Bengaluru, June 14: With several start-ups laying off employees and even shutting down operations in the ongoing funding winter, media and entertainment major Nazara is actively looking to acquire Web3 companies and game development studios specialising in Virtual Reality (VR) games. BusinessLine spoke to Joint MD of Nazara Technologies, Nitish Mittersain, about the company’s acquisition plans, outlook towards Web3 space. Excerpts:


As investors turn conservative and start-ups cut costs to secure financial runway, will Nazara look at acquiring companies this year?

I think we definitely have acquisitions on the radar. In the market downturn, we will have much better value opportunities to buy companies for the next year or so. Our areas of focus will be the freemium space (free to play games), as we are looking to build that business for ourselves. We are also looking at game development studios, especially the ones in VR (virtual reality) games, along with companies operating in new areas of the eSports ecosystem that we can enter. In gamified learning we’re looking for products that can cater to children in 8-12 age group.


How much capital will you invest towards acquisitions this year, and is there an estimated number of acquisitions that you will be doing?

All I can say is between Nazara and our group companies, we have a little over ₹700 crore to ₹750 crore of cash as margin. We did nearly ₹100 crore of EBITDA (earnings before interest, taxes, depreciation, and amortization) in FY22 and our free cash flow was ₹112 crore. We are generating cash and also have cash in the bank. So, we will use a lot of our money for acquisitions. However, since we have already made acquisitions after we went public, we will also take some time to integrate existing acquisitions before making new acquisitions. I think, it is a balancing act, and that’s how we are going to approach it. 

There has been a lot of hype in Web3 space without substance. As Nazara, we don’t want to burn our fingers by getting into something short term. So we are being cautious in our approach.Nitish MittersainJoint MD of Nazara Technologies


Gaming, as an industry, has always been on the forefront of innovation. As one of the major players in the space, will Nazara look at making a Web3 foray?

We have already made some active moves into the Web3 space. Nazara has made investments in some global gaming funds such as Griffin Gaming Partners and Bitkraft, to get more exposure on what they are doing in Web3. We are also looking at moving some of our internal products into Web3. Cricket games, for example, will probably be our first launch in the Web3 space. 

We are also being a little cautious because there has been a lot of hype in this space without substance. We don’t want to burn our fingers by getting into something which is short term in nature. One of the most popular games in Web3 — Axie infinity — became very big very soon, but they also went down equally fast. As Nazara, we are looking at building sustainable Web3 businesses. With the ongoing downturn in the Web3 market, we are hopeful that we will get some good opportunities to invest and acquire companies. That said, we are also internally developing Web3 projects.


What is your view on the play-to-earn model in Web3 games? Do you think it can become successful in India?

Play-to-earn is a very interesting model because it creates a new use case for gaming. In India, the freemium business has been slow to take off, because in-app purchase conversions are still very low. Indian consumers prefer to play for free rather than spend a lot of money. I am hoping that play-to-earn would bring better ARPUs (average revenue per user) and better monetisation to gaming.

However, we have to solve for certain nuances around play-to-earn games, such as whether people’s objective of playing a game is only to make money or is making money a by-product of entertainment.  Because if the objective is to only make money and not enjoy the game, then it becomes a little difficult to sustain. That’s what companies like Axie Infinity have faced. I think if we get the approach right, this can become very big and much higher ARPUs could be generated, compared to what have been done in the freemium space.

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