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"Parents and kids are now gaming together": Akshat Rathee, Nodwin Gaming
The co-founder and MD of one of South Asia's largest e-sports companies talks about media, advertising, and marketing in and around the e-sports ecosystem.
What are the chances of a schoolgoer, who knows how to run and bowl, getting Virat Kohli out in the nets? Kohli might get bored and leave a ball that hits the stumps, but that doesn't mean the kid defeated him. "Where skill wins 10 out of 10 times, it is sports. When you need to depend significantly on luck, it is not," says Akshat Rathee, co-founder and MD of Nodwin Gaming, one of South Asia's largest e-sports companies.
In India, one often gets confused about what e-sports is, and how different it is from gaming. There are many games, like Ludo, Candy Crush, fantasy games, etc., that are played electronically. Are these a part of the e-sports economy? "No they’re not," says Rathee. They are RNG (random number generator) games, "Where skill will lose 30 per cent of the time because of the opponent's superior luck," he adds.
The Coronavirus-induced lockdown forced people to remain indoors. Television didn’t have new content to telecast, schools were shut, and so were gyms, swimming pools, and cinema halls. While games like Candy Crush and Ludo, did see a significant spike when it comes to the time spent and active users, COVID-19 seems to have become a blessing for e-sports, too.
Nodwin's ‘ESL India Premiership’, one of the marquee e-sports properties in India, has witnessed record growth in the number of registrations. The 2020 edition of the tournament will have the likes of Counter-Strike, FIFA 20, PUBG and Clash of Clans. Gamers from all over the country have registered to participate in the competition. The number of entries, Rathee says, has grown by an unprecedented 414 per cent.
In an interview with afaqs!, Rathee explains what this growth means for media, advertising, and marketing in and around the e-sports ecosystem.
Edited excerpts:
Where has this 400 per cent growth in entries come from? Why are more people suddenly interested in e-sports?
You have to go out, and go into a little bit of psychology and behavioural studies to understand what is happening in India, as far as gaming and e-sports go. Basically, whenever a kid mentioned e-sports, his parents and teachers said, you're wasting your time, read a book, instead, or go out and play… Be a doctor, or an engineer. The kid’s response would be, no this is sports, it is in the Asian Games, and is being considered for the Olympics. There are so many tournaments, like India Premiership, DreamHack, etc. There are 1.2 million concurrent YouTube viewers watching e-sports, the influencers are making so much money... The parents wouldn't listen, and then COVID happened. They (the parents) could no longer say, go to school, or go out and play.
Did that instantly change the game?
The lockdown started from March 25, but till April-end, we didn’t see much increase. The germination of behaviour started happening when the kid was sitting in front of his parents, and playing games all the time. By the end of April, the parents started asking, out of curiosity, what is it that you are doing? Their kid replied, I am playing Counter-Strike, or I am playing PUBG.
What was hostile in nature, suddenly became an ambivalent environment. Suddenly, the same answers that were given by the kids earlier, started resonating. Not only did they stop saying bad things about gaming, but started appreciating it, and said "Chal Khel". In fact, Late May onwards, parents joined the kids and started playing games together.
Parents playing... is this a trend you witnessed in particular parts of India?
No, it was all across India. Remember, this is still an entertainment form at the grassroots... You don't become an e-sports athlete the day you pick up the game. Between 0 and 100 hours, you are curious about the game. From 100-500 hours, you are passionate about the game. From 500-1,000 hours, you are becoming good at the game, and beyond 1,000 hours, you become an e-sports athlete.
Before 1,000 hours, when you're playing with your parents and sister, it becomes like Ludo that we play at home... When cousins, or parents, start playing together, it means there is a critical mass in that family for whom this is now legitimate behaviour.
Advertising and sponsorships, media rights, and ticketing and merchandising. These are primarily the three sources of revenue for sporting events globally. What about e-sports in India?
Before COVID, we used to make 10 per cent of our revenue from merchandising and ticket sales, 50 per cent from sponsorship, and the remaining 40 per cent using media rights.
How has that changed post the outbreak of Coronavirus?
Obviously, merchandising and ticket sales have become zero. But, we have more than offset that by going and having 60 per cent of our revenue through media rights, and 40 per cent has remained through sponsorship. But the pie has increased from 100-size-pie to 150.
What has sponsorship revenue looked like during lockdown? Will you be able to retain the gamers once they start going out?
Let's say that since there is an economic crisis and nothing is selling, marketers, who had a budget of say 100, it has now got slashed. But it has not gone from 100 to 0, they still have a 40 to spend, and it is essential for them to do so. Where are they spending this 40? They can't spend it on sports because there was none at all. Then, can they do it on news? But that is again too negative, so, they are coming to people like us.
Earlier, when I used to get, maybe, 1.5 of that 100 marketing budget, now I am getting 10 out of 40. Fast forward to post COVID, will it go back to 1.5, as people start going out and working? We did speak with the brand marketers, and we don't see that going down. Similarly, people will continue to spend time on gaming, and it will offset the time they were spending on other forms of entertainment. The registration numbers will not go down.
In the US, reports suggest that the media rights will grow from $100 million in 2018 to $400 million in 2022. What about India?
Media rights have two parts, live and non-live. For live, first we go and get the rights from the (right) holders. So, PUBG, as an intellectual property, is owned by a Singapore-based company. We have gone to them, and got the right to have it in our tournaments. Once I go and get these rights and make tournaments, I then go to broadcasters - both television and streaming. And I say: I have the India Premiership tournament, would you be interested in (its) media rights?
Then people bid for it exactly the way they would do for a cricket tournament, like Indian Premier League (IPL). These rights, by definition, are awarded for 1-3 years, and grow from 2X to 10X. Then there are non-live content pieces, which are talk shows, reality shows, etc
Are mainstream sportscasters interested in media rights, when it comes to e-sports in India?
Traditionally, live e-sports rights are always bought by the streaming players, and the reason for it is simple. The ‘watch time’ in e-sports is around eight hours, and the tournament goes on for about 21 days.
Unless there is a dedicated e-sports channel, it doesn’t make sense as they need to sell the inventory, too. What the television channel does is they ask us to condense it down into a one-hour highlight package. We do that with MTV, and a couple of others.
How can you make more money from media rights? Do you need new properties, or will the rights acquisition cost go up?
Now your existing IPs needs to keep on growing by a certain margin. At the same time, you need to go and keep launching newer IPs. We are doing the same thing, we have 11 IPs, and we keep growing them. Also, our objective is to launch between two and five new IPs every year.
Do you see enough non-tech, non-peripheral brands willing to sponsor e-sports event?
Worldwide, the phenomenon has been that endemic brands (brands are creating products used in game production or for playing games) have made a lot of money from e-sports as advertisers. In India, I could not find a single one of them to give us money initially. So, Nodwin has built the India story of e-sports from non-endemic brands, like FMCGs. Our big clients are Mountain Dew, Red Bull, Airtel Xstream, Mercedes Benz, Coca Cola etc. None of these are what you would call endemic brands. We do a very good job of working with people like them, and go ahead and build a brand story.
What about the third bit, ticketing and merchandising? Are there people willing to buy tickets to enter an arena and watch e-sports?
In Mumbai, we hosted ‘ESL One’ last year, which was the first ticketed e-sports event in the country. We sold close to 4,000 tickets. Before that, we've also done two different editions of DreamHack, one in Delhi and another one in Mumbai. This year, we were supposed to do it in Hyderabad, but COVID happened. Mumbai and Delhi, both of them put together, saw thousands walking in everyday.
We have all heard investor and author Ruchir Sharma saying gaming is bigger than movies and music put together. How big is e-sports in that?
Globally, e-sports is about $2 billion, out of $150 billion gaming market. Gaming predominantly is the activity where the money is made from the consumers, either through in-app purchases, or advertising during the game, or an upfront selling. So, if you want to play a game, you go and buy the DVD or pay and download. Whereas, e-sports is the business of watching. The definition of e-sports is literally the word itself. 'E' stands for electronic, which means this is an activity that is happening electronically. And, sports refers to the activity that is completely competitive in nature and where rules are absolutely fair.
What would be the size of e-sports in India?
The e-sports market is currently not defined. Are you only talking about software? Which is about a billion-dollars across the world. Or, are you also including phones and computers that people are selling in the name of e-sports, like ASUS ROG phones, or Alienware laptops?
Are you also including the entire advertising money that sits on YouTube around e-sports, or are you also including all the revenue that comes from telecom services, like Vodafone or Airtel? There are people legally betting on e-sports in London, are we including that, too? Different reports will have a different number…