Over the last three years, the firm has invested about $140 million in 11 Indian gaming and content-driven ventures including Nazara Technologies’ unit Nodwin Gaming, Pratilipi, KukuFM and Loco. The firm also invested as a limited partner in 3one4 Capital and Lumikai, but those investments were just roughly 10% of its total investments in the country.
Sean Hyunil Sohn, chief executive at Krafton India, told ET in an interaction that the company’s investment thesis will target startups focussed on building intellectual property (IP). “There are some core values across gaming and entertainment—you are monetising through your platform but at the same time you are creating value based on IPs. There is great potential with differentiated IPs… Pratilipi, KukuFM are also trying to build great IP pipelines,” he said.
The announcement comes even as Krafton’s most popular product, the battle royale game Battlegrounds Mobile India (BGMI), continues to operate under a three-month review set by the government after it was blocked for about 10 months till May this year.
Also read | After year-long ban, Krafton relaunches BGMI in India with limited playtime
“Any fast growing gaming market takes some time to come up with the regulatory framework required… We saw similar cases in South Korea, in China, and even in the US. India is also unique due to the pace of mobile penetration, and the pace was so fast that a structured regulatory system took some time to catch up… Our flagship title has been under discussion not just because of geopolitical reasons, but also because any major game in a market will be under scrutiny and hot debate, and that is pretty understandable”, Sohn said about BGMI’s block period.
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“Of course, as someone running the operations it was a painful process but we are happy that we are on the right track now. A data bill also got approved recently, so the regulatory structure is rapidly improving and I expect continued interaction between the government and industry executives,” he added.With the proposed $150 million investment, Krafton will look to buy into slightly mature firms, with an expected 50% to 60% of investments going into Series B or later rounds. This is in contrast with its investments so far, about 60% to 70% of which took place in early-stage rounds like Series A or seed.
“Most of our investee firms like Nodwin and Kuku FM are leading their sectors… We are seeing some consolidation in the consumer tech space and it makes sense to invest in stronger players that can do that in their sectors” Sohn said.
Krafton is looking to invest a third of its new investments in artificial intelligence (AI) and deeptech firms, while the rest will go to a mix of entertainment and consumer tech firms similar to the investee firms it has put money into so far.
Though the earlier intention was to invest in gaming and gaming-adjacent firms, Sohn said the nascent nature of the game development industry in India as well as the promising growth in wider consumer tech convinced Krafton to diversify their investments. When asked about the future acquisition of investee firms, Sohn said that it was a possibility but would require the firms to reach a certain amount of scale and sustainability before Krafton would consider that scenario.
“We also need some synergy between our core business and potential units. These are long term bets… there is also the thesis that as gaming in India matures there will be greater demand for India-focused IPs, which might be crossovers from our other investments,” Sohn said.
Meanwhile, despite a review period, the return of BGMI has reinvigorated the gaming as well as the adjacent entertainment industry. A number of e-sports and streaming firms told ET in May that they saw brightened financial outlooks this year due to the return of the game, without giving exact numbers.
Also read | Game on: Krafton’s BGMI return revvs up Indian esports scene
At the same time, Star Sports, part of Disney’s Star TV network, expanded its broadcast of Nodwin’s BGMI Masters tournament to three languages and multiple channels this year. Meanwhile, Reliance’s Jio set top box integrated the streaming platform Rooter, the official online streaming partner for the tournament, with its connected TV platform.
Though Sohn would not comment on the review beyond stating that the firm would “comply with the policies set and the decisions taken by the government”, he added that the return of the game had inspired further confidence in Krafton’s Indian bet.
“Our chairman (Chang Byung-gyu) has been very confident that India would be on a steep growth trajectory if we can tackle this issue well, so I had very strong support from HQ all along. Fortunately we could solve the issue, and that has reinforced HQ’s optimism and long-term commitment,” Sohn said.