In an interview Yashash Agarwal, Co-founder and CEO of gaming company Gamezop talks about his industry at large, and specifically of what Gamezop is doing in it.
1. What sets Gamezop apart, in this competitive industry?
Gamezop is a mobile gaming company that works very unconventionally to acquire users – rather than pushing app installs, we integrate our games within popular apps. This way, we have reached over 165 Mn unique users, at zero marketing spends!
While Android and iOS games require installation, HTML5 games work with a single tap within other apps. Choosing HTML5, Gamezop piggybacks on distribution network of partner apps that add us as a gaming button on their apps. This way, each partner app serves as a touchpoint for Gamezop. On 97 per cent of smartphones in India, Gamezop has at least two touchpoints. By the end of 2020, we see this rising to ten touchpoints per device.
It’s a lean model: we don’t create the games (we have licensed 250 games from third-party developers) and we don’t need to spend money to acquire users.
2. What is Gamezop’s approach to user engagement on apps?
Every app, irrespective of what it does, has two primary objectives: engagement and monetisation. Adding Gamezop addresses both of these for app developers. As our games work within other apps, this increases the average engagement time on them by 15-40 per cent. Secondly, the revenue we make from games is shared with these apps.
Leading apps in e-commerce, social, web browsing, travel, and utility have found value in us, taking our total number of partners to 800. For all of them, gaming is a key feature on their products, powered by Gamezop.
3. Why did you think of also expanding to an HTML 5 platform?
Consumption of videos wouldn’t have gone through the roof if each video required installation. Common perception is that mobile gaming is booming but the friction of app installs is actually throttling games. Imagine the growth we will witness if games were playable like videos, with one tap and no installation. This is where the full potential of gaming lies and it’s possible only with HTML5.
4. How does Gamezop percieve the Indian market right now?
India is our largest market, with 85 per cent of our 15 Mn MAUs. When commanding such a large user base, one has the ability to introduce multiple game formats. One such format we introduced recently is real money-based esports, where users to compete against each other and win cash prizes. Needless to say, it has been a roaring success in a market like India.
As our user base grows at the back of our partner apps, we will continue to be opportunistic in introducing game formats. This way we want to give our partner apps the ability to choose the format they want to integrate – free games with ad monetization, real money-based esports, subscriptions, etc. – and share a portion of the revenue with them.
5. How have your gaming ventures evolved over time?
We started as an app on which users could play multiple games in a social setup. Users liked the idea, but the cost of driving app installs didn’t seem reasonable to us at all. It was then that the advantages of HTML5 dawned upon us. Rather than pushing installs of our own app, with HTML5 games we could be the gaming button on other app, which would make the business much more elegant.
The early days were tough, of course. In 2016, gaming on HTML5 was in its infancy and the games we fetched from developers were practically unplayable in Indian market conditions, viz., the combination of weak browsers, poor handsets, and patchy internet.
During our journey, we developed proprietary tools to re-engineer each game that we add to our catalogue to make it suitable for the harshest environments. On the other hand, we worked closely with the world’s leading smartphone companies and browsers to ensure game performance at the delivery level. In spite of laser sharp focus on HTML5 gaming, it took us years to make the optimization process scalable at the game as well as the delivery level. These are such high barriers to entry that those looking to work with HTML5 games turn to us instead of re-inventing the wheel.
6. What are Gamezop’ unique features?
Gamezop’s geometric growth to 15 Mn MAUs is a result of our large partner network of 800 apps. Each time a partner adds Gamezop, we see a rise in user numbers, at no spending from our end. Other players in gaming need to push their own apps to the users at a high cost, while Gamezop is able to piggyback upon the network of its partner apps.
The uniqueness of our model allows us to be highly profitable in a competitive space and also opens an additional monetization stream for our partner apps. We closed the last financial year with 45 per cent EBITDA.
In essence, we are a gaming company that doesn’t need to make games (because we license them from other developers) and doesn’t need to acquire users!
7. Could you throw some light on the market size as well as competition landscape for Gamezop?
According to a frequently cited KPMG-Google report, the online gaming market in India is expected to generate USD 1 billion by 2021 with 310 Mn gamers. These numbers, of course, include gaming across all verticals. Gamezop currently operates in two categories: hypercasual smartphone gaming and real money-based esports.
In both models, and especially in esports, our unit economics are much better than the competition. Owing to our piggybacking model, we do not have any cost to acquire users, although we are able to monetise them from the first day, making us highly profitable.
Our competitors in the esports space push APK side installs, which is extremely expensive, and amounts to alarming high burn rates. The units economics in the APK side install model does not make sense for esports; there is too much dependency on continuous fundraising.
Having seen scale for a while now, we would never be comfortable with such a high burn model. Our concern is not GMV, but profitability.
8. What has changed at Gamezop between 2016 and today?
A lot of things have changed at Gamezop between 2016 and now. Back in the day not only did we exist as an app, we also developed the games in-house. Neither of these aspects were scalable.
Turning to the web has allowed us to build a robust business model: sourcing games from third-party developers and integrating them on multiple touchpoints. Today, we have 250 high quality games and 800 touchpoints!
It is key to note that Gamezop has 15.2 Mn users merely by being present on 1 per cent of the apps published by Indian developers. There is a lot of room for expansion there.
By no means is this model going to be restricted to India only; already 15 per cent of our users come outside India. The plan is to make a repeatable model: go to relevant markets, work with local apps there, and bring games onto them. We will be opportunistic about the formats introduced in each market, whether it's casual gaming, real money gaming, subscriptions, or in-game purchases....