Nazara's FY21 consolidated revenue jumps 84% to Rs 454.2 crore
The gamified learning and esports segments were the main drivers of the company's revenue growth
After a stupendous Initial Public Offering (IPO), Nazara Technologies has delivered exceptional FY21 results with its consolidated revenue for the fiscal jumping 84% to Rs 454.2 crore over Rs 247.5 crore in FY20. Nazara's Rs 583 crore IPO was oversubscribed 175 times.
The gamified learning and esports segments were the main drivers of the company's revenue growth. Revenue from gamified learning segment shot up by a whopping 820% to Rs 175.8 crore while esports revenue more than doubled to Rs 170 crore.
Other segments like freemium, telco subscription and real money gaming witnessed a de-growth. Freemium revenue was down 2% to Rs 19.5 crore. Telco subscription fell 8% to Rs 74.9 crore while real money gaming saw revenue tanking by almost 67% to Rs 13.9 crore.
The company said that the gamified learning and Esports segments have not only demonstrated strong growth momentum in FY21 but have also laid the foundation for predictable growth on account of proven user engagement and retention KPIs in gamified learning and multiyear media licensing and game publisher agreements in case of Esports.
EBITDA margin stood at 12% as against 4% in the previous fiscal. "As Nazara is operating in high growth business segments such as gaming, gamified learning, and Esports, we will continue to drive profitable growth while prioritizing growth over profit maximization at this stage so that we can achieve and maintain market leadership in the segments we operate in," the company noted.
Gamified Learning: Kiddopia had 340,282 paying subscribers as of March 2021 which is a 172% increase in the number of paying subscribers as compared to March 2020 (197,522). Cost per trial has stayed range-bound between 22 USD to 26 USD in the last 12 months and the activation ratio from free trial to subscription has also remained around 70%. The monthly ARPU of the user has been around 6.3 – 6.4 USD and monthly churn is range-bound between 4% - 6% across the months in FY21.
Esports: Esports revenues comprise media rights licensing of own content, brands sponsorships for offline and online events, licensing fee received from game publishers for community activation and programmatic inventory selling on Sportskeeda. Esports is disrupting traditional sports worldwide and is an outcome of sports and gaming intersecting to create fast-paced spectator entertainment content.
Sportskeeda witnessed 487% growth in MAU in FY21. During peak cricket season (October 2020), Sportskeeda recorded 68.44 Mn MAU up from 10.53 Mn MAU in April 2020. Sportskeeda has emerged as a leading Esports news and content destination in India.
Nodwin continued revenue growth momentum with 75% growth in FY21 over FY20. Media rights contributed to majority of the revenues in FY21 and game publishers formed the second-largest source of revenue wherein Nodwin partnered with them for grass route community tournaments across India. Nodwin also expanded into South Asia in FY21. Nodwin continues to be the dominant player in Esports in India with its marquee IPs like ESL India premiership, Dew Arena etc.
Free to Download (Freemium): WCC (World Cricket Championship) is the world’s largest cricket simulation game franchise on mobile and is played for ~46 minutes/day by over 15 Mn monthly active users. The Game has a very strong franchise among the midcore gamers who love the virtual sports simulation genre and gets over 100,000 downloads every day organically and without any marketing spends. WCC revenues were flat in FY21 on account of a drop in advertising rates in India due to COVID. We expect growth in WCC to come from in-app purchases of virtual goods and WCC3 – the latest version of the game launched in July has been designed for enhancing in-app purchase conversion rates.
The scale of Daily Active Users (DAUs) of world cricket championship (WCC) is stable with few spikes seen during the first phase of lockdown in April 20 and during IPL 20.
Tangible progress has been made on the % conversion ratio (daily paying to daily active users (DPU/ DAU)) in FY21 via the launch of WCC3. The % conversion in WCC3 has increased multi-fold to 0.08% - 0.10% as compared to 0.01% in WCC2. % Conversion in WCC3 is expected to increase further in FY22 through new product updates. Once the positive LTV/CAC equation is achieved, the company will invest aggressively in user acquisition to scale up its user base on WCC and drive profitable growth.
Telecom operator-driven Subscription business declined by 8% in FY21 over FY20 primarily due to decline in India revenues in H2FY21. Nazara has acquired rights to distribute a library of premium Disney and Star Wars games based on iconic stories and characters including Star Wars, Frozen, Big Hero 6, Cars, Duck Tales, Finding Dory, Toy Story and many others in 100 countries for three years. These premium games will be distributed through Nazara’s network of telecom operators to their customer base. Under this agreement with Disney, Nazara is the only third-party distributor that Disney has granted the right to create and operate Disney-themed storefronts for premium Disney and Star Wars games on these telco channels.
Sports Fantasy (Real Money Skill Gaming): Sports fantasy witnessed disruption in FY21 on account of lack of live matches in the first half of FY21 and regulatory turbulence triggered by legislative ordinances passed in a few of the large states banning real money gaming operations. The lack of stability in the regulatory framework leads to Nazara taking a strategically cautious approach in this vertical till further clarity emerges. It has pivoted to a product-driven growth strategy versus an aggressive customer acquisition spends-led strategy and the team is focused on enhancing existing as well as bringing new product features to differentiate ourselves in this segment.
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