Games24x7 CFO Rahul Tewari shares his thoughts on how revenue streams for gaming companies will increase in 2023, the brand’s advertising strategy, and more.
The year 2022 saw a lot of talk about the emergence of the mobile gaming sector as a viable advertising platform. Multiple reports showed that as the engagement of consumers with mobile games increased, so did the interest of brands in collaborating with gaming content. This led to a plethora of brand deals for gaming content creators and sponsorships for e-sports events in 2022.
However, for gaming platforms like Games24x7, advertising revenue is pretty much non-existent. In an exclusive conversation with afaqs!, Rahul Tewari, CFO, Games24x7, says things are likely to shape up in 2023 for the gaming industry in terms of direct ad revenue from brand advertisements.
“In the casual gaming industry, there are primarily two revenue sources for a company,” he explains. One revenue stream is the platform fee, which gaming platforms extract from a new user at the time of onboarding them.
“In the skill gaming space, the revenue model is pretty much exclusively dependent on the platform fees. We levy a transaction fee for people to come and engage with our platforms like RummyCircle and My11Circle,” he shares. The secondary revenue stream is from the in-app purchases that a lot of casual games offer their players. However, Tewari points out that a third revenue stream — advertising — may emerge in India in the next year.
“Advertising revenue in gaming is almost non-existent today. But as you get more eyeballs and more engagement, there will come a tipping point when the brands will start advertising on casual game gaming platforms. Gamers don't typically like interruptions in the gameplay. So the advertising will be integrated into the game and will be very subtle. I feel we will see brand advertising embedded in the core journey of the games. We would also see that the personas and the characters in the games will absorb some of these brand advertising angles,” he says.
In-game advertising has been more prevalent in western markets till now. However, Tewari confirms that there has been an increase in Indian brand interest in this mode of advertising given the user engagement that games command. Without giving out additional details, he confirms that the company is looking at finalising multiple such opportunities as of now.
Games 24X7 was established in 2006 and earned unicorn status in 2022. It is among the three unicorns in the gaming space (others being Dream11 and Mobile Premier League).. Initially, the company grew as a game publisher with multiple IPs based on the success of RummyCircle. Their second largest IP is the more recently launched My11Circle.
The umbrella category for both games is skill-based gaming. “When we see this development from a global context, I think India is the hottest market for gaming at the moment and skill-based gaming is one of the biggest spaces in the industry. It's a rapidly growing market and the established players really have the benefit to keep on growing their market share disproportionately higher as compared to the industry growth rate,” he said.
A BIS report estimated the total size of the skill-based gaming market in India to be around $3.6 billion in profit.
“What drives consumer engagement in skill-based games is a mixture of competitiveness and snackable entertainment, that is, a quick game which engages you for not more than 15-20 minutes. Consumers are looking at any time, anywhere entertainment in an immersive fashion, which is only possible with mobile gaming. This is exactly what skill-based gaming gives to its users and hence, the sector is growing exponentially,” Tewari says.
While the rapid expansion of the sector is widely attested, issues with growth also have arisen. Real money gaming platforms and betting games, where consumers have a risk of losing money, have also gained a lot of momentum in the past year. Sometimes, with the association of words like “fantasy” to the game, it might be hard for a potential player to distinguish between real money gaming and skill-based gaming. In order to tackle this challenge, Games24x7 has proactively taken multiple initiatives, says Tewari.
The company has also taken a part in an industry-wide advocacy initiative where they engage with policymakers, consumer groups, and with the media to make sure that people understand the distinction between games of skill and games of chance.
Apart from these initiatives, Games24x7 advertising and marketing initiatives have also been one of the most prominent in the industry in 2022. From signing Hrithik Roshan as their brand endorser to sponsoring Lucknow’s IPL team, the past year was eventful for the company’s marketing department, to say the least.
Tewari explains that the company looks to bundle ads together. “Usually, the visibility is created through our TVCs and that’s where the brand ambassadors really help. As we are running a TV campaign, we also penetrate the user bases through performance marketing. We employ different kinds of digital marketing channels, most prominently display advertising, affiliate marketing, and influencer marketing. Social media is a very diversified channel strategy as that channel is where we really get a chance to thoroughly engage with the users,” he says.
The company also adopted a multi-pronged strategy around the IPL 2022 to promote My11Circle.“We did have a very high decibel campaign during the IPL when we sponsored the Lucknow Super Giants. Fortunately for us, the team did very well, and that created a tool for visibility for us. We are more leaned towards advertising in cricket because in fantasy sports in India, that’s where we see the most engagement. We also sponsored the Women's T20 Championship in 2022 and hope to capitalise these associations further in the future,” he shares.