BGMI maker Krafton chooses India as its biggest bet

During his ongoing fourth visit to India, and speaking to the press for the first time here, CH Kim, global chief executive of Krafton, told Mint in an exclusive interview that the company sees India as a crucial market. “Globally, India is already the fourth- or fifth-highest contributing market for Krafton. In the future, India has the potential to become the biggest market for Krafton thanks to its unique position of the sheer size of the market, as well as an increasing amount of interest in e-sports in the country," he said on Tuesday.

Company has the highest investment in India

Kim added that the total $170 million invested by Krafton so far in India "is higher than what the company has invested anywhere around the world".

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The company has invested in Indian companies such as e-sports firm Nodwin Gaming—a subsidiary of the publicly-listed Nazara Technologies, audio streaming platform Kuku FM, and content platform Pratilipi in a bid to diversify its offerings beyond gaming.

Krafton, listed publicly in South Korea, reported a net revenue of $483.2 million between January and March—claiming it to be a quarterly record. Prior to this, it had reported net annual revenue of $1.39 billion for calendar year 2023. Over 60% of its net revenue is derived from mobile platforms, of which BGMI is a key contributor from India. In its earnings call on 8 February, the company had said that the sales upturn was “mainly driven by the popularity of BGMI"—signalling India as a key market for the firm.

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The PUBG network is one of the world’s most-played action and competitive game platforms. In June this year, market researcher Statista ranked PUBG as the sixth most-streamed game globally, with nearly 2.5 million hours of streaming viewed by e-sports enthusiasts globally every week in June. Annual app charts from market tracker AppMagic ranked the PUBG network as the sixth most-downloaded action game in the world last year, with 85 million downloads.

Yet, the popular battle royale game has seen a topsy-turvy journey in India. After facing suspensions by the ministry of electronics and information technology (Meity) on grounds of data localization, the game was finally reinstated in May last year. Overall, BGMI is estimated to have raked in nearly 250 million downloads as of June this year—making it one of the most-played games in the country.

Touching upon India’s regulatory approach, Kim said that while India’s stance “has been encouraging", there’s more work to do. “E-sports can have a constructive impact on mental health. While we are conscious about adding filters such as permissible hours of gaming, what e-sports in an overall sense would benefit from is to be taken seriously as an industry, and that will only happen when individuals get a deeper understanding of the impact that e-sports can have—including commercially," he added.

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Sean Hyunil Sohn, Krafton’s chief executive for the India market, said that faster movement in policy terms, such as with India’s animation, visual effects, gaming and comics (AVGC) policy, “could further boost the sector and make it a monetizable economy."

“This, in turn, will only boost India’s prospect," Sohn said.

Kim, however, added that the company will not consider delving into fantasy sports and real-money games (RMG) such as rummy and poker, as it's wary of their overlap in definition with gambling titles. “It’s a no-go area for us," he stressed.

India's RMG industry has been hammered by taxation issues and concerns and disputes around them being deemed as “games of skill" or “games of chance", thereby raising doubts on whether global investors might shy away from the sector. Kim said that the company is focusing on investing in game development and designing in India. “Going forward, this is a sector that can truly develop and take off—we’re looking at viable investment avenues in this space," he added.

A report by gaming venture capital firm Lumikai, in partnership with Google, published in October last year, pegged e-sports and ‘core’ games as the two fastest-growing verticals in in India until FY28. Core games, which refer to enthusiast titles such as the ones Krafton may invest in from a development and design perspective, is projected to grow in revenue at 49% annually, while e-sports could grow 25% annually.

“In-app purchases and ad revenues are expected to drive growth on account of structural shifts towards higher propensity to pay in-game, and the growing prominence of casual and midcore games," the report said, underlining Krafton’s strategy to grow in the country as well.