While the real-money gaming (RMG) industry grapples with the impact of the 28 percent GST implemented last October, SportsBaazi from the house of Baazi Games, is defying expectations. The company reported a 70 percent year-on-year growth in the financial year ended March 2023 and projects breaking even within the next six months.
How are they achieving this in a challenging environment? SportsBaazi isn’t passing on the GST burden to users. Instead, they’re absorbing the cost to maintain volume. The strategy prioritizes user experience and retention. But growth isn’t just about cost absorption. The company is also focusing on ‘watch and play’ experiences, where users can engage with the game while participating in real-money contests. This strategic pivot in late 2021 is nearing product-market fit, expected to be fully realized in the first half of 2024.
In an exclusive chat with Storyboard18, Puneet Dua, Co-Founder & CMO, SportsBaazitalks about staying afloat, GST impact, growth and importance of content in marketing RMG.
You have recorded significant growth in the past year. Do you see that trajectory growing? What would you credit this growth to?
SportsBaazi has seen between 70 percent and 80 percent year-over-year growth and expects similar gains moving forward. This success comes from innovative game development, particularly engaging ‘watch and play’ options that cater to various sports and enhance the spectator experience. By capitalising on seasonal spikes like the Indian Premier League and World Cup, SportsBaazi has grown its user base beyond recreational players to target serious sports fans through a combination of product led growth and content led growth.
Content led growth sounds interesting. Do you mean you are spending your marketing budget on ads and influencers?
As a marketer, just burning cash on user acquisition is a recipe for disaster. If I’m only burning dollars and bringing in users, I’m worthless. Sure, the initial numbers might look good, but without long-term engagement, the brand fades away. That’s why content-driven marketing is so crucial. It’s about quality, not just quantity. It involves finding the right influencers, crafting engaging scripts, and understanding the audience’s mood. Imagine a hilarious stand-up comedian trying to convince you to invest in your financial future – complete mismatch, right? Content needs to resonate. SportsBaazi is laser-focused on hardcore gamers, those who breathe sports and crave constant improvement. We don’t target the casual viewer just looking for a laugh or a momentary thrill. Our content empowers these dedicated users, helping them get the most out of the games they love. That’s where our content dollars are going – building a community of passionate sports fans who are serious about the game and their success within it.
Covid helped most gaming brands grow. How did it work out for you?
The COVID surge impacted user behaviour in unexpected ways. While casual gaming platforms boomed, SportsBaazi, reliant on sporting events, struggled. The lone Belarus Football League tournament offered a surprising surge. Overall, unfortunately, IPL’s delayed and fragmented schedule disrupted our user acquisition strategy heavily reliant on full tournaments. Unlike card and poker games on our platform that thrived, SportsBaazi faced a challenging period due to the lack of high-profile sporting fixtures during this crucial scaling phase.
Who are your target audience and where are they from? Have ticket sizes spent on your app gone up post Covid?
We target three user categories: aspirational (low spenders seeking entertainment), recreational (professionals with varied spending habits), and regulars (high spenders with deep sports knowledge). Geographically, Maharashtra leads in revenue (higher ARPU- average revenue per user), while Uttar Pradesh leads in users (likely due to a larger population base). Rajasthan shows more aspirational users based on lower ARPU, while North Indian states like Delhi and Punjab have decent user bases but lower ARPU compared to Maharashtra.
As for ticket sizes they have seen a 30 percent growth between 2022 and 2023.
Coming to what every company in the space is worried about – GST. How has it hit the industry and how are you dealing with it?
From the industry standpoint, the recent changes have squeezed margins. It’s a simple equation – scale matters. Not everyone can achieve it, and that’s why we’re seeing consolidation. Gaming encompasses various revenue models and game types, so each company needs to adapt for economic viability.
This industry boomed in the past five to seven years. New entertainment avenues like gaming attract a flurry of startups.
In this rush for growth, some companies prioritised speed over sound financial practices. Optimism fuelled the belief that large-scale operations would eventually make the economics work. This ‘growth at all costs’ approach is common in tech startups, built to scale rapidly.
However, unexpected regulatory changes dampened the optimism. Companies most vulnerable were the ones already burning cash and relying on future success to justify their spending. When investor backing dried up, these companies had to make difficult decisions, including layoffs and shutdowns.
Our company, fortunately, navigated these challenges differently. We focused on positive growth and user engagement, allowing us to absorb the increased costs without passing them on to the customer. We haven’t had to lay off any employees, and we’re confident in our ability to weather this storm through adaptation.
The recent changes are forcing a shakeout in the gaming industry. Only companies with sound economics and a focus on sustainable growth will emerge as survivors.
Are there any open dialogues with the government? Do you see the situation improving?
The initial industry mood regarding the regulations was understandably gloomy. However, there’s a growing sense of optimism. The Finance Minister’s commitment to review the regulations, coinciding with the upcoming budget, fuels this positive outlook. We believe industry experts will advise for adjustments that allow the gaming sector to maintain its growth trajectory.
While initial concerns remain regarding the regulations, cautious optimism is emerging. Data is being analyzed by officials to understand the impact on businesses and consumers. This, along with the Finance Minister’s commitment to review, fuels hope for a potential revision that fosters continued industry growth.
What are the key focus areas for SportsBaazi in 2024?
Our focus is two-pronged. First, solidifying our position as the go-to platform for ‘watch and play’ experiences. This innovative format enhances the spectator experience for various sports.
Second, we’re committed to providing the right content for our users. This includes a mix of influencer partnerships and original content we create in-house. The focus will go beyond just winning; it’s about education, knowledge sharing, and ultimately, increasing the value proposition for our users.
As for other plans, we’ve achieved impressive growth, and we’re excited about the product-market fit we established in late 2021. This strategic pivot has positioned us strongly, and we anticipate the full plan implemented within the first two quarters of 2024.
We should be able to break even in six months.