[Parth Das]: I kicked off my career being a consultant for big financial institutions where I was helping them set up operations in the Asian Debt Market. For the past decade, as an Angel Investor, I have been involved in helping startups find a foothold in the tech industry; something which was at the crossroads of my interests and formal education in tech & business. This is primarily where I discovered the gaming industry as a budding industry with a strong focus on technology and innovation. Along with all my investment initiatives, I started taking active operational roles in Gaming companies to become an industry expert. Working on the launch of top grossing games at Wooga or leading the PC business unit at Aeria Games, all these experiences gave me really strong insights into the end to end lifecycle management of gaming companies and games as products. In my last active engagement in gaming, I spent the past four and a half years with DECA Games which is a company headquartered in Berlin, focused on acquiring gaming assets and then working on breathing new life into these games. After this I went on to found The Collective Ace Group to solve a unique problem in the industry.
[Parth Das]: Being Business Owner at DECA, my focus was primarily around building a profitable business with game acquisitions. It was during this time that I observed that mostly development studios, who primarily make their own games, are the companies that are getting the biggest amount of attention and are benefiting from the consolidation that is happening in the gaming ecosystem. However, all the companies that are providing game life cycle services, like Engineering, QA, Art, Localization, Analytics to name a few, which are the true backbone of the gaming ecosystem are hardly benefiting from this. These are the unsung heroes behind the scenes and with The Collective Ace Group, I want to put the spotlight on these companies. The aim is to make sure that they also get their piece of the pie on the consolidation scene along with all the advantages associated with it. The main role of The Collective Ace Group is providing a structure of a multinational holding to these service companies which would translate into numerous benefits at the financial level. In terms of our growth strategy we intend to do it in phases. Phase 1 would be focused around service companies from Central & Eastern Europe, Middle East and the Indian subcontinent. However, in the next phases we would also be targeting expansion in North America, Western Europe and the southern hemisphere.
[Parth Das]: We are putting a lot of effort into identifying the right partners in the gaming service sector. By that I mean that we are looking for companies of a certain size that have been already established on the market and proven to be running their business in a successful and profitable way. Once a service company is interested in joining us we would be starting the due diligence process. It is an intense time of approximately 6 to 8 weeks during which we would be looking closely into their business track record, financials, team structure and growth plans. It is an indispensable step for us to make sure that the company is a strong fit and we can succeed together. What is equally or even more important is the mindset of the companies’ founders. We want them to join our Collective and stay on board, making sure that they keep on successfully operating their ventures. They need to understand that it is not an exit but rather a next step in the direction of making something bigger together. All the Founders would be enjoying independence in running their companies, growing together as a Group and benefiting from it.
[Parth Das]: The first set of VC investments in gaming startups in India started in 2014. Between then and 2020 about $ 350 Million were invested. However, only in the past 8 month, we have seen over $500 Million investment pouring into India. Projections for the coming 12 to 18 months are even more staggering and talk about doubling the capital inflow meaning it would reach over $1 Billion. Big names on the global scene like Tencent and Alibaba have already invested in gaming which is fuelling interest from VC firms such as Sequoia, Kalaari, Blume, Matrix to name a few. We can also not forget that the Indian Gaming sector is a beneficiary of the pandemic. People under lockdown had more time and disposable income that they spent on mobile games.
With regards to the E-sports it is still a niche segment but it has been enjoying engagement increase fuelled by the pandemic as well as investment. To name just a few examples - Loco, GamerJi or MPL (Mobile Premier League) that secured $95 Million in the last financing round. India’s large young population together with increasing ownership of smartphones and affordable data plans create great conditions for further development of E-sports.
Another area worth keeping in mind are Real Money Games (RMG) like rummy or poker that are expected to grow at a high pace in the coming months.
[Parth Das]: Gaming was one of the industries that provided gains during Covid Times. Most of the stocks increased over the lookback window of 1.5 years and although some companies are slightly overvalued, the majority within the sector still have growth potential. However in order to make sound investment decisions, we need to break this down into investment profiles;
For Investors (Institutions and individuals) making private investments: The market is very conducive as profitable businesses can have successful exits (with IPOs or Groups) providing sizable returns for the private investors.
For Investors investing in the Public Markets: These can be further divided into Active Investors, Passive Investors and Speculators.
For Active Investors (who keep abreast of their portfolio performance on a frequent basis), the younger companies (in terms of time since IPO) can provide significant upside potential which can be comparable to the trajectory of any tech unicorn
For Passive Investors (who look for slightly lower risk-return profiles), the big and renowned names in gaming space are reliable options
For Speculators (who are looking for specific conditions for a super fast return), following closely the M&A scene would open up opportunities.
Overall, yes it would be a good decision to invest into gaming given the current market conditions but like any sound investment, one would need to do thorough analysis into the investment options to rule out the losers as an investment friendly market dynamics also produces a high number of cash drains.
[Parth Das]: Digital Gaming in India is a fairly new asset class which has primarily seen exponential growth in the past 5 to 7 years with the past 15 months having played a pivotal role. Quarantine and lockdown restrictions made people have limited access to alternative modes of entertainment and also more disposable time at hand. Gaming in India is certainly a Covid-19 beneficiary where we saw tremendous increase in engagement levels of the players. The time spent on gaming apps increased by 21% along with 20% increase of game downloads from the AppStore and 51% from the Android Play Store (comparison between 2nd quarter of 2019 Vs 2nd quarter of 2020).
Mobile gaming has been the key driver in this growth. It accounts for more than 85% share of online gaming in India and the key business model has been the Free to Play Model. More than 500 Million Smartphone users in India have fuelled this where more than 350 Million out of these are online gamers. Key factors acting as catalysts are affordable data, increased bandwidth, relevant local content and micropayments. Also emerging technologies like AI, Virtual Reality, Augmented Reality and Simulation, while still at a nascent stage of adoption in India, are still creating an impact on driving talent towards this industry. With talent coming in- there is potential for innovation and growth. Lastly, growing esports and gaming federations are all playing key roles.
[Parth Das]: Gaming as a subset of the technology industry is far from stagnation/saturation. There is constant innovation happening in the tech industry where every month there is something new in terms of AR, VR, Blockchain, Streaming etc. Given this trajectory, there would be no stagnation in terms of possibilities, opportunities and business models. However, there could certainly be stagnation in terms of talent that is able to use these opportunities to flourish.
We have seen a strong development of the infrastructure and inflow of support being directed mostly to the Tier 1 cities in India. On the one hand, it drives an increase in the number of players, but on the other hand it provides companies with an adept workforce which has gotten the necessary exposure to thrive with the opportunities. However, after a while, the talent pool in these cities will start drying out as the rate of migration of the workforce to these cities will not be able to keep up with the increasing demand. Employees will circulate between the companies being offered better conditions but their overall numbers won’t grow at the necessary pace, which can lead to a stagnation of available talent. In order to avoid such a scenario, the Tier 2 and Tier 3 cities would need to be exposed to upgraded technology - both on the players and industry experts level. India has a very strong past when it comes to the service companies. We boomed during the IT revolution and became one of the biggest trusted partners for developed markets. This allowed for us to get exposure to newer technologies and thus develop the talent and skills for it. These factors create the right environment for innovation and once they are in place, VCs will be there to invest. This is where currently the biggest challenge lies wherein someone needs to break this vicious cycle. And this is exactly where I’m seeing Collective Ace playing a significant role.
[Parth Das]: The gaming industry in India took some time to catch pace and is currently still in a much earlier stage of growth and development as compared to some of the mature markets like the US and Western Europe. The Global Gaming industry's CAGR trend (YoY) is between 10 to 13% but India’s CAGR trend (YoY) for the past decade has been between 16 to 20%. Currently the Indian market is worth $1.2 Billion and expected to grow to $3 Billion by 2023. At the moment, India has approximately 350 Million online gamers and their numbers are expected to grow rapidly to 510 Million by the end of 2022. Putting some perspective to global numbers: India is one of the top five mobile gaming markets in the world, with 13% share of global game sessions. However, even with 12% of the global players and 13% of the global sessions, it accounts for less than 1% of the global revenue. This reflects on the fact that there is a lot of untapped potential especially in the Tier 2 and Tier 3 cities, which makes the role of a Group like Collective Ace that much more important.
[Parth Das]: The Collective Ace Group aims to be the one stop solution for best in class gaming services. We intend to start by deploying $100 Million capital across different focus areas of gaming services, which we can consider to be our first milestone and then scale it further from there. Our growth strategy is broken down into phases. Phase 1 would be focused around service companies from Central & Eastern Europe, Middle East and the Indian subcontinent. However, in the next phases we would also be targeting expansion in North America, Western Europe and the southern hemisphere. Also in terms of focus areas, we would start with services like Game Development & Porting, Localization, Art, Quality Assurance, Customer Support and then follow these up with capabilities around Analytics, User Acquisition & Monetization, Payment Solutions and Community Platforms to name a few.
[Parth Das]: I certainly would say that I have had a very fulfilling journey so far in the various roles I have had in the Tech and Startup space. I am humbled to have led companies that have generated billions of dollars of businesses with products that have serviced almost half the worlds’ population (>4.5 Billion Life Time Users). Personal achievements like delivering the most successful PC game launch at Aeria Games, or building and leading the biggest business unit at DECA games, or successfully exiting 11 investments across different industries, are all flattering experiences, but I would say the following learning that” the only time we really fail is when we give up, until then- it's all work in progress” is my biggest achievements so far.
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