said the company continues to prefer buying small companies like Paper Boat Apps and Sportskeeda to acquiring large firms. The company, he said, would like to consolidate more skill-based money gaming players if statutory issues do not come in the way.

Nazara Says 28% GST Acceptable If...

An empowered group of ministers has suggested 28% goods and services tax on online gaming, multiple media reports, including from The Economic Times and the Mint, said citing unnamed officials.

Agarwal said a 28% GST on platform fee would be acceptable to Nazara Technologies. But it should not be imposed on transaction volumes, he said. Such a move would be a "self-goal" for the government given the potential of the gaming industry in India, he said.

Watch the full conversation here: