Krafton, the brand behind some of the world’s most popular video games, says it has already deployed the $100 million it had committed to the Indian market two years ago in the South Asian nation and is gearing up to launch several new titles in the country.
The four-year-old South Korean firm, which went public last year, gained popularity with its shooter game PlayerUnknown’s Battlegrounds — commonly called PUBG. The title, PUBG Mobile, amassed over 50 million monthly active users in India, becoming the most popular mobile game in the country, until it landed on the list of apps New Delhi ordered to block over national security concerns.
Unlike most other firms on the block list, Krafton has been able to relaunch a new title in India — called Battlegrounds Mobile India. the games Released in India in July last yearshares many similarities with PUBG Mobile, though the developer claims it has introduced many changes to address local concerns.
In November, Krafton brought PUBG: New State as its new game based on the same last-man-standing gameplay, also called battle royale amongst gamers, that is available on BGMI and PUBG Mobile. That new offering was renamed as New State Mobile in January — as a strategy to avoid getting into trouble for the issues raised against the PUBG title earlier.
In a wide-ranging interview with TechCrunch, Krafton’s India CEO Sean Hyunil Sohn said the New State Mobile has not grown as fast as BGMI and its retention has also not been that strong. He also said that BGMI complies with the local regulations in India, where the company employs about three dozen people, 70% of which manages its publishing operations.
The company also has more in the store for the country, including investments in local startups.
Krafton’s investments in India so far
- $22.5 million in Nodwin Gaming in March 2021
- $9 million in Loco in June 2021
- $48 million in Pratilipi in July 2021
- $6.5 million in Frnd in December 2021
- $5.4 million in Nautilus Mobile in Feb 2022
- $7 million in Kuku FM in March 2022
- Investment of an undisclosed amount in Lila Games in March 2022
Krafton’s India team (Image credits: Krafton India)
Edited excerpts from the interview below.
How much has Krafton been able to spend out of its $100 million investment in India that was announced in 2020?
We did reach our target and have already spent $100 million from our original investment plan. We are working towards two–three deals that should hopefully be converted in August, pushing us towards roughly $140 million being invested in the country. There have been roughly eight investments in total in the last one or one-and-a-half years. We will keep investing in gaming, gaming-related and tech startups in the country. In 2022, we may invest another $100 million in total or more in the Indian market. Although we didn’t set up a fund separately for the Indian market, we are investing from our balance sheet. We have been a profitable company, especially following the IPO, and we have $2.5 billion on our balance sheet. We are investing in several markets, and India is a part of this global investment strategy. However, in India, we have a slightly broader scope given that it is a fast-growing market with several promising industries.
What key aspects do you consider while making an investment decision in India?
The product and the space that the company is operating in are a core concern. It should be gaming, gaming-related or working in the media and entertainment sector or digital space – these are the three pillars we focus on. For example, Nodwin and Loco are not gaming studios but are a part of the gaming ecosystem that we are interested in. Pratilipi and Kuku FM are not gaming-related, but they are interesting for consumers and host original ideas or content. Other companies we invested in include Nautilus Mobile and Lila Games that are game developers based in India. We are also interested in original IPs created by India, which are expandable.
So, is it like you are not limited to companies aligning with the goals of Krafton or making things that can be complimentary for your games?
We want to be larger than just a gaming company. We essentially want to bring experiences rooted in gaming, but we want people to enjoy content and have fun on different platforms. We have pilot projects in development, which are new projects and are not exactly games. We have some metaverse projects based on web 3 where creators can work with our platform and tools and experiment. It is at a very nascent stage at this moment.
Are these metaverse projects aimed at gamers or content creators?
We need to understand whether these platforms are suitable for professional creators or youth who have just started creating. If you look at games like Minecraft, it can be used there, and the level of development can vary vastly. We are yet to see, though it could be expandable in the future.
We see a lot of startups in the metaverse space in India. But a lot of them are using “metaverse”, “NFT” and “web 3” as buzzwords in their pitch notes — maybe to attract investors or gain short-term success in the market. How do you see that trend?
Krafton does have a few investments, and we have announced one for web 3 in India. We are also in the process of closing other smaller investments. Apart from India, we have invested in web 3 in other markets as well, but they have again been small investments. We do need to learn more to see what is working and what doesn’t, and we want to be part of this experimentation, which is why we’ve invested small amounts. Having NFT elements in a game doesn’t necessarily make it fun. It needs to be developed into an enjoyable experience for players. While new gameplay elements can be explored, we are yet to see this develop and closely follow its growth while not maintaining it as our core focus. Web 3 alone cannot make a fun game, so one needs to know how to make a good game and incorporate the technology to elevate the gameplay experience.
What are the key things you look at in a founder and the team before signing the deal?
We have invested in game studios for the last 10-12 years. At first, there was only one studio – Bluehole, but now, we have eight – nine gaming studios. Not all have been successes, but we have some great learnings from all of it. We believe in our capacity as a team, and want to share our collective experience to achieve more successes. While investing in India, we do look at the previous experience that the team has and the time spent in gaming development. There are a few companies in India who have made games, and made a decent revenue to sustain their team. We work at tapping into local strengths, for example, Nautilus Mobile and the cricket sports games made by them. While they are not globally famous yet, we feel that we could boost further growth with funding and support.
You talked about the new games you’re planning to introduce in India. Will those be from the battle royale genre or based on another format?
We have different games planned for India. We may bring one of our games launched in Germany with some localization to the country. Our studios RisingWings and Dreamotion are also making games that could be suitable for the Indian market. Similarly, Striking Distance, a subsidiary of Krafton, is making PC games, which may be relevant to Indian consumers but will not be as big as BGMI.
Sean Hyunil Sohn, CEO, Krafton India (Image credits: Krafton India)
What has been the total time and money spent on BGMI?
As a company, we do not announce specific KPI numbers for India. The game has been very successful for the last year, and registration and revenue have steadily improved. We recently announced the number of registrations on BGMI, which has crossed 100 million users.
What has been the biggest season of the game so far?
BGMI is a free to play game. We want to sustain the game’s life as long as possible, so we introduce new content, updates, and in-game features to keep the game fresh. Some royale passes perform better than others. The most recent one was the Egyptian theme that is called Sky Islands, which performed very well.
Could you share some details about Krafton’s investment in Lila Games?
Lila Games has three founders, two from the US, and one from India. The creative director and CEO are from the US, but their engineering capabilities are local. We believe this synergy of combining global and local learnings could lead to a successful venture. They have been making cricket games for the last seven–eight years. And then they showed some good metrics. Ironically, they are making shooter games — maybe battle royale games — for casual users. That can also be an interesting approach.
Since Lila Games is also working on something for the battle royale category, how would you ensure that it is not something that can bring an issue of conflict of interest?
The gaming market in India is a huge space, and unless something extremely similar to BGMI is being made, it is not a conflict of interest. We see new, good quality products developing as a happy addition to the market. Also, given that target audiences are different, we don’t see conflicts yet.
Aneesh Aravind, who was leading the BGMI team, left Krafton in February. Who is leading the team now?
Aneesh left a few months ago, though all other team members are still with Krafton. Minu Lee is the Head of Publishing for BGMI at Krafton. He supported the local team in launching BGMI in India and is familiar with every element of the game and the team. Currently, Minu works as a bridge between the global and local teams and can help launch new products and games in the country.
What has been the state of New State Mobile in India?
New State Mobile is not as big as BGMI. At the initial launch, it had great numbers, but its retention is not as strong as BGMI. Nevertheless, we will keep adding new content to New State Mobile. Due to hardware limitations, India may not be the core target for New State Mobile, but it has great graphics, and we will continue to service the game.
Some reports claim that parents have lost lakhs of rupees as their kids made in-app purchases on BGMI using their credit and debit cards. Some reports have also alleged that some people were killed due to over-addiction to the game. These issues eventually led to the scrutiny of PUBG Mobile in India in the past. So, how is Krafton looking at all these issues this time?
Krafton launched the ‘Game Responsibly’ campaign, and we are the only major gaming company in India to take these measures. We also have play hour limits, spending limits and login safeguards built into the game. The game is extremely popular, and these issues come with the territory. We don’t know the details of the fraud and how it was committed, but these are extreme cases. We constantly work towards securing a safe gameplay experience for users.
There have been some concerns around how Krafton got clearance for BGMI just months after the government banned PUBG Mobile since both games have many similarities. A legislator also questioned in the parliament last week whether PUBG Mobile has made a comeback in India. How would you respond to these concerns?
The government does not intervene in which apps can function and which cannot. They intervene in digital security and privacy concerns, and BGMI complies with all guidelines. MeitY (Ministry of Electronics and Information Technology) has also noted that PUBG and BGMI are different games. We understand that the government is concerned about gamers’ playing habits, and that is where BGMI has incorporated safeguards.
