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Nazara Technologies Ltd. – Business Update for the year ended on March 31, 2021

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Nazara raises INR 315 Cr from marquee investor
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In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information in terms of Regulation 8 of SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company would like to update on the following key business parameters on consolidated basis for the Year ended March 31, 2021

Business Overview:

Nazara is an India based, diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America.

As of March 31, 2021, Nazara has diverse business segments with revenue generation happening across gamified learning, Esports, freemium and telco subscription.

S. No. Business Segment Business Model Content IP Ownership IP Name % Revenue Contribution FY21
1 Early learning Gamified App for 2–6 year old kids with subscription paid by parents Yes Kiddopia 39%
2 Esports Premium exclusive content / (Media rights licensing) & brand sponsorships (ads shown on the platform) Yes Nodwin, Sportskeeda 37%
3 Freemium Ads & virtual items purchased within the games Yes WCC 4%
4 Telco Subscription Business Players subscribing to curated game packs and payment collected through telecom operator channel No 16%
5 Skill Based Real Money Gaming Platform fee collected from the skill games played on the platform Yes Halaplay, Qunami 4%

 

Income Statement Performance: Snapshot of FY21 over FY20

Key Highlight of FY21: Delivered 84% YoY revenue growth and 470% YoY EBITDA growth

Revenue Performance: Snapshot – FY21 when compared to FY20

Nazara Technologies delivered consolidated revenue of 4,542 Mn INR (unaudited) in FY21 which is 84% growth over FY20 (2,475 Mn INR). Gamified learning and Esports segments have not only demonstrated strong growth momentum in FY21 but have also laid foundation for predictable growth on account of proven user engagement and retention KPIs in gamified learning and multiyear media licensing and game publisher agreements in case of Esports.

Segment wise revenue breakup is as follows:

Revenue INR Mn FY21

(unaudited)

FY20

(audited)

% Growth
Gamified Learning 1,758 191* 820%
Esports 1,701 842* 102%
Freemium 195 198 (2%)
Telco Subscription 749 818 (8%)
Real Money Gaming 139 426 (67%)
Total Revenue 4,542 2,475 84%

*included from date of acquisition in the consolidated financial statement for FY20.

Consolidated EBITDA Performance: Snapshot – FY21 when compared to FY20

EBITDA including share of non-controlling interest for FY21 has witnessed 470% growth over FY20.

Particulars FY21

(unaudited)

FY20

(audited)

EBITDA margin 12% 4%

 

As Nazara is operating in high growth business segments such as gaming, gamified learning and Esports, we will continue to drive profitable growth while prioritizing growth over profit maximization at this stage so that we can achieve and maintain market leadership in the segments we operate in.

Segment wise commentary on business performance:

  1. Gamified Learning: Kiddopia had 340,282 paying subscribers as of March 2021 which is a 172% increase in number of paying subscribers as compared to March 2020 (197,522).

LTV (Lifetime Value) – CAC (Consumer Acquisition Cost) Parameters: Cost per trial has stayed range bound between 22 USD to 26 USD in last 12 months and activation ratio from free trial to subscription has also remained around 70%.  Monthly ARPU of the user has been around 6.3 – 6.4 USD and monthly churn is range bound between 4% – 6% across the months in FY21.

  1. Esports: Esports revenues comprise of media rights licensing of own content, brands sponsorships for offline and online events, licensing fee received from game publishers for community activation and programmatic inventory selling on Sportskeeda. Esports is disrupting traditional sports worldwide and is an outcome of sports and gaming intersecting to create fast paced spectator entertainment content.
  • Sportskeeda witnessed 487% growth in MAU in FY21. During peak cricket season (October 2020), Sportskeeda recorded 68.44 Mn MAU up from 10.53 Mn MAU in April 2020.Sportskeeda has emerged as a leading Esports news and content destination in India.
  • Nodwin continued revenue growth momentum with 75% growth in FY21 over FY20. Media rights contributed to majority of the revenues in FY21 and game publishers formed second largest source of revenue wherein Nodwin partnered with them for grass route community tournaments across India. Nodwin also expanded into South Asia in FY21. Nodwin continues to be the dominant player in Esports in India with its marquee IPs like ESL India premiership, Dew Arena etc.
  1. Free to Download (Freemium): WCC (World Cricket Championship) is the world’s largest cricket simulation game franchise on mobile and is played for ~46 minutes / day by over 15 Mn monthly active users. The Game has a very strong franchise among the midcore gamers who love virtual sports simulation genre and gets over 100,000 downloads every day organically and without any marketing spends. WCC revenues were flat in FY21 on account of drop in advertising rates in India due to COVID. We expect growth in WCC to come from in app purchases of virtual goods and WCC3 – the latest version of the game launched in July has been designed for enhancing in-app purchase conversion rates.
  • Scale of Daily Active Users (DAUs) of world cricket championship (WCC) is stable with few spikes seen during first phase of lockdown in April 20 and during IPL 20.
  • Tangible progress has been made on % conversion ratio (daily paying to daily active users (DPU/ DAU)) in FY21 via launch of WCC3. The % conversion in WCC3 has increased multi-fold to 0.08% – 0.10% as compared to 0.01% in WCC2. % Conversion in WCC3 is expected to increase further in FY22 through new product updates.

 

Once positive LTV/CAC equation is achieved, the company will invest aggressively in user acquisition to scale up its user base on WCC and drive profitable growth.

  1. Telecom operator driven Subscription business declined by 8% in FY21 over FY20 primarily due to decline in India revenues in H2FY21. Nazara has acquired rights to distribute a library of premium Disney and Star Wars games based on iconic stories and characters including Star Wars, Frozen, Big Hero 6, Cars, Duck Tales, Finding Dory, Toy Story and many others in 100 countries for three years. These premium games will be distributed through Nazara’s network of telecom operators to their customer base. Under this agreement with Disney, Nazara is the only third party distributor that Disney has granted the right to create and operate Disney themed storefronts for premium Disney and Star Wars games on these telco channels.
  1. Sports Fantasy (Real Money Skill Gaming): Sports fantasy witnessed disruption in FY21 on account of lack of live matches in first half of FY21 and regulatory turbulence triggered by legislative ordinances passed in few of the large states banning real money gaming operations. The lack of stability in the regulatory framework lead to Nazara taking strategically cautious approach in this vertical till further clarity emerges. We have therefore pivoted to a product driven growth strategy versus an aggressive customer acquisition spends led strategy and the team is focused on enhancing existing as well as bringing new product features to differentiate ourselves in this segment.

 

About Non-Financial GAAP measurement

We use EBITDA as supplemental financial measures. EBITDA is defined by us as net income before interest expense, income tax expense and depreciation and amortization, including share of non-controlling interest. EBITDA as used and defined by us, may not be comparable to similarly-titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDA provide no information regarding a Company’s capital structure, borrowings, interest costs, capital expenditures and working capital movement or tax position.

These numbers have not been subjected to audit or limited review.

 

Asia

Tourism & Sports Ministry, SAT and Garena Signs MoU to Support and Enhance Esports Industry in Thailand

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The Sports Authority of Thailand (SAT) and the Thailand Ministry of Tourism and Sports have partnered with Garena Online Thailand to strengthen the domestic esports industry and develop the country as the hub of esports tournaments in Asean.

“The ministry and the SAT will focus more on esports next year including training and welfare to develop the esport ecosystem after esports was named in the Royal Gazette last month as one of the country’s professional sports,” Tourism and Sports Minister Phiphat Ratchakitprakarn said.

The esports industry across Asean was worth US$39 million in 2020 and is expected to grow to $72 million by 2024 as people spend more time playing online games amid the pandemic, according to the minister.

A boom in esports does not only benefit internet providers or IT products, but also consumer product makers which target millennials, sport tourism, and investment in the country, he said.

Mr Phiphat said Thailand is due to take part in the biggest esports event, Arena of Valor (RoV) International Championship 2021 (AIC 2021), with a prize pool of $1 million, at the end of next month, which could help the country prepare to serve as the future regional hub for esports competition.

SAT governor Kongsak Yodmanee said the agency has recently established the SAT Esports Academy to train RoV players participating in the upcoming Road to AIC 2021, a tournament that selects esports teams for AIC 2021.

Kongsak said there are 12 members from two esport teams that are preparing for the match under the supervision of the SAT, which provides support for physical training, nutrition and sports psychology.

The Tourism and Sports Ministry, the SAT and Garena signed a memorandum of understanding to support and enhance the esports industry in Thailand.

“Even though Thailand is not the biggest esports market in Asia, investors and stakeholders perceive the country as a potential market thanks to the readiness of the ecosystem and official recognition from the government,” Allen Hsu, regional head of strategic partnership and esports development at Garena Online Thailand, said.

Thailand is the first country where foreign football clubs like Paris Saint-Germain and Valencia have invested in the RoV Pro League, which showed the country’s potential for esports, he said.

He said 2022 will be the year for esports as many tournaments will take place in Thailand and overseas, particularly the SEA Games and Asian Games, where esports have become a medal sport and could gain more recognition.

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Fosun Sports Group Announces New Entity to Deepen Global Sports Industry Footprint

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On October 19, Fosun Sports Group (hereinafter referred to as “Fosun Sports”), a global pan-sports industry operating group company and subsidiary of Fosun International’s happiness segment, announced the formal establishment of Fosun Sports as a holding entity, and the acquisition of core operating assets and management team of Foyo, in games, esports and sports. At the same time, Fosun Sports has received a minority strategic investment from the U.S. finance and technology firm, PEAK6 Investments, which will continue to deepen the global industrial layout around the core business of sports, esports and games in the future.

Since Fosun acquired Wolverhampton Wanderers Football Club in 2016, Fosun Sports has relied on the group’s global resources and built a professional team to operate the club consistently and steadily, which has greatly enhanced Wolves’ brand value. In 2018, Wolves won the EFL Championship title and returned to the English Premier League, with 7th placed-finishes in the Premier League for two consecutive seasons and a last-eight finish in the UEFA Europa League. Wolves ranked 19th in the Brand Finance 2020 football club brand value rankings.

Meanwhile, Fosun Sports has built a sports-focused platform to offer its community of loyal football and esports fans a unique and innovative range of products (merchandising, sports fashion…) + content (music, mobile gaming, social media) + experience (matches, gaming portal…). Today, Fosun Sports has found its unique path to directly communicate with young audiences and connect with core users.

In 2019, Fosun Sports established the trendy sports brand WWFC based on the Wolves IP (Intellectual Property) and launched a collaboration series. Through “Wolves Fashion Night” and “Wolves Fan Night”, Fosun Sports harnessed the combined power of its projects, fully deploying the resources of fashion, trend, and partner brands. Wolves has now been successfully transformed from a traditional soccer brand to a diversified pan-sports lifestyle brand and is known as a practitioner of “sports + fashion” in the industry. Such IP operation capability also makes Fosun Sports the exclusive authorised partner of CFA (China Football Association) China Team to develop licensed products and create a new “content + trend + youth” lifestyle brand “My Home Field”.

In addition, Fosun Sport actively entered the esports industry. Since 2018, Wolves has been one of the most active Premier League clubs in esports, with three teams in the UK – FIFA 22, Rocket League and Le Mans/Formula Pro Series sim racing, as well as strong collaborations with other popular esports titles such as Fortnite. From 2019, Fosun Sports has entered the China esports market with the “Wolves Esports” brand, currently with five divisions including Honor of Kings, QQ Speed, Identity V, Call of Duty Mobile, FIFA Online 4, and has won multiple titles in international and domestic major competitions. Three out of the five squads have won championships in various national or global competitions.

The acquisition of Chongqing QGhappy (now renamed as Chongqing Wolves), the Honor of Kings professional league team with six championship titles, in September, was one of the most critical moves by Fosun Sports to connect with young audiences in the esports world, further expanding its esports footprint by entering KPL, the top league of mobile gaming with 100 million daily active users. The addition of a Wolves KPL squad has made the Wolves Esports brand one of the best in Asia.

The strategic investor in Fosun Sports, PEAK6, is the owner of North American esports powerhouse Evil Geniuses, a team with a long and decorated history since its foundation in 1999, and the winner of the fifth International DOTA2 Championships (Ti5). Fosun Sports then made a strategic investment into Evil Geniuses in July 2021, building deep cooperation between Wolves and Evil Geniuses, and thus entering the North American esports market.

From DOTA2, Honor of Kings, FIFA, Call of Duty Mobile, QQ Speed, Identity V and virtual 24 hours of Le Mans combined with traditional sports, Fosun Sports has advanced in the esports market in China, North America and Europe, achieving “full coverage” in esports both geographically and in terms of projects.

Fosun Sports has reached more than 30 million fans worldwide through its two core businesses of soccer and esports, which brings infinite possibilities for business development to form a global sports ecosystem.

Mr. Jeff Shi, Chairman of Fosun Sports, said he was delighted to have PEAK6 join the Fosun Sports family. “Our organisations have great synergy, from our mutual desire to challenge conformity, to our openness for collaboration, and of course our shared passion for sports, technology and achieving success through hard work, intelligence and innovation.”

“We are confident PEAK6 can help bring Fosun Sports and Wolves a wealth of knowledge, wisdom and learning, and support Fosun Sports to become a sports industry group with global influence and much success.”

Fosun Sports is also one of the key business units of Fosun’s happiness segment. After the restructuring, the company will have the opportunity of rapid development with empowerment from Fosun’s ecology, and to gain greater synergies through mutual empowerment with other member brands in the Fosun system.

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IndiaJoy and Esports Platform MPL to Present Asia’s Biggest Virtual Digital Entertainment Festival from 16th to 19th November 2021

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IndiaJoy and Esports Platform MPL to Present Asia's Biggest Virtual Digital Entertainment Festival from 16th to 19th November 2021
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Asia’s biggest digital entertainment festival IndiaJoy, will be held this year virtually from 16th to 19th November. Mobile Premier League (MPL), Asia’s largest esports and skill gaming platform has become the presenting sponsor of IndiaJoy 2021. The annual event is hosted by Telangana Virtual Animation and Gaming Association (TVAGA) and supported by the Government of Telangana.

The digital entertainment festival, in its fourth edition, is bringing together businesses, business leaders, content creators, professionals across gaming, animation, digital media, and entertainment sectors, and will feature VFX, OTT Pulse, Influencer Conference, and DesiToons.

Shri K T Rama Rao, Minister for Municipal Admin & Urban Dev, Industry & Commerce, ITE&C, Government of Telangana, said, “In the past three editions, IndiaJoy has played a significant role in boosting the AVGC sector in Asia. It has also helped shine a spotlight on the city of Hyderabad as one of the important hubs in the global digital entertainment industry. The Media & Entertainment sector is expected to grow at a CAGR of 13.7% to reach INR2.23 trillion (US$30.6 billion) by 2023. Telangana Government has been at the forefront of harnessing the new digital entertainment revolution that requires a state to promote the use, adoption, and adaptation of cutting-edge technologies. We continue to build a robust ecosystem, infrastructure base to promote leading-edge technologies which is a must for success.  Initiatives such as Image Towers and hosting global scale events like IndiaJoy which encompass Animation, VFX, OTT, and Gaming have catalysed the growth of the sector both in Hyderabad and in India. Our vision is to make IndiaJoy an event that the world looks forward to every year.” He added.

Shri.Jayesh Ranjan, Principal Secretary of the Industries & Commerce (I&C) and Information Technology (IT) Departments, Government of Telangana said.  “India has lately seen tremendous growth in the creative tech & digital sector (AVGC Sector) with an estimated reach of 3 Lakh Crore (approx. USD 44 Billion) by 2024. Hyderabad has always been the epicentre of growth in this sector & Telangana Govt has played a key role in promoting this ecosystem. Now we are at a juncture witnessing rapid growth, it entails a lot of strategic value to keep the momentum by continuing to support such a mega event like India Joy.”

“As we welcome the 4th edition of IndiaJoy, it gives me great pleasure that Green Gold Studios has contributed to bringing the best creators, producers, broadcasters, business and creative heads onto a single platform. IndiaJoy was established to celebrate the success of the industry, exhibit the talent within it and provide a space for the leaders of the AVCGI to deliberate the way forward. We have accomplished all that in our previous editions, and we look to continue building the event to encompass more ideas, individuals and technology.” Rajiv Chilaka, Mentor, TVAGA, Founder & MD, Green Gold Studios.

The Indian Media and Entertainment industry is witnessing a new era of game-changing development and IndiaJoy will see pioneers from the sector sharing their insights. In the past editions, IndiaJoy attracted exhibitors from across the globe, including Adobe, Netflix, Sony, British Columbia, Moiba, Gametion, Australian Trade Commission, Victoria Trade, Unity Epic, and Homa Games. This edition of IndiaJoy is expecting international participants from more than 50+ countries and globally recognised, prominent AVGC and many tech giants are set to share advancements in new and emerging technologies.

“We are thrilled to present this year’s edition of IndiaJoy along with TVAGA and the Government of Telangana. Hyderabad has emerged as the next big gaming destination after Bengaluru, and an event like IndiaJoy—which brings together all stakeholders under one roof—will further boost engagement within the sector. Our vision at MPL is to revolutionise the mobile gaming and esports landscape not just in India but the world and we look forward to sharing our experience and insights and delve deeper into ideas that will propel the industry forward,” said Sai Srinivas, Co-Founder, and CEO, Mobile Premier League (MPL).

Sunil Chakravarthi, Program Director, IndiaJoy, expressed “Telangana, the youngest state in the country, has organized and hosted world-class events. IndiaJoy, the brainchild of Telangana has demonstrated significant success during its last 3 editions, and this global scale digital festival is generating enormous interest among many AVGC industry experts. While this edition is going to be virtual, we see it as an advantage, as the speakers and participants are boundless. Over 500 delegates, 18000+ participants, 200+ tracks, and 100+ panel discussions confirmed already, we have already witnessed a 2.5X increase in participants this year, nothing less than an International physical event that is full of Joy, yes Virtual is Reality”.

Since its inaugural edition IndiaJoy enjoyed a record-high number of visitors to attract more than 30,000 plus participants, visitors, and global delegates. Including, attracting investments of USD10 million for the past 3 years and catalysed the emergence of startups. IndiaJoy is the largest Congregation of Gaming, Animation, VFX, E-Sports and Entertainment Events in India, IndiaJoy is an aggregator platform, bringing together prestigious international events in one place to unfold opportunities for Investors, Corporations, Studios, Content Developers, Delegates, Consumers, Hardware manufacturers and students, through series of Networking, Trade Exhibitions, Product Launches, B2B and B2C events. For registration visit https://indiajoy.in

 

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