Head Digital Works, also known as A23 Games, aims to end FY24 with gross sales of Rs 1,100 crore; maintain profitability of 50%

The Pay-to-Play ecosystem of online gaming mainly consists of Rummy, Fantasy sports and online poker, and a small segment of casual pay-to-play games. This segment is popularly referred to as the real money gaming segment which accounts for about 70-75% of online gaming in India. Rummy is 99% of the total revenue distribution. We have a current user base of around 55 million players, Siddharth Sharm, VP of corporate strategy, Head of Digital Works told BrandWagon Online.

According to the recent FICCI-EY report, the online gaming segment grew by 34% in 2022 and is expected to reach Rs 135 billion by 2025. Real money gaming accounted for 77% of the segment’s revenue. With over 500 million online gamers of which 90-100 million play frequently, the online gaming segment is on the rise. Online gaming also generates Rs 11 billion in digital advertising revenue and is expected to reach Rs 20 billion by 2025.

The company claims to charge a platform fee for every game played. It further claims to charge a 20% fee for fantasy sports, a 10% fee for rummy and five percent for poker.

According to the company, a number of players, regardless of format, play against each other to create a pool of money. “Suppose there are five players who each put in Rs 100 to play either a game of rummy or poker or fantasy. sports, the operator takes between five percent and 20% depending on the format of the game. So the operator’s revenue is five percent – 20% of the pot on which the operators pay GST. So the winner gets the delta money i.e. Rs 450 from the five players minus Rs 50 rupees charged by the operator,” he added.

Revenue from operations fell 13.5% to Rs 721.8 crore in FY22 from Rs. 819.2 crore in FY21. Profits shrank 17.9% to Rs 17.8 crore in FY22 from Rs. 21 crore in FY21, in the same year in the corresponding year, according to regulatory filings consulted by business intelligence platform Tofler. However, Sharma claimed that the company “has seen tremendous growth in the previous financial year, we are close to gross sales of Rs 1,100 crore. We are aiming for more than 50% growth to maintain the profitability of our business.”

The company further claimed that an average of two to six people play a given game – otherwise known as table size. The maximum bid is around Rs five to 15,000 per table on the platform. “The male to female ratio is 9:1 for A23 rummy,” said Sharma.

“We have seen games exceed Rs 10 crore per day and wagered between Rs 20-30 crore.” he explained. It further claims that the average cost of customer acquisition is Rs 4000 per customer.

The company claims to have spent around Rs 550 crore on marketing in FY22. “We plan to spend more than Rs 600 crore in FY23,” Sharma stated. Of these, digital accounts for 75% of advertising spend. Less than five percent of total digital spending is spent on influencer marketing.

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