Nikhil Kamath, co-founder of retail stockbroking firm, Zerodha, who on Monday invested Rs 100 crore in online gaming and media firm, Nazara Technologies, which takes his stake to about 3.5% from the earlier 1%, is open to investing in other gaming companies in India. The only criteria for such investments will be that the companies concerned, should be capable of displaying a strong track record, focus on the Indian market, and have the potential to scale up.
In an interview with Fe, a day after announcing his investment in Nazara, Kamath said that he intends to remain a minority stakeholder in the company, much like most of his other investments. “I don’t understand the sector or industry as well as they do and therefore will have no involvement in its execution whatsoever,” he said.
Kamath said he invested in the gaming firm because of its strong track record and its leadership position in the domestic online gaming segment. He said that the online gaming industry is growing rapidly in India, driven by the increasing popularity and penetration of smartphones and the growing number of young people in the country.
“I think the interactive nature of gaming is winning amongst the sub-16 year old generation significantly more than my generation,” Kamath said.
“The advent of technology around virtual reality and augmented reality is bound to make devices cheaper, more accessible, and create newer, broader pockets of opportunity. I feel in the days to come the penetration of gaming in India will be significantly higher than it is today,” he added.
According to him, a growing number of people are now engaging with interactive content versus the kinds of content where they are just pulling information and not interacting with it.
Further, Nazara’s focus is on developing games that appeal to the Indian market. “They are not just focused on making games that are popular in the West. They are making games that are relevant to the Indian audience,” Kamath said. He said that Nazara is a very well run company, and is the only listed entity in the space. “The company has been around since 1999, and has a proven track record of displaying high pedigree,” he added.
According to him, Nazara has very little involvement in real money gaming, which is seen to be adversely impacted by the 28% GST on gaming. “The real money gaming component for Nazara is under 3% in terms of Ebitda. Around 25% of their income is coming from focusing on pure play gaming, which I think was also an appealing factor for investing,” he said.
Kamath said that he expects the Indian consumers’ spending power to go up considerably in the coming years, which makes the consumption category an interesting avenue to invest in.