According to Salon Sehgal, general partner at Lumikai, a gaming-focused VC fund, a significant portion of the funding went to real money gaming during the pandemic. However, investors have diversified their capital into game streaming, content and infrastructure providers in the last 6-8 months, she said.
“We have seen a lot of domestic interest from VCs, a lot of international interest from strategic ones who are actively looking for companies in the Indian market,” Sehgal said.
One example is Bangalore-based startup Bombay Play, which last month raised $7 million in a Series A round led by Kalaari Capital to build social games. Another local game developer, Leela Games, raised $10 million in March to form a mobile games studio. The company is also developing a free-to-play mobile shooter game.
In March, game streaming platform Loco announced a $42 million funding round led by early-stage fund Hashed. Loko said the money will be used to strengthen the content and focus on the development of Web3.
Sehgal said there have been over 1,000 deals in the last 18 to 20 months, of which 500 to 600 are in the gaming content segment. “It’s a mix of independent studios making mid-core games and PC games, but most of them making mobile and casual games,” she said.
Oliver Jones, chief executive officer (CEO) of Bombay Play, felt that VC firms are “starting to wake up to the magic of Web3 and real money gambling”.
“Gaming has historically been countercyclical. Investors are realizing that the content business is more trustworthy, and investing money in businesses like ours will yield more assured returns.”
Pranav Pai, founding partner of 3One4 Capital, pointed out that India has not yet built big-game development studios. He said that while India has “almost all” essentials needed to create a market like animation designers, developers, gamers and more, there is a need for stakeholders to come together and build a genuine industry including IP, platforms and dedicated capital .
Investments aside, service providers in the gaming market are also increasing revenue. According to Manvendra Shukla, CEO of Gurugram-based Lakshya Digital, the company has twice outsourced work to India since the pandemic began.
Shukla’s firm is one of India’s oldest firms in this area, and has designed characters and artwork for big-ticket games like Metal Gear.
He said that while India was getting the “low hanging fruit” earlier, it is not working on the complex characters, environment and level design for the big games. Target has worked on Elden Ring, a big-ticket gaming title from Japanese publisher Bandai Namco.
“Sports development is booming in India. India is seeing a lot of new developers and startups who are excited to make their own games.”
Lakshya opened a new studio in Bengaluru earlier this month, led by Raju Patil, co-founder, Dhruv Interactive, which was bought by American Rockstar Games in May 2019.
Pai said that India is capable in terms of animation services, but it needs to “transition to a product mindset where we will build and scale our games”.
All this will lead to more investment in gaming firms in India. Nazara Technologies CEO Manish Aggarwal said the environment in India has “significantly improved” over the past two years due to the consolidation of non-real money gaming firms and acquisitions of local studios by European firms.
In addition to the acquisition of Rockstar, Swedish gaming firm Stillfront Group acquired Moonfrog, an independent game studio based in Bengaluru, in February 2021. In July 2021, word games startup PlaySimple was acquired by another Swedish gaming company, Modern Times Group, for $360 million.