Is online gaming the new battleground for telcos?

By: |
September 6, 2020 7:10 AM

As per a recent KPMG report on business of fantasy sports, in the last three years, the gaming sector is seeing good traction both in the usage and engagement.

The fantasy sports model and the offerings in India are pretty much in sync with what is being offered globally.The fantasy sports model and the offerings in India are pretty much in sync with what is being offered globally.

After the race for subscriber addition and adding more and more entertainment-related video streaming over the top (OTT) apps in their offerings, the next contest emerging between the country’s top two telecom operators — Reliance Jio and Bharti Airtel — is in online gaming.

As part of their digital strategy, both operators are keen on focusing on gaming and gradually monetise their subscriber base. According to analysts at Bank of America Securities, similar to their content strategy, both the operators are looking to collaborate with the gaming companies rather than making their own games.

Generally, analysts feel that Jio currently has a well-etched strategy in gaming, while Bharti is exploring a few more areas. Of the three gaming sub-sectors — casual, real-money, and PC/console gaming — Jio is focusing on casual and set-top box/TV gaming while Bharti is more on fantasy sports currently.

Analysts feel that both the telcos are expanding their fixed broadband and in a couple of years will launch 5G services. Over time, with better broadband speeds and by leveraging artificial and virtual reality they would be well placed to monetise their subscriber base. Moreover, 5G will also allow them to focus on high bandwidth-consuming cloud games. While this may not appeal to a wide subscriber base, the target audience would likely be the high average revenue per user (Arpu) paying high-end users.

As per a recent KPMG report on business of fantasy sports, in the last three years, the gaming sector is seeing good traction both in the usage and engagement. Monetisation has seen a significant improvement in the real money gaming business in the past 24 months. The fantasy sports model and the offerings in India are pretty much in sync with what is being offered globally. The market has also become very fragmented with more than 140 platforms.

The top player, which is Dream 11, and the next four-five players control 95% of the market share. Except for some states that do not allow online fantasy sports (OFS), everywhere else this particular model is designated as a game of skill. So the regulatory position is pretty clear.

There are around 700 million smartphone users in India, of which 400-500 million could be the potential market for OFS.

As per KPMG, in the next two-three years, the user base for OFS will reach 150-200 million in India. These are all monetiseable users unlike the casual games where monetisation is difficult. Once that scale is reached, it will become an attractive market for international players like Draft-Kings. Around 20-25% of the users on OFS are paid users compared to 1-2% of paid users for casual gaming.

There are broadly two models. One is to pay to play where one puts an amount for entry into a contest and the amount gets pooled and the winner gets the money and the operator keeps 10-20%.

The second is where there is also a free-to-play model like CricPlay where the users are not charged but monetise through in-app advertisements. Outside of this some operators are trying to monetise the ancillary offerings through ad or subscription but it is still very new.

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