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Investors are pouring money into gaming companies as they benefit from a surge in online gaming sparked by the pandemic.

Gaming startups in India have attracted $1.6 billion in the nine months to 30 September, exceeding the total value of investments in the sector in the past five years, according to a new report by investment banking platform Maple Capital Advisors.

That said, close to 90% of the investments went to two large players in the fantasy sports and platform gaming sector. Dream Sports and the Mobile Premier League (MPL) raised $785 million and $375 million, respectively. The report, however, was published before Dream Sports announced an additional $840 million funding round on 24 November, which valued it at $8 billion.

Dream Sports and MPL aren’t the only companies that have received investments.

Top venture firms such as Accel, Matrix Partners India, and more have invested millions of dollars in firms, including PlayShifu, Zupee and Winzo. South Korean gaming firm Krafton Inc., which makes popular battle royale games PUBG Mobile and Battlegrounds Mobile India, also invested $22 million in homegrown Nodwin Gaming in March this year.

In all, the sector has seen a total of 42 deals so far, counting both venture investments and mergers and acquisitions (M&As). Venture investments accounted for $911 million, while M&As amounted to $611 million. This month, a separate report by gaming and interactive entertainment venture fund Lumikai Ltd noted that the sector saw $415 million in venture investments in 2020.

“We expect investments to increase in the sector in the next 12-18 months," said Pankaj Karna, founder and managing director of Maple Capital Advisors. “Consumer traction on the back of greater awareness and engagement is likely to accelerate," he added. The report said that platform plays and electronic sports (E-sports) companies should witness large capital infusions from VCs and PEs in the coming months.

According to Salone Sehgal, general partner at Lumikai, a “massive amount" of money is being invested in gaming globally, and India is benefiting from the same. “India has been a beneficiary of the fact that capital inflows to China have slowed due to the strong stand China has taken against gaming," she added.

Sehgal added that capital infusion allows companies to attract talent to the ecosystem, which helps drive innovation and entrepreneurship. “Already in the last two years, we’ve seen game development studios go from 25 to north of 500. These game development studios are now building games from India, for India and the world. We are seeing a new kind of entrepreneur coming into the gaming industry, with a new paradigm in terms of defining what gaming means," she added.

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