Nitish Mittersain, CEO, Nazara Technologies, talks to Deepsekhar Choudhury and Tarunya Sanjay about AI in game design and the company’s experience going public. Edited excerpts
Where is the Indian gaming and e-sports market heading? Where does Nazara fit into this picture?
India has long been a mobile-first gaming country, with over 500mn playing games on their phones, though access to PC and console gaming has been limited. While the country ranks among the top globally for app downloads, revenue generation from video gaming has lagged. India is still a low average revenue per user market compared to the West.
Real-money gaming is under regulatory uncertainty, which often leads global investors to conflate it with video gaming and view the entire sector with scepticism. Many struggle to differentiate between the two verticals, especially with concerns around high taxes and unclear regulations. However, a major opportunity lies in India’s potential to not just consume but also create games for the world.
Is AI showing signs of cost savings in gaming or has it made Indian developers more competitive?
Definitely. AI allows you to produce content in a much faster manner. In India, the big challenge for developers has been around game design and monetisation. I think AI can help improve that very quickly and bridge the experience gap between global and Indian developers. Everyone is starting to use AI, and I believe in the next one to three years, we’ll start seeing Indian games performing well on the global stage. This is from an industry perspective.
How big is your global revenue compared to India revenue?
Global is almost 65–70%. Right now, for us, global is growing faster because we are very acquisitive in the international space. Only recently, we acquired a UK-based company called Curve.
From Nazara’s perspective, India is our home strategic market where we’re investing heavily. Globally, we also see a large opportunity for Nazara to become a respected gaming company outside of India. That’s why you’ll see us acquire a lot of gaming studios outside India. So, we are focused on both India-specific and global opportunities.
You mentioned a $100mn war chest for acquisitions. Is your focus on IP or do you also look to buy tech and studios?
Our focus right now is on buying gaming studios that have good gaming IP, that have at least ₹100 crore plus in revenue, decent profitability and 15–20% margins at least. And of course, it should fit in our valuation framework.
Globally, gaming drives the deep-tech ecosystem, with the latest technologies often first appearing here. Is this happening in India?
From our end, we are focused on two to three technologies. One is Web 3, because digital-asset ownership within games will be important for players going forward. I think that part of Web 3 will be very relevant and eventually become mainstream.
The second is VR [virtual reality]. In fact, we are going to launch a VR game very soon. VR for gaming has been around for many years. It is now approaching mass adoption.
Third, of course, all-encompassing is AI. How do you leverage AI in terms of how you make games? How do you engage with players? How do you analyse their data? I think in every aspect, AI is going to make a very big impact.
We focus a lot on each acquisition, making sure that the company we’ve acquired does well on a standalone basis first
What kind of R&D investments are you making?
Not very large right now, maybe 2–3% of our revenues. But we will, of course, continue to expand. From a capital-allocation perspective, we have thought about allocating up to 10% of our capital in new technologies.
You have done quite a few acquisitions. In the corporate world, these are always challenging in building cultural and business synergies.
We’ve been cognisant of that. We run the businesses in a fairly decentralised manner so that we don’t fall into the same trap of cultural clash. Our structure at ‘Friends of Nazara’ [a network of gaming companies] provides the individual management a lot of autonomy.
We don’t necessarily force synergies, we encourage synergies and let them grow on their own within the platform. We focus a lot on each acquisition, making sure that the company we’ve acquired does well on a standalone basis first. Standalone basis, and then the synergies are the topping.
Are you trying to build common departments to cut costs?
No, we have not done a lot of that. We are doing a little bit now, creating some centres of excellence around user acquisition and data analytics and AI. But that is more of a support role rather than owning the function role. Our approach has been different and I think it has worked well for us.
You were the first new age company to go public during the pandemic in March 2021. How has the experience been?
It’s been quite a great experience. I have no regrets taking the company public. We learned our way around public markets and what we need to do. We’ve also kept a balance in terms of focusing on doing the right thing for the company, doing things so that we can move the share price.
Focusing on the right things is very important as a public company. That’s not lost. We are in a good place. It’s been four years as India’s only really listed gaming company. The next two, three, four years as a listed company in India will be very exciting as well.