The online gaming industry in India has witnessed growth in recent years, fueled by increasing smartphone penetration, affordable Internet access, and a young population with an alleged appetite for digital entertainment. However, amidst these developments, the sector faces a challenge in the form of Goods and Services Tax (GST) implications, which have impacted the survival and sustainability of online gaming apps. Over the past three years, the online gaming industry has grown at a CAGR (compound annual growth rate) of 28%, reaching Rs 16,428 crore in FY23 and is likely to reach Rs 33,243 crore by FY28, as per the FICCI-EY report. The report further stated that India continues to be a ‘mobile first’ market, with 94% of its gamer base engaging in mobile gaming. Despite the rapid increase in game consumption, India’s online gaming revenue is still merely 1.1% of global online gaming revenue.
WinZO’s revenue from operations rose 2.88 times to Rs 673.93 crore in FY23 from Rs 233.9 crore in FY22. Its net losses widened 92% to Rs 710.15 crore in FY23 from Rs 370.10 crore in FY22. In a conversation with BrandWagon Online, Saumya Singh Rathore, co-founder, WinZO, talks about the company’s strategies to deal with 28% GST, expansion plans in Brazil, and recent marketing strategies, among others. (Edited Excerpts)
What has contributed to the growth of your company, especially in today’s tumultuous times?
This growth is before the GST changes. FY23 ended in March, and everything changed after that. As a VC-funded company, we’ve raised a lot of capital. The path for this company is to return that capital, ideally through an IPO (Initial public offering). The Indian market is great for any firm to go the IPO route, especially in the case of a consumer tech product; we’ve seen many IPOs in the last 24 months. India has a very robust market for IPOs.
However, our goal was to build a robust business, not just to show revenue without EBITDA. We were working towards this. We are a very lean team—potentially one of the leanest operating at this scale, with 150 people. From day zero, as second-time entrepreneurs, we learned from our past mistakes with Zo Rooms and Zostel. We were clear about building a company with real business metrics, no vanity metrics, and one that is worth retail investors’ money.
Once we achieved product-market fit, we started optimising the business for profitability and growing margins, with the ultimate goal of becoming a publicly listed company. We planned to expand to multiple nations and replicate our playbook across geographies. Our vision was to build a large consumer tech company from India, serving the global market, and achieving a significant market cap.
What you see in FY23 is the result of our efforts since 2018. We have raised $100 million but haven’t utilised all, to reach this point. Things have been tough, especially after changes in indirect taxes, which now take up north of 60% of our revenue. This leaves little to no margin and causes the business to bleed. Additionally, offshore betting and gambling have put pressure on the business, causing user attrition.
Despite these challenges, in FY23, our investors noted that our retention metrics and product performance were among the best they had seen across various gaming platforms globally. These investors, from top blue-chip gaming firms like, Courtside, and Griffin, were fine with our retention rates. However, even the best products cannot be sustained without a viable business model. This is why large gaming companies often avoid entering the Indian market—despite having great products, monetising in this market is challenging and often not viable.
What marketing initiatives is WinZO focusing on, particularly in the new fiscal year FY25, both in India and Brazil? Also, how successful have the collaborations with Bobby Deol and Carry Minati been for the company in the past? Lastly, are there any new collaborations in the pipeline?
We have onboarded Mahendra Singh Dhoni as the new pastor, aligning perfectly with our brand ethos. We’ve always believed in selecting ambassadors who embody our brand values. Dhoni’s story of rising from Tier 2 of the country reflects the grit and perseverance we celebrate. Similarly, Carry Minati, with his massive following as Asia’s largest gaming influencer, resonates well as our digital brand ambassador.
Regarding marketing, we had strong plans for 2024, especially with events like IPL, T20 World Cup, and elections capturing massive viewership. However, due to economic challenges, we had to recalibrate our strategies and focus on sustaining our business.
Reflecting on our past experience with Zo Rooms, where rapid scaling led to challenges, we’ve adopted a lean approach with WinZO. Our team is a key strength, and we prioritise cost-cutting measures to ensure financial stability, especially during uncertain times like the Covid -19.
Internationally, we’ve expanded to Brazil, leveraging our technology-driven gaming platform. Our long-term vision is to scale globally with India as our core market, regardless of tax implications.
What is the current Monthly Active Users (MAU) count for the company? What is the ratio of repeat customers? Can you explain the monetisation model?
Currently, we have 175 million registered users, with approximately 30 million new registrations each month, making us the largest platform in the country. We facilitate one out of every 250 UPI transactions in India through WinZO’s platform. Additionally, there are four billion transactions or gameplays on our platform every month. After acing the market playbook in Brazil, we plan to expand to other geographies.
How is WinZO helping other developers take their games to a global audience, and what role does game aggregation play in WinZO’s plans?
We are an aggregator platform similar to Netflix, focusing on technology and distribution rather than game development. However, we indirectly support game development through our publishing business called ZO Games and our $50 million Zo Fund. We invest in studios and ideas to bring quality games to our platform and the market faster. Our direct synergy is to ensure that as we go global, the studios we work with also expand globally, aligning with our vision and plans. Indian mythology offers rich storytelling potential that we aim to tap into, creating immersive experiences that resonate with our users and fill a content gap in the market.
What is the company’s roadmap considering the GST changes?
The GST is a current situation we have to sustain. Will it stay like this? Maybe, we don’t know. That’s why we need to open new geographies quickly and work around the business to increase margins in India. We may not be the same margin business, and we may not get the same multiples, but survival is key. The business must respond quickly and adapt to this threat to exist. An entrepreneur needs to understand that near-death situations like regulation changes, capital shortages, and Covid can happen. The only thing to do is respond quickly and de-risk the business.
We are in the process of responding to this GST challenge by changing many things within the business to build sustainable margins for the long term. We’ve contained marketing expenses, user bonuses, and rewards to get past this phase. We are opening new geographies and diversifying our revenue lines, including going big on our publishing business.