Bhavin Pandya, the co-founder and CEO of gaming unicorn, Games24x7, said he does not see the company foraying into NFTs in the immediate future, as he feels the world is yet to figure out a way to monetise NFTs on an ongoing basis.
This comment comes at a time when gaming major Dream11 has made its Web3 foray by investing in cricket NFT platform, Rario. “Games24x7 has been on the forefront of a lot of Web3 research that is going on. We know that Web3 space is absolutely fantastic and there are a lot of opportunities there. But I don’t think people have figured out what that opportunity is yet,” Pandya added.
Further, he also thinks that the adoption of Virtual Reality (VR) gaming or metaverse games is a few years away, given its dependence on expensive VR headsets. “I think VR hasn’t yet taken off in a really big way. Yes, we have some games that have made some splash every now and again. But the fact of the matter is that you need an expensive device to be able to experience VR, especially if you want to make that experience immersive,” he said.
Games24x7 was started as RummyCircle, and later expanded to include fantasy sports with the launch of My11 Circle and casual games studio, U Games. RummyCircle continues to drive the majority of the revenue for Games24x7, followed by My11Circle, which was launched in 2019.
“We were a fairly late entrant in the fantasy games space. By the time we came around in 2019, there were many operators already in the space. But I’m very pleased to say in the last three years of being operational, we have cemented ourselves as the number two player in the fantasy space,” said Pandya.
My11Circle is said to have doubled its user base since 2021. However, the company did not disclose the exact size of the user base. Games24x7 is a profitable gaming unicorn last valued at $2.5 billion. In FY21, the company reported a total income of ₹1,312.66 crore on a standalone and consolidated basis, and its net profit after taxes was ₹383.7 crore.
Threat of GST
Similar to all real-money gaming companies, Games24x7 is also faces the threat of being obliterated if the 28 per cent GST is applied on the contest entry amount of online games such as RummyCircle and My11 Circle. The way real-money gaming companies work is that if two friends enter a tournament for ₹50, a total of ₹100 is collected by the gaming company.
Out of the ₹100, the gaming company’s earning is between ₹10-20, and the rest is given back to the player as contest winnings, prizes. At present, gaming companies pay 18 per cent GST on this ₹10- 20 revenue, but the GST Council is considering to apply the 28 per cent GST on the contest entry amount (in this case ₹100).
“We are okay paying 28 per cent GST as long as we are being taxed on our revenue. We welcome that change. But when the government says they will charge tax on the ₹100 that is collected as entry fee, they are, in effect, asking us to pay ₹28 in tax when our revenue is just ₹10,” Pandya noted.
He added that the industry has found the government extremely forthcoming in their recent conversations, and is hopeful that GST will be levied only on company revenues. “They’ve called us many times to really understand what is going on, and they understand that the tax must be levied on our revenue and not on the entire pool of money. There was some confusion around it, but now they have understood this clearly. The government told us in the recent meeting that they want the online gaming industry to flourish. We made our case and now we will wait and watch,” Pandya added.