Reverse Pitch | 'Confluence of real money gaming and cheap data heralded era of Gaming 2.0'1 min read . Updated: 10 Dec 2019, 10:42 PM IST
Today, India has over 200 million users spending hours every week on sports fantasy games or casual e-sports
Mobile gaming was always India’s favourite pastime, but the sector has recently witnessed renewed excitement from the venture capital (VC) industry. The first bout of VC excitement came in 2009 when casual and social gaming became a staple for millions of Indians—from metro commuters to college students in their rooms. Multiple game-developing startups emerged in this period promising to deliver the next Candy Crush or Temple Run. However, these models remained high-risk ventures with limited ability to monetize. Beginning 2016, however, the confluence of real-money gaming and cheap data heralded the era of Gaming 2.0. Today, India has over 200 million users spending hours every week on sports fantasy games or casual e-sports. Startups in these categories have scaled rapidly as users don’t mind paying to play for a win, allowing startups to make a 7-15% administrative commission.
While the scalable Gaming 2.0 business models indicate a bright future, the question on defensibility remains unanswered with no proprietary product/tech behind these platforms and limited network effects. In addition to the low barriers to entry (games can be easily replicated), regulations could be a spoilsport. While most states allow wagers on games of skill, the definition of this remains open to judicial interpretation. We believe Gaming 2.0 firms can build their ‘right to win’ by investing in—
Supply-side partnerships: Tie-ups with exclusive game titles for e-sports platforms, event tie-ups for sports fantasy games
AI/ML: Use data to optimize for user experience and win rates. Best-in-class platforms have as high as 45% of their users generating net positive returns
Low CaC Playbook: Adopt low-cost user acquisition strategy to keep unit economics healthy
Continuous product innovation: Periodically introduce new games, formats and features
We believe firms that demonstrate success will emerge as the strongest candidates for financial investment. As soon as regulatory clouds are cleared, the game is on.
Reverse Pitch is like a normal investors pitch, but with the roles reversed. That means the startup doesn’t present its business to investors but investors and companies pitch their business concepts, challenges and the like to startups