Transcript
Speaker: Are you a gamer? No, I'm not. How does a guy who doesn't derive pleasure out of playing games ends up founding a gaming company? He also recently launched an Arrows game and I saw it get to like a million dollars in ARR within three weeks of launch. You must have got some intuitive sense of what a hit would look like. game called Block Blast, which is doing and approximately like 400 million dollars in revenue annually, just one game. Put your app on App Store, but then nobody comes in and plays it because you are not willing to spend money. Why are A non-gamer has just built one of the most successful gaming companies in India. Anurag Chaudhary, founder of Felicity Games, reveals what it really takes to produce hit games and build a global game publishing company out of India on this episode of the Founder Thesis Podcast with Akshay Dutt.
Speaker: Anurag Chaudhary, you are the founder and CEO of Felicity. Welcome to the Founder Thesis podcast. My first question to you, are you a gamer? And don't tell me the answer as on date. People who are gamers are gamers since kids. So that's what I want to know.
Speaker: and No, I'm not. ah In fact, um I think I end up playing games um mostly to deconstruct them. ah It's only now at a point where I can say that I derive pleasure out of playing games, but I'm not.
Speaker: And I never was earlier. So how does a guy who doesn't derive pleasure out of playing games and ends up founding a gaming company? right Because ultimately i feel that gaming is a surface area of, I mean, it's a consumer product at the core of it. right And um what you're trying to build with a consumer product is a place where you you are getting users to engage and spend time.
Speaker: right So in that essence, it's like an app or it's something which can build habit over time. And those are the kinds of problems. ah or rather those are kind of products that I like to build.
Speaker: And thus gaming is just a niche that I ended up building in because ah i realized that in this space, ah you know, you can take several shots at the goal rather than trying to live or die by this one app that you'll build.
Speaker: So I just found it to be an interesting space and I think it has grown over me over time. I mean, as a space. ah And yeah, I mean, I wouldn't say that I don't derive pleasure out of playing games now, but yeah, earlier i wasn't a gamer.
Speaker: Got it. So so you you essentially took the McKinsey consultant route to enter giving. ah But, ah you know, some of the things which you're saying will probably make more sense if you talk a bit about your own background. So like you said, you want to do consumer, you want to build an app which has habit formation happening. And these are all linked to your past experience. Just I mean, if you can talk about that a bit.
Speaker: Sure. So ah I've been working in consumer internet for the last 12 years. um i mean, seven years between e-commerce and food delivery, Snapdeal and Swiggy. My longest career stint was at Swiggy.
Speaker: ah ah Back in the days, we were in seven cities. ah ah Saw that journey from going from seven cities to 500 cities and almost 60, 70,000 orders do do a day to a million orders a day.
Speaker: Ended up working with one of the co-founders there building out, oh you know, specific categories which cater to need states like gourmet food ordering or healthy food ordering.
Speaker: um And in 2021, I felt that instead of doing this as an entrepreneur, might as well ah attempt something of my own. ah Because my formative years ah were in businesses which had physical boundary conditions.
Speaker: ah you know There is a warehouse, there is a person delivering the order, there's logistics. I was enamored that what what if you know I could just solve for attention span?
Speaker: And this was the year 2021. So you know there was a lot of captive attention span at that point. right So ah ah I teamed up with another Swiggy colleague of mine and we knew from the outset that we are taking an all or nothing bit.
Speaker: right So either we'll be like the next Instagram or we'll fail miserably. Unfortunately, light has played out. But yeah, we're building Vakao. It was an app around micro challenges because at that point, ah you know that was a net new unit of consumption, ah Reels.
Speaker: or TikTok. right So we thought that can we innovate on top of that and create a new unit of consumption, which is around ah challenges, split screen challenges. And while um the entire premise sounded great. When we pulled to execution, we realized that this is tougher than building ah you know a consumer business where there's a real lead state because you're trying to solve for the vitamin. You're not a painkiller at all.
Speaker: And thus, a lot of numbers which comes with improving engagement like retention, session time, how do you marry the right creative set to set the expectation of the user when they land on an app.
Speaker: We ended up solving some problems we had never solved. And I thoroughly enjoyed doing that. ah In the end, Vakao didn't have the legs and wings to monetize ah that retention span. And you raised the two and a half million for this.
Speaker: Correct. Correct. Yeah. ah So this was back in 2021. I would also say that the bar on raising money at that point of time was not very high. But that said, I mean, ah it was largely done at the back of, ah you know, our street crates, perhaps rate. And i it was also a humbling experience to fail um and failed fairly fast. How fast?
Speaker: So the entire cycle was like one and a half years. right And then we returned a million dollars that was left with us back to our investors um because we could sense that there was nowhere way to monetize this. We were just building MTDAU.
Speaker: So yeah, I mean, there was a very concentrated learning, a very different kind of learning, which we had never had on. So I've already built something on top of it.
Speaker: And a ah Felicity was kind of born out of those experiments there. um but yeah i mean And it wasn't even start, i mean we didn't start the funding, we started bootstrap, all alright ah just like experimenting with what does it take to knowledge games.
Speaker: You must have ah formed some sort of rules, ah principles, tenets, whatever that I need a business which does ABC or which does not have ABC characteristics when yeah after Vakau, because you would have learned from that failure, right? And then typically you would not want a failure again. So what were those tenets?
Speaker: So, um I mean, call it, you know, so first was that oh I didn't want to reinvent the wheel on a net due unit of consumption. um So because, yes, I mean, there's all the glory in building a category, but building a category is tough. And a lot of incumbents who are large, perhaps were not the first one to build it, specifically in consumer.
Speaker: right So didn't want to take that ideation ah risk. I didn't want to build something which was entirely net new, which was the first, like which is what we built with Bakao.
Speaker: The second tenet was I wanted to build in a target in a market where the but there was no real TAM problem. right Like, okay that're okay, there are only 1 million users whom you can monetize. So I wanted to have fairly large enough TAM.
Speaker: And third, a monetization model, which was fairly well-established. So not that I'm reinventing the wheel on, you know, what would it take to monetize? So, I mean, if i look at ah these three tenets, yes, there are I mean, app-based businesses could still classified under those.
Speaker: But I think the one last thing which pulled me towards gaming was just the number of shots that you can take. I think the story that inspired me a lot was that of Angry Birds, which was like the 50 second attempt for OVO.
Speaker: And I think if you speak to any gaming studio, which has made it, you will hear the story, right? that they What is the story? So apparently Rovio, it's Finnish company now in the Hall of Fame because of Angry Birds, ah tried multiple games since their inception.
Speaker: um But Angry Birds was the 52nd game ah which worked. So it took 51 failures to get to that point of success. right And um ultimately it's a hits driven business as with anything in content at large.
Speaker: I mean, I wouldn't just say it's gaming, right? I mean, whether you make reels or whether you make at times movies, but ah the number of attempts that you'll have to make to get better and iterate. ah Because you're still second guessing what the audience love loves or likes. right Same, I mean, as ah you know, you might have heard of Supercell. It's a large, again, a Finnish company.
Speaker: ah They ah have clash of clans and a bunch of like, large titles, which are, but you know, yeah um um like, which are legends is now. So even they basically called Supercell because they had these cells.
Speaker: within the company, which would create games and then they would test them on certain metrics. And if only those metrics were met, was the game really put out to scale as it dies. So, so um yeah, I mean, ah as a founder who was taking a ah lot of pressure on making it one app work, Vakao, it did feel lighter.
Speaker: To say that I'm not building an app named Felicity. I'm building a portfolio. So, you know, something should, something might it might work if if you stick to the science.
Speaker: Okay. ah You know but what, but I do believe that you don't actually build games. You buy games. Correct? Yeah, so that's how we started. all right um I mean, rather we prototype games with external developers.
Speaker: What does that mean? Yeah, so ah let's say Akshay has a studio, a five member studio, and you love to build games and try out new things. um But you don't know what to do next because it takes, I mean, organic installs are dead. So I think that's the other tailwind that kind of VR writing, which is organics are dead.
Speaker: Actually, it's not a great tailwind to write, but then that's the market reality. that it that there is. right that So, to yeah you know, you have time.
Speaker: but ah So Felicity comes to you and tells you that, you know what, ah these are the trending top breakout mechanics and see if you can make an iteration, smarter iteration on this. So you'll put together a prototype and we will make sure that you're compensated for your time and we align your incentives in a manner that you build a really, really good game because if it hits the thresholds on you know early metrics like retention, session time, we'll pay you a little more. If if it hits those metrics, we'll mo well check it on monetization.
Speaker: which has those metrics will make an offer to buy out your game, which is something that ah could be, if not life changing, something that will definitely sustain you for ah you know several more months or a few years to kind of you know sustain that passion that you have as a game developer.
Speaker: ah So that's the model that we started with. After Vakao, your core thesis was large market, already consumption is there, no need to create a category, not dependent on one hit, multiple shots at getting a hit. um Why not actually build a game yourself? ah Why go this route? like There must have been some journey to ah deciding that, okay, we'll not build games, but we will work with studios.
Speaker: ah Since this started off as an experiment, right? I mean, it wasn't started off as a company that I'll build from the get go. And I had no real experience of ah running a production of, you know, building games because building games requires you to have apart from engineers like a good uh game design team good product manager and also um you know uh some incredible folks who can uh you know go deeper into the ui um uh so basically the whole shabang right so yeah and it needs money from day one like Yeah. And and the second thing is ah you need to know how to run this team. So if you have had experience as studio head or our senior product manager, then yes, it like makes life incredibly easy to navigate this.
Speaker: But since I had no real experience ah in the space, I thought might as well um you know attempt this ah very ah in the least with the least amount of capital deployed.
Speaker: Because there's already creation that's happening outside. um And if I talk about just the sheer number of games, that rule I think there are 30,000 game developers in India. So everyone's kind of shipping games.
Speaker: ah So why don't I figure out how to perfect the distribution model by working with them rather than working as a studio. And I think my first few pings were to solo developers whom I could find on LinkedIn. And I would look for some mark...
Speaker: of excellence. For example, one of the first few games that we built was this dog meme game. um So the but the team that I found a was this IGDC student game of the year team. So basically both the kids had like you know built this incredible game and won an award. so Those were marks of success that, yeah, you know, these guys can do something good. And ah and what I gave them was, okay, we have to build something, an iteration in this trend.
Speaker: Can you, you know, put this together in a month, month and a half time? Which they did. Now, ah to... pull in all these SDKs which are required for the games to function, for ads to be served, for analytics events to be tracked, i found another developer, right? ah Again, freelance. So that's how it started ah by with a team which was, I would not say studio, but like freelancers who were passionate about gaming.
Speaker: And then in the even the early days, i kept the team small. I think we were, I think, seven or eight member team in the first year of our existence, mostly to, you know, build capabilities around distribution rather than production.
Speaker: um But over time, um with the, I mean, you know, with the, I mean, the tailwind around like age yeah agents, I think production is also something that we are now starting to look at. So there are a few games that we have launched, which are built internally.
Speaker: ah um But yeah, I mean, we still keep a mix. but rather than putting all the eggs in one basket because it's very very easy to get carried away with this one game that you're building, polishing it um and then ah you know ah time's over by the time ah but time it comes.
Speaker: ah yeah but but ah By the time you have to deploy monies on it to kind of you know get the users. So in a way, ah you took the VC approach that I will find ah talented teams building games and pay for the games which seem high potential. But of course, a lot more...
Speaker: um ah Like VCs typically are a lot more hands-off, whereas you were co-building with them. You were the distribution platform for them. So there are a bunch of questions. ah Let's just kind of figure out what's the sequence in which we should tackle them. Like, I want to know types of games. I want to know what's the value chain of games, like from a game developer making a game till ah somebody who makes money off it. or What does that value chain look like? ah Who's making money at what stage in the business? I want to understand the different stakeholders here. um you You tell me, how should we tackle this gaming studio, one this gaming 101?
Speaker: So gaming, just like the movie industry, ah it was and entertainment, like, you know, was part of the entertainment industry. A lot of monikers in the gaming industry, like producer, ah like, you know, etc. are actually should de derived from the same, you know, music or ah the film industry.
Speaker: It was a packaged goods industry, right? And ah ah initially, ah the kind of games that would work were like Prince of Persia, etc. Like, you know, single player games, which were experiences people play on their laptops. ah Then came console.
Speaker: i think somewhere down the line, people realized that There's a lot of interest in games which are very easy to play. So, I mean, Prince Persia, while it's easy to play and with games at large, they're easy to play but difficult to master. There are lot of games which are just like, you just play them for a few days and then that's what we forget about them. So,
Speaker: Like Angry Birds is a classic example. Yeah. So that's why these games are called casual games. So they're not necessarily considered real games. right And within the gaming universe as to now how it has evolved. Firstly, ah the hardware zone, which people are playing it are different. So people are playing games on PC and console, PC, then console and mobile. Right. So these the three large places. ah And on PC, typically the kind of experiences that people like to play are very immersive experiences. So these games typically are AAA or production games. It requires Hollywood production grade investment.
Speaker: It requires that amount of time, that amount of character storytelling because the need state of a user when they're sitting to play a PC game is that of watching movies.
Speaker: Right? Mobile. ah kind of democratizes this audience, ah opens it up ah many, many, many, many folds because i think the reason why this ah gaming culture doesn't exist in India is because it was only accessible on PC and console back in the days. And at that point, I don't think the demographic...
Speaker: It was such that it allowed us to have an Atari or something at home, right? Or a gaming PC at home. ah So in India also, the ah you know the first real wave of gaming was that mobile gaming, all right?
Speaker: And mobile gaming is as old as 2008, 2010 when I think Zynga, etc. started coming into the picture. ah These games really really like you know opened up the audiences.
Speaker: so One is AAA games. So yes, you can play um ah phones have processing power as much as they you know your laptop would. And that you can play like you know a Genshin Impact ah or even a BGMI on your phone, which is a AAA.
Speaker: It's a high production game, will take years to build. ah Then there is midcore. Midcore is a bit like multiplayer ah asynchronous and you know with ah you being able to like clash of clans is like a typical example right ah has a lot of ah depth and also lot of currencies which you kind of deal with.
Speaker: What about hyper casual that's also a category right? Yeah, so hyper casual is actually like a real. So, I mean, casual games, for example, like a Candy Crush, even though it's not something that's at the top of your mind, they can have a retention of a year and beyond. they should have a certain percentage of users.
Speaker: Hypercasual is like, ah you know, ah it's like a very low depth game, which is supposed to make back more than what it paid to acquire you within 7 to 15 days. Right. These are the game categories. You mentioned the the word publisher here, and we also spoke of game development studios or game developers. um What does the value chain look like?
Speaker: So, uh, a lot of studios started out, I mean, uh, gaming started with studios, uh, and by the publishers, uh, again, going back to this consumer package goods era, uh, they've just like movie industry. There were, uh, like studios, there were publishers, uh, right. So take two interactive.
Speaker: Uh, uh, and, uh, I mean, Atari, all of these way they were like, they were publishing games. So they would pick a studio and, uh, you know, they would, commission a budget and, uh, and, and there will be some sort of a minimum guarantee attached to, uh, commercial success of the game.
Speaker: And that's something that went on for quite some time. But I think ah it also started... ah the The publishing was also start contracting when ah internet came through and democratized distribution.
Speaker: So Valve, which was, by the way, a studio, it had made these games called Half-Life. um And, um you know, it was very, very successful at... By the way, Counter-Strike. So ah ah they...
Speaker: actually launched a platform to ship updates to their game. ah And later on, that platform became Steam. So Steam is the largest platform for PC console gaming. So anybody who now wants to distribute a PC game does it via Steam. So Steam is like a Play Store.
Speaker: Yes, it's a Play Store equivalent. You would like download the Steam executable file onto your PC and install it. Correct. So therefore, it's able to take care of updates as well.
Speaker: the role of publishing kind of in a way contracted a bit ah when the democratization happened through internet like people could self publish. So ah ah you will see that in gaming and I think everyone ends up becoming a publisher ah if they if they achieve scale. like Eventually, what is publishing? Publishing is the art of spotting trends, ah figuring out the right you know recipe for commercial success and backing something that works.
Speaker: So since this is a hits driven business, because this is a digital product, so it's easier to be across the value chain. So, I mean, a publisher is usually trying to solve some distribution problem, which is not that easy to crack and is using all the compounding learnings across multiple attempts and in a way, very smartly allocating capital.
Speaker: wherever there is a return and withdrawing it fairly quickly if there is none to be made. Right. So so hedging your bet rather than like going all in. Okay. Okay. Okay. So the publisher is like a curator plus source of capital.
Speaker: Correct. For a game developer, his choice is that I build a game and I go directly listed on App Store and Play Store.
Speaker: It's all virtually free and ah App Store or like Google and Apple will keep 30% of whatever I'm earning, 70% comes to me. And ah if my game reaches a million dollar annual revenue, then seven hundred k comes to me.
Speaker: um So what is his incentive to go to a publisher instead? So ah firstly, ah you know, do ah so now that building games or apps has become so incredibly easy, like you know, you can just bytecode it.
Speaker: Um, I see the real cost is in, uh, you know, cost of testing it on real users. Uh, so let's say because our organic installs are dead. So, um, you have studio, you put your app on app store, but then nobody comes in, plays it because you are not willing to spend money.
Speaker: Let's say you are willing to spend money. Let's say you have the resources. ah ah How many users you need to validate whether or not you should continue investing in this game? So that would be ah like that would that would cost you, let's say, four to five thousand dollars if you were to do this in the US.
Speaker: ah And this is all testing budgets, right? Now, let's say the you got to good retention, but you don't have monetization. You'll again have to test further with 20, 30, 40 thousand dollars to see if this game works at a slightly bigger audience.
Speaker: ah If that also works, then you would need to have ah the analytical ah rigor ah and the sophistication to be able to make changes and run A-B experiments within your game to keep improving the metrics so that this game becomes ah he and can The gain can hold on to its profitability even at the larger spend because the more you'll spend the CDI will keep increasing.
Speaker: So what works at $1000 a day spend won't work at $5000 a day. What works at $5000 a day won't work at $10,000 a day. So you'll have to keep figuring out ways to improve the LTV and retention of your game.
Speaker: And that's a very scientific ah process ah because once the core game loop established, ah you know you need a lot of in the you know ah personalization of the level difficulty curve, a lot of feature sets which are set up for driving engagement beyond the early reception of the game ah and then running the game ah like a retail outlet forever, which is LiveOps, which is, you know, okay, that come Christmas, I will have a Christmas event within the game.
Speaker: So it eats a lot into ah your resources, whether it is ah capital, whether it is people or ah it is also just analytical bandwidth and prowess to make decisions, right? So because you need experts for this.
Speaker: And thus that's where the value of the publisher gets unlocked because it's not just capital. I mean, it's not to say that oh you know any publisher would be making big money on a game which is stuck in time. The for V 1.0 of Akshay's game, if it was off to a great start, is not the is not a version on which it would be making a million dollars. So it will need to evolve. And that pace of evolution, if you haven't seen as a solo developer or a developer who never tasted success, then that requires someone to work with you to ah achieve that success at that pace. Okay, very interesting. I think a fundamental question then is, ah how do games make money?
Speaker: So before we talk about making a million-dollar game, the like you know what is the way in which these games make money? I'm sure it will be different for different types of games. Just tell me about that.
Speaker: Yeah, so AAA and midcore, it's purely in-app purchases, but in casual games, there is a mix of both in-app purchases. in-app purchases, like say you buy an armor or something, power up or something like that. So um in AAA games, it could be both something for progression.
Speaker: Or something for status, for example, you know, we are playing BGMI. I have this new um um you know bulletproof proof jacket, which has the Indian flag on it. now got I'm playing this on Independence Day. So like, it looks cool.
Speaker: okay It could be both, right? So ah something which gives you like identity plus like something which gives you progression. But in most of the other games, it's progression. It's a way to progress.
Speaker: And it's not to say that games don't ah bring you to that point. right They will try to orchestrate that failure point ah so that ah you know because you are so invested, you will make that ah you know investment of money as well, apart from what you've made till now, which is your time.
Speaker: um So that's one. The second one is ads. So, um I mean, and this is a model which is very well said for engagement led games. So for example, let's say you're playing a classic solid head.
Speaker: Now, Solitaire has been around for eons, right? And ah you play it for, it's a solo journey. So you're not playing it to show someone that I'm like the best Solitaire player out there. You're playing it for your own, it's like Sudoku or... Yeah, it's time pass. Yeah, it's time pass.
Speaker: ah There, um you may not really pay for boosters, right? ah You really want a great Sudoku. And by the way, a great Sudoku will be one which...
Speaker: ah fits like a glove in terms of the level difficulty curve, gives you the right you know escalation in the level design when when they think that okay you know ah you're making well lot of progress and also deescalates it when you think that you had a rough Sudoku game. So all of that's working in the background. So here you are engaging and just like you finished your level, you will take an ad break.
Speaker: and then be back to your game. There will be some boosters which are available wherein you can pay or you can watch ads. But that's also a different, that's also type of ad monetization. Ad monetization, um late I think alone contributes to 50 to 60 billion dollars in revenue annually. like There is a company which has filed for this DHRP, DRHP recently got Play Simple.
Speaker: and i It's an Indian, I mean, it's a company which got acquired by mdg Group. ah ah It's a Swedish group ah in 2021. And now the MTG Group is kind of, you know, are doing an IPO for it. It's an Indian company. um um And they do 2000 crores plus of revenue ah with almost 350 CR of profit after tax.
Speaker: And most of it is ads by the way. Okay, so so they are into hyper-casual, casual games. Casual games. So they make word games. Word games and, ah you know, tile match, etc. Again, long-term retaining games, but habitual games.
Speaker: Why is a word game a long-term retaining game? So ah it's a habitual game. Okay. You feel like you're getting smarter every time you play it. Yeah, so I mean, I think the ah the same, I mean, it's like a dal chawal game versus like a pizza game, right? So ah you will, some games will look incredibly good. You will, like when you see the ad, you'll be like, i want to play this game, but you'll get poured out of it very quickly. But then there are some which you'll keep coming back to you for your comfort.
Speaker: and Right? So ah in word games. Like the the New York Times, Wordle and all. A lot of people are still like, it like like yeah yeah, those games have a very high retention rate. Yeah.
Speaker: Okay. So, I mean, I think that one of the highest retaining games right now in ad monetized games is a game called Block Blast, ah which is doing approximately like $400 million dollars in revenue annually, just one game.
Speaker: Right. So it has this incredibly ah long term retention budget. Okay. Got it. So, ah ah Tell me about the players here now. um We spoke of publishers, we spoke of game developers. ah what Are there dedicated ad networks? like like who's ah Who are the players in the ad side of things here?
Speaker: Yeah, so, I mean, the biggest ad network in gaming ah is this company called AppLovin. A-P-P-L-O-V-I-N. It started off as an ad network, but in between, they did something incredible, which was they started running gaming studios.
Speaker: And they took up a lot of debt and... um They built some publishing businesses from scratch. They also invested in lot of businesses and over seven, eight years, they perfected, they're not just rid of inventory for themselves, because they also perfected their algorithms. And then they hived off all these gaming companies to this large ginormous operator named TripleDot, which does around like $1.4 billion dollars a year in revenue.
Speaker: Again, mostly ad monetized. right And ah when someone asks me what is casual gaming or gaming today, while it's all about the craft, it's about innovating on the mechanics, it's about delivering user experience.
Speaker: ah But at the core of it, what are people trying to do? It's a UA arbitrage business. Like, you know, it's a, I feel that UA is user acquisition. User acquisition. Like, you know, people are running these trade desks for user acquisition that, okay, what's the ROAS profile?
Speaker: ah What is the retention curve? What is the LTP curve? when will it break even? When will it turn to cash? right Because eventually in gaming, there's no real cost of inventory or fulfillment. right So even if you are able to get to 140 to 150% rewards, like you put $100, make 140 over a year or even two years and you can do this at scale.
Speaker: It's a cash flow positive business. right take Not profitable, cash flow positive business. Um, but yeah, uh, it's, uh, as difficult to do it as it sounds easy right now.
Speaker: Apple living is a supply side platform. Yeah. Uh, uh, I mean, no demand center, like you, you're getting your users from there. And also, it's a use it's also a monetization platform. So you can also make money from Apple 11.
Speaker: oh Both. And that's how they close the loop. Okay. So you can, as a game developer, I can go advertise my game using Apple 11.
Speaker: to my users and i can also use the Apple and within my game to serve ads to people who are playing my game and therefore make revenue. So so it's a it's a two-sided marketplace.
Speaker: Correct. Okay, I want to understand this user acquisition strategy a little better. ah Why are organic installs dead? i think it's because of just the sheer number of games and apps ah which have come up right. So two things. ah i mean I mean, come to think of it.
Speaker: ah ah When there is more demand than supply, right um and there's a niche in which you are searching for something, let's say you're searching for a solitaire.
Speaker: 20 years back or 10 years back, maybe there was maybe they were 20 solidaires. So sure, the solidaires still had to pay for users who are not searching and who will be caught off guard on impulse in some other game.
Speaker: But otherwise, there were no options. But now, think what I hear is that every quarter, ah the rate at which people launching apps, like every quarter, they're outdoing the number of apps that will launch in the last four quarters. Right. So so then now the, the invent, like, you know, the the marketplace is overstacked, right? Like there's, there's enough and more. So why will it be there organic, why will there be any organics now?
Speaker: Everyone has to fight for that attention span. So the ah anecdotal stories you hear, like the bird was an organic story.
Speaker: ah And there was one more game. I i forget. It was like again a casual game, some physics-based where some bird had to... Angry Birds. So those do happen been ah at times when you know there's something new.
Speaker: And by the way Angry Birds was on web. It was not on mobile. you will not find a mobile version of Angry Birds. So it it was ah the became viral on a web platform. And I think so did Wordle. I don't think started off as an app to begin with. It was actually like an HTML, which was shareable. right like You could just go on your phone and play Wordle on a website.
Speaker: on nvd's website right so okay now it's been made into an app so um see everything which has a lot of shares and there's some novelty but you're saying these are like 0.001% games which are organically then you're using a lot of analytics and constantly improving your game and so on so that game is no longer uh something which somebody without some capital can play and therefore ah the need for publishers and that is the spot that you are occupying. are there other people who are
Speaker: ah publishers at scale in India? ah No, I mean, not really. ah um So I think ah ah there are good studios. I mean, by the way, I mentioned Play Simple, Read Lake.
Speaker: It's a big studio and now they're self-publisher and I think they also operate across some multiple games. So, uh, from what understand, it's a UA driven company. Uh, they have a spend target in hundreds of thousands of dollars daily, which they have to deploy, uh, on which they have to, like you know, uh, make that return. Right. So, um, uh, but apart from that, like someone who's working with external studios, et cetera,
Speaker: I think in India, there is none there are a lot of publishers outside India. ah ah Calls and done every publisher is still fighting for attention span in the tier 1 markets, right? Because that's where the money is.
Speaker: Unfortunately, the Indian casual gaming ah attention span, the size of the price is not incredibly large, right? I mean, it is there. I mean, one can make 20, 30 million dollar game for sure.
Speaker: But you can't build a 100 million dollar game ah from the casual gaming. You can still make it in AAA, which has been shown by Garena and Crafton. ah But casual, it's been difficult. So yeah, coming long story short, we are the only publishers at the moment in India.
Speaker: So how how does Felicity operate as a business? um Like you told me a little bit about the early days where you went to individual ah solo game developers and ah you told them to build a game like this. ah But just tell me what is the model exactly? How much do you ah like how much do you support the game developer? Do you acquire the game upfront or is it a revenue share arrangement? ah How does all of that happen?
Speaker: Yeah, so, so far we have avoided revenue share because in revenue share, by the way, it's profit share typically because you're also spending on the user acquisition cost rate. So, but ah the thing with profit share is that it, it ah um you know,
Speaker: then you can't reinvest profit back to growth and in early stages you need to have that trajectory ah because once you get to a certain scale is when you are bargaining power on the ad network side and everything else also changes.
Speaker: Right. So, um, I mean, you can't be, um, you know, asking for like, uh, a few things when you are at like subscale and that's where we consciously chose in the beginning, not to go with a profit share model because we wanted the ability to be a little more aggressive in scaling again to the point where, you know, we can have those relationships, which can help us kind of, you know, grow further.
Speaker: ah But coming back, ah ah the model is fairly simple where we where it's like a three step process ah for any game ah to be evaluated, tested and acquired.
Speaker: in a sense In a sense, when we are paying out $5,000 or for prototyping. It's like a service model. ah If you think of it, right? like Sure, ah ah we don't usually try to take the game upon us if the game didn't have good metrics and we leave it with the developer. But it's a service model. It's a contractual service ah that the ah developer has gotten into. So that game in essence sense belongs to the person who has paid for the service, right?
Speaker: ah And then ah ah post that, what we do is we ah you know get the game tested on metrics like retention, session time, which is like an early you know test on engagement.
Speaker: Are people liking to play the game? That is a tick. We pay a little more to build it in depth because this time you would need retention up till 14 days, 30 days to know how things are going on. This time we test for monetization.
Speaker: ah So typically the payout here would be another eight to $10,000. ah And if though that tick mark is met is when, you know, like the ROAS is ro but is good. We can see that they can recover 50, 60% of whatever investment is on UA back in like 30 days.
Speaker: And there's enough retention left for a breakeven window and it's something we can go now deeper into ah and we can turn it into a profitable like you know, it's a if this is a breakeven mark, if it's seventy eighty percent there and you know, now going really really deep into the game. in terms of experimentation, in terms of all the la level designing curve, ah ah investing into different creatives, playable ads, all of this could perhaps you'll treat it in the favor and help that cross that threshold. That's when we make it active.
Speaker: That's when we formally take the game off so from the app store and we we pay reasonably for that, day you know anywhere close to like 40 to $50,000. ah ah um And once that's done, then our team takes over, which means that we don't take the developer's help on expanding the game and we also do an engineering restructuring on the backend because a lot of games are wipe coded and you are trying to fix things as it's flying. So the code is not necessarily architecturally sound and prohibitive to scale.
Speaker: So we also redo that ah internally with like our own engineering team and um or deploy product managers who bring it at in a vintage and industry experience ah ah who have worked on large titles to go deeper into the games and then with the profitability rate. so So that's that's the operating model.
Speaker: That sounds like a very sophisticated model. You must have come to it over iterations. um If I understand correctly, you pull it off the App Store and you're pulling it off because you want to fix the code and make it scalable and then you publish it again.
Speaker: ah So in a way, it's like the who's the owner of the source code? Who's taking ownership on the deployment of source code? So ah ah i mean the we would so we want to scale in a manner wherein we are not bloated on costs in terms of our team, etc.
Speaker: So that's in the initial days, you're totally fine if you know someone's white coding it, if it's a developer, because it's their creative vision and how do they get to it? As long as the consumer is getting a crash-free, smooth experience, we are okay. But once it comes to this side, then someone will architecturally redo parts of it. That depends on the code review.
Speaker: called review um um So it's the ownership of the code, which is ah which is what like changes most the App Store transfer happens, right? From their App Store to our App Store.
Speaker: That's about it. You're saying that ah initially the game is not published through the Felicity account on App Store. The game developer's own account is publishing the game.
Speaker: Correct, correct, correct. But ah he is publishing it with some way for you to look under the hood at the analytics, the retention rates. So the thing is, ah we have invested over time into SDKs.
Speaker: Events is nothing but milestones which get triggered. It's like a beep. ah So level 1 cleared, milestone. So we have now registered Level 2 cleared, we have registered it.
Speaker: You left the game, we have registered that too. So these events can either be... coded by the developer, but then there will be like the way you think about events, the way I think about events would be very different.
Speaker: If I am not analytically rigged, like if I don't have, if if I don't have any prior exposure of analytics, I will think very linearly about four things, but someone who knows where to look will tell me 10 more things. Right?
Speaker: So what we've done is we, we tell developer, this is there in the SDK, this analytical events are there. You just follow documentation, integrate. This analytical events SDK is also needed for the game experience by itself? Like for a user, any logs on again? User would not have any difference in the experience if they were to play a game with the analytical events or without analytical events. So it's a tracking versus not tracking.
Speaker: Same way, for example, you have to initialize the ad networks when you launch the game. Now, the way you initialize this on a low RAM device versus a high RAM device will be very different because if you initialize it in a low RAM device, the user might wait for 25 seconds on their screen and be like, what is this? like Because you download it out of an impulse. You want the launch time to be quick.
Speaker: Now this is a nuance. We have learned this over time across 40 games. That's initialization logic is like is coded in our SDK. It's called Felicore. So when you as a developer are integrating it, ah you don't have to like solve for these edge cases.
Speaker: So the ah typically when you create an account with an ad platform, there is ah all of that KYC, blah, blah, and sharing your bank details, et cetera. Who's ah owning that ad account for that game?
Speaker: It's us. So the developer will only see the fixed payouts on milestones. He will not see the ad revenue that comes directly to you. Correct, correct. Okay, okay. Uh, so that we also come across developers who already have their own ad accounts. Uh, typically in the beginning, we are not, uh, very, I mean, monetization comes the last, the first thing that we care about is retention.
Speaker: Uh, and to do that, I think there are two, mean, analytical events and the right attribution. Those are the two top things. If those are sorted, i mean, whether we spend thousand dollars on your game to test the game.
Speaker: We have done a few of those as well, wherein the game was already made. We told them that, okay, we will spend money, whatever money comes to you, keep it. But we are testing for, you know, retention and, um you know, if the game is good, then we'll make an offer or something. But ah
Speaker: analytical events matter the most in the beginning. we We were talking about how ah Felicity works. So you have the analytical SDKs and the ad serving SDKs, which all of this is packaged into one SDK called Felicore. Everything is in one. So I'm just unbundling everything that is there inside this one SDK called Felicore.
Speaker: So this is given to the game developer and they launch the game. ah They make it live. and Then you spend money on getting them users because the installs, because the only way to get yeah users is through ad spend.
Speaker: ah So yeah then what? and And how does that progress? Like how much do you spend and when do you decide you want to spend more, et cetera, et cetera? So typically we try to at least aim for, ah you know, 400 to 500 conversions because any data reading into any data, less than that would be, so, I mean, you know, would suboptimal. So it could cost anywhere be between, ah actually should depending on the installs, like these days $2 is the minimum that it costs. There was a time when 50 cents also used to be enough.
Speaker: You are doing this for which geography? US. Specifically US. Every game that you want to work with is for US geography only. So we are testing it in US. Because if it works in US, then it will work across the world. Yeah.
Speaker: So there's some reasons for that. ah Couple of reasons. One is the audience maturity is fairly high ah in that market. And receptiveness for newer mechanics and figuring out how those work is also fairly high. So what that means,
Speaker: is that like, let's say if you were to pick up a tier two or tier three, geo ah the learning curve, if it is something which is never they've never ever experienced, you will you will read into signals of very low retention and feel that you have made a bad game.
Speaker: But that's ah so so you want mature audiences who love to try new things. If that works there, typically what we've seen is as the game will keep becoming bigger, there will be some trends on TikTok, etc. also and whatnot. So this game mechanic will then start traveling across, right? And then everyone will be playing that game. So, and I mean, in Vakao also, I think Rajesh and I, my previous co-founder, we used to joke that like world culture is built in the US. Like the soft power that they command is incredible.
Speaker: ah ah like if if everything else was aside like the soft power that they built is ah you know ginormous so so coming back the ah yeah US is the market every district so the difference between the prototype game and the game after you see good retention numbers is just the number of levels Level and monetization. So we will now start adding monetization features. so for example, ah when you're playing the game for the first time, prototype, it may not have any ah rewarded ads, hints, boosters, nothing. Right? Like it's just pure gameplay that we're testing the game on.
Speaker: So the ads are also served in two ways. One is just periodically or so based on some event. And second is that if you want more gems, then watch an ad. Correct. So that second type of ads ah doesn't exist in the prototype. So stuff like that, you will start adding. Yeah. And fact, when we test the prototype, we also don't switch on any type of ad. We want to see ad-free words of retention.
Speaker: You want to see pure data of whether people like the game. That's that's more important than that stage. Got it. Okay. ah And in the second and second phase, you know, we've introduced monetization. When I say monetization, for monetization also, there has to be some sort of a strategy. ah ah Like, of course, it's like, okay, you can have some ads where people are grinding, but even if it's a disruptive interstitial ad which comes up in between levels. What is interstitial?
Speaker: So any disruptive ad that you see like you were playing a game, you stopped it and then suddenly that game is called intersession. You have to wait for the ad to reach the skip button so that you can skip. and help Yeah.
Speaker: So when to when to when does the interstitial kick in? ah After how many, ah what is the cool down? Like for the but between the first and the second one, what should with the cool down? Should it be levels? Should it be minutes?
Speaker: Should be seconds? All of those are calls which we don't take like which we like don't even think about in the first stage, but the second stage we do. And with all of that, ah like IP packs are introduced and the depth of the game and of the levels is also increased.
Speaker: ah now it's um you know Now the game can be tested on something, ah a metric called as Return on Ad Spends, ROAS, right? ah that Because previously there would have been zero return, right? because because Didn't have any monetization. So now we're testing for retention and ROAS.
Speaker: And typically we would have some sense of, okay, if this is the retention, this is the ROAS progression curve, this could be the possible break even window. Right? So we will test this at a slightly bigger budget.
Speaker: but Why would ROAS have a curve? So LTV has, ah I mean, lifetime value. I mean, everybody was finding the ldv it doesn't catch ah right so LTV So LTVs have total of two things. One is your average revenue per daily active user.
Speaker: And second is retention. So there's a retention verb and then there's an app down. So every because you're getting an average revenue per daily active user, whatever your retention is based on that, whatever the area under the curve is, your LTV.
Speaker: So, ah so what what I mean to say by we look at a curve is that if your game has a D0 ROAS 40%,
Speaker: It doesn't mean anything, by the way. ah Unless and until you look at it, try it with retention. If the retention after day one is 10%, you're not going to break even even with 40% days of retention. The return on ad spend is boosted if retention is high. Otherwise, you're constantly spending money to acquire new users and only 10% of those users are staying back. So... The ad spend, it's ah it's a leaky bucket. ah And therefore the therefore, the longer you have been running ads, ah the higher the ROAS will be because some percentage of people who joined 30 days ago are still playing and those that free money like because... So yeah, so that's a uber at a cohort level, right? So you look at like, and this test you'll have to run for at least three to four weeks to have at least three weeks of cohorted data, right? That okay. I mean, everyone should have completed their one one one week.
Speaker: um So this is like, I would call it like a soft launch, where you're spending anywhere between 15 to $20,000 on just user acquisition to test the game.
Speaker: It's a certain skill. So this is basically a monetization test. The first phase was, do people want to play it? yeah Yeah. Okay. like Like a game PMF. This is more of a monetization PMF stage for that. Correct. Correct.
Speaker: Got it. Okay. And then and after, if it crosses this, then you take it in, in-house. Yeah. Okay. Okay. And at each ah stage, the developer gets paid something which ah you define as a, I'm paying you for a service of first building the game, second improving the game.
Speaker: And then once the game is proving to be a profitable game, then you pay one final tranche. That's it. After that, the developer gets no more payment. Yeah.
Speaker: So these 40 games which you have worked with were selected out of how many that you saw? Out of the 40, I think around 30 would have been commissioned and 10 we would have seen wherein it was already made.
Speaker: But ah yeah, I think out of that funnel soft launch only like five or six would have made it. 506 were made it to the second stage where you are testing the monetization.
Speaker: Correct. Okay. So out of 40, 506 were playable or liked by players. ah Yeah. And then what was the funnel after that? And yeah, I mean, at the moment, ah like ah three is where we are actively working. I mean, there are, ah you'll find more games on our app store.
Speaker: Because some of them would have been some of our own experiments or, you know, in some cases the developer said, just you keep the game. ah But we are actively deploying money only on three games. So these these are the three that you've outright acquired and fixed the code and then relaunched it as your property. Okay.
Speaker: Okay. ah Is this a capital intensive model? So ah ah the biggest spend is actually a UA. So does because the cost of testing in the US is high and you will make mistakes right with every channel, ah your learning cycles are long. So it can be capital intensive until you get to your first cash flow generating game.
Speaker: right So that is that. ah But largely, to be very honest, um um if you are getting a good momentum, ah having cash does help because you can afford to afford to ah ah yeah postpone your breakeven by increasing scale and ah that will increase your CPI. right So ah whatever your cash in bank is gives you the stomach to, gives you ability to stomach the working capital on when your overall return will come.
Speaker: um So if you have very little capital, you'll want games which make money in seven days, right? And you will be greedy in your monetization. already Even if it's profitable, then ah it's it's not going to scaled outcome because are losing out on your users. So you're not building a doubt.
Speaker: ah But if you are playing the long game, you will okay, I'll wait for 180 days for breakeven. So what happens, what what what that means is that effectively, let's say you're spending $5,000 per day for 180 days.
Speaker: for one two days Only on the 180th day, you'll make $5,000 revenue and $5,000 spent. Before that, you'll be making less and less. So there'll be an area under the curve which is the burn. So to stomach that you need capital, I mean, um ah you know, in the beginning.
Speaker: Why does stomaching the burn give a better outcome in the long run? but Because you are able to ah capture a larger market share. So every new trend will only have, um you know every new shelf that's created will only have like a certain number of people can capture the category.
Speaker: ah Right. um um So how i how we look at it is daily spend potential. For example, there's a genre of game right now which has a daily spend potential of $1 million dollars because it's incredibly viral.
Speaker: The top three incumbents- What genre is this? This is called Arrows. It's a tap game. arrow ah yeah I've seen these ads on Instagram. yeah the arrows yeah Got it. so ah so So, I mean, i think collectively, these games are driving 150,000 160,000 daily installs just in the US.
Speaker: daily installs just in the us ah right And if you just do the math on that, like multiply by three to four dollars, that's like a, that's this US spend potential plus global, we estimate it's one million dollars plus.
Speaker: ah But this didn't exist as a category four months back. at eight So, home server would have gotten to that, ah like, maup that capture the market will sit at a good comfortable DAU now.
Speaker: ah Now someone who starts today ah will first have to pay higher CAC, will have to have better retention. And even if they do, then I mean those you those users have already played arrows, right? So like you have to have something deficient your game.
Speaker: ah ah For example, we also have a game called Solitaire. So Solitaire is a stable category, non-monopolistic. But what I mean by that is like there's no real one incumbent who is driving 80% of the install. So when we look at genres, you also look at that. How monopolistic or distributed are they?
Speaker: So Solitaire has, drives 40,000 installs a day in US. So at $5 install, must be a 200k per day kind of a market.
Speaker: But the incumbents have been around, like the all the large incumbents there have been around 2019 or before. So there will be those many experiments ahead of you.
Speaker: ah right So tough market to crack, but like still stable enough. So as with any business, you need to get to that scale. And I think that's how gaming business works.
Speaker: like ah It's not that arrows will go down to zero in six months from where this peak is. It will settle at a point ah From where it will become stable. So it will go here and then it will become like this. So you will have to keep launching new games.
Speaker: Whatever your ARR is, it will come to let's say 60-70% of what it is until your next game and your next game and that way you build like this huge portfolio cake, right? Which has a sum total of multiple games.
Speaker: What is the... ah So one is, of course, you've talked at an individual game level that, ah you know, how to make that game succeed, the different strategies, like being willing to stomach losses for longer is the way to make a hit game with a high DAU number. The goal is high DAU number game and some of the strategies which you've talked about on how to get there. ah But is there an advantage of having a portfolio of games?
Speaker: Does it, for example, allow you a lower user acquisition cost? Does it lower your CAC because you have five different games and so you can advertise to each other? Or does it give you a data mode? What are the advantages of the portfolio approach here that you are getting as an unfair advantage over a game developer?
Speaker: So cross proportion is definitely one rate. And again, that happens at some scale. I mean, unless and until you have gotten to half a million dollars or something, it won't necessarily compound. But ah at that point, you can drive anywhere in five. And I've even heard with some publishers which which only work with adjacent categories. like ah It can even drive to 20% of your daily installs.
Speaker: but So you're doing this between your apps. This is a huge advantage, right? Like at that scale. What's an example of a publisher which is doing this like adjacent categories only?
Speaker: um So a play simple but word games. Got it. Yeah. Okay. But I mean, Voodoo, for example, has this a network network called Voodoo ad network. And i they are also driving a good number of, in fact, they have also acquired apps like BeReal, which is a social app to build an ad network on top of it. And I also leveraging that to push their own game. So I think ultimately distribution is always a mode, right? If you can build one of your own.
Speaker: ah Because so now whatever am talking about is pure finesse of doing UA and monetization. But proof of the pudding lies in if we are able to get to that one game which has an incredible doubt.
Speaker: But coming back, that is one ah advantage, cross promotion. Second advantage of portfolio is that dependence on one game you know cross ah offer portfolio is ah that dependence on one game is low. ah Like as I said, dick every game will go through this curve wherein it will stabilize at some point. So if you are a if you need to be a growing concern, if you're a bootstrap shop, doesn't matter to be very honest.
Speaker: But ah but if you're ah if you are supposed to be a growing concern, Then putting all your eggs in one basket in gaming will be ah could be counterintuitive. right Because then, I mean, they like what what will be in the next phase of growth? right Third is infrastructure. So when you're single game focused, you build everything for that one game.
Speaker: right um All your learnings are in that one whole game. But like, for example, AB b testing is an infra, ah you know, which can be achieved like leverage, segmentation of users and playing around with level difficulty curves is an infra.
Speaker: I mean, even at ad initialization, I was talking about Felicor is it infra. So all these infra, if you are a multi portfolio company, you build up over time and your core IP is not your game, then you it's your it's your infra.
Speaker: This infra is largely people know how like you have people who understand segmentation, who understand how to create good levels. No, no, no. These are ah these ah so good people need leverage. So it's a bit like how ah you always get good people. I think that is like a table stakes.
Speaker: But, you know, i say a good it's a smart engineer with Claude but versus a smart engineer alone. So delta ah that's what infra Delta would be in this parlance.
Speaker: For example, um if you, ah if, ah so let's talk about level, ah we like level and content experimentation.
Speaker: So one way to do it would be that I have a brilliant product manager who has a thesis around what kind of content would work. and he or she chooses to ship these this content with every release.
Speaker: And there's a dependency on engineering, there's a release dependency. He or she is able to read into all this data and you know. Second one is this game has an experimentation experimentationra always on So the product manager has a level design tool. i He or she recreates these levels, deploys it on their own on a live game, no engineering talk, just FIA and takes data.
Speaker: So both these will have very different pace ah of experimentation and learning. right Because I think the other part that like we have talked a lot about the game development part, but the other part of game scaling, I think the raw materials for ah large gaming company in casual gaming are time people And experiments. How many experiments can we run? Because like, one can i have a hunch that this will or this will not work. But like, till the time is not tested, there's no real way to know.
Speaker: Okay. um How much money have you raised so far? ah We've raised close to $12 million. So, I mean, ah we haven't announced one of our rounds as yet, but yeah. And is this good enough to last you till you find your hit?
Speaker: Yeah, ideally, yes. right and i mean And next round would as it is be a growth round. based on i mean you know All these parameters and everything should have ah been underwritten by that time. right Next round, I assume, would only happen if you find a hit.
Speaker: Correct. I mean, ah find a hit and um um we also have the recipes to find more, right which are more like, ah how should I say, more deterministic rather than, ah like, you know.
Speaker: You know, you must have got some intuitive sense of what a hit would look like. Have you developed that yet or it's still work in progress? I think it's still work in progress. so But I think we have gotten better at it. So, I mean, in the last... So, I mean, we also recently launched an Arrows game and I saw it like get to like a million dollars in ARR within...
Speaker: like three weeks of launch. I was like, okay. ah And I had never seen it with any other game. Right. So, and when I like just got deep, went deeper into why did it work?
Speaker: Of course there was a market trend, but, ah but we had also like created this great tooling around making geo specific creatives. So, so for example, ah out of the $3,000 it does every day,
Speaker: ah US only does $1000. Less is coming from Korea and Japan. now Why? Because we are able to make a Tori Gate ah label. we We are able to make a South Korea temple label.
Speaker: All of this didn't exist until six months back even within Felicity as capabilities. ah The team is able to run, like you know we are able in geographically, we are able to run different different experiments on the continent.
Speaker: So um I still feel that it's not enough. like This is still subscale. ah like i would feel validated if like you know we could take one year to $10 million dollars in the air or something. That's when I would say, yes, it's a true hit.
Speaker: they then But yeah, I do feel like as a founder, you do get an intuition that you're moving to towards it and you have trust the process that ah we'll keep creating more games. We'll not get too carried away with just one game.
Speaker: ah And you'll always have to keep punting on something ah which is about to break out has just broken out and can you be fast enough to the market with an iteration?
Speaker: ah You keep talking of shipping content. I just want to understand, are you talking of content as in the ad ah ah copy and the ad video or content as in what's happening inside the game?
Speaker: What's happening inside the game. So actually the your core game, so 80% to 90% of the time you spend on the levels, right? Rest everything, lobby in the game, some daily challenge. i mean, those are adjacent side quests. 80 to 90% of the time going to spend on the levels.
Speaker: Now the level looks very easy, but it's an amalgamation of some logic, ah which is nothing but constraints. All games have some constraints.
Speaker: Yeah. And ah some core art or ah word or number, whatever, like your whatever the form factor that is. So that is content. So it's a mix of logic and some art word number or it um something else. Right. Like.
Speaker: So this thing, while it looks very easy, it is the most difficult part for a game publisher or developer to master because what difficulty curve presents the right amount of challenge for you that even when you stop playing the game the next day, instead of v row opening reels, you opened our game or you opened our game as well apart from reels.
Speaker: That is very difficult to master. And for that, you need to really go deeper into what makes game challenging. So, and thus content experimentation is is like table stakes. And I think the biggest delta of like retention and gains come from content experimentation.
Speaker: So like when you said that you have the ToriGate for Japan, ah that is inside the game, that would just be one level? Or are you saying that in your ads which you run in Japan, you show that ToriGate level and therefore… So we started with ads ah in Japan and we started getting like really, really good CPIs.
Speaker: ah In fact, we haven't yet done it. We are now instituting that as a level in the game and not just that, we'll try to do many, many more. But for that, we have like this level building tool which can make ah you can throw any ship at it and make a level out of it.
Speaker: And this level building tool is the infra that you were speaking of. So no, level building tool is a, I mean, it's still a tool. ah Yeah, for this game, it will be Nidra. What we'll test across multiple games is that a PM doesn't have to ship any release.
Speaker: ah He or she will plug this, like, let's say we created five specific levels for Japan with this tool. And we created five specific levels for corria What we'll do is this PM without going to the engineer will create an experiment only for Japan and AB original versus this new curve will create an experiment for Korea original versus this curve.
Speaker: And one week later report which one worked better and on what metrics that is infra, the ease of being able to do this without having to like run pillar to post Yeah, right. Without custom coding, Correct, correct, correct. Yeah.
Speaker: Okay. um I kind of want to understand that do you think India itself will also become a big market for monetization or you want to focus on the developed countries for monetization? Yeah.
Speaker: I think it's a matter of ah soap i think so all i think it's a matter of affluence, simple things. I think if there was a way to laser sharp, you know, in a laser sharp way get to the 50 million users in India who power every food delivery app and all the services, then it's ah as good as a Jio as Japan or Korea, I believe. Right? ah so So, I mean, you' you've been in Swiggy, Snapdeal, etc. So, you're saying that the you know there's this ah magazine called The Ken, which called this the California users. So, this California users in India who pay for content, who pay for a Netflix subscription, who use food delivery apps, etc. is $50 million.
Speaker: Yeah. And it is hard to reach this, ah the cost of acquisition, etc. The cost of acquisition in India specifically is very high for these because when you're competing, then then you're competing with a lot of VC money, which is also competing for these.
Speaker: Okay. Right, sir. Okay. So, and in in yeah inordinately so, right? Like, ah everything is just ah coming back to these 50 million people. All the consumer internet companies are essentially just targeting this 50 million audience. Yeah, it can be built. Yeah. ah I think in the US, gaming is bigger than movies, right? the The Hollywood revenue versus gaming. Is that the case in India also or not yet? No, not yet. I don't think so.
Speaker: Okay. And globally also, is that the case that gaming is bigger than movies? Only in the Western countries and Japan, Korea. These are countries which have had like, you know... I think it all... ah It could be, like it can become, but it is all...
Speaker: Like, you know, I think when you have some affluence, then people start drinking coffee everywhere. like Then this happens. It's the same thing, you know. It's a matter of affluence as it goes up.
Speaker: Like, you know, gaming becomes a thing which people enjoy. i mean, Mahajong is something that I've heard that like a lot of women in the South Bombay are playing now. It's a Chinese board game, yeah.
Speaker: It's any board game. So, and but Vita Mahjong is play a game which its so does like 300 to 400 thousand dollars in monthly daily revenue or something. So that's the kind of scale that it is. So these things I think are coming. But as I said, this this user is wafer thin and very difficult to pinpoint in India and gaming is all about like reaching massive audiences. It's not about, it's not a surgical strike ah that, okay, you will only get to this audience. It's a DAO game. Like, what is your daily average? What what is your DAO, by the way?
Speaker: Across all the games at the moment, around 50,000, right? Like those three games combined. I think, yeah. um um I'm waiting for like one game which crosses like, you know, 400 to 500k per day. i mean, that would be like a true,
Speaker: Yeah. Validation. Yeah. And what's your ARR currently? I mean, it's early days. I understand that. but ah So north of 3 million. that That sounds pretty good to me 50,000 3 million dollars So, AppDow is very high in the US. Ah, okay. That's why. yeah So, 20 to 25 cents, depending on the game, even 30 cents per user. ah I'm also curious about ah this ecosystem in China. How does it compare with India? and Is that something that you have insights on? which
Speaker: China has a huge consumption market of its own. And they have been able to achieve it by... what they have done with Meta or Google, right? Like it's not allowed.
Speaker: So the same, if you want to launch a game in China, you have take the government's permission. But the consumption the consumption is there internally. So the Chinese developers actually have their population captive, ah which brings in the early cash flows. Again, I'm not saying that it's easy. I mean, even there, the mortality rates are fairly high.
Speaker: um So they have a very good market for consumption. Second, they were the... Is China a more profitable market for games than India? Yeah, yeah. Much bigger as well.
Speaker: Much bigger. Okay. And both from production standpoint as well as consumption standpoint. So in India, casual gaming, I think what we are doing maybe thought of as, okay, you know, like we're doing something good or like i wouldn't call it cutting edge order, but...
Speaker: ah you know, reasonable attempt, ah right? But in China, like, they have ah AAA studios which are producing, like, these big ticket, as I said, Hollywood production games. 600, 700 people at it.
Speaker: And that's because in the early days, there used to be a lot of Korean games which used to be ah MMORPG games which the Chinese would play and they were like the back office for Korea for development.
Speaker: Over time, they became better than ah ah ah you know then i' building those and like now. ah So they are way ahead, way ahead in gaming.
Speaker: Does India also have the talent depth? oh Talent depth is there. ah Okay, actually no. As of today, the ready-made talent depth is not ready to make AAA games. Even in casual, they you know there are a few companies from which you'll have to hire.
Speaker: But ah smarts is there. Like for example, trainable talent... which can really go and deliver is there. I think of where we lack is because there's not been much precedent of success.
Speaker: There's very little capital that flows into this ecosystem. That is one. And second thing is I think ah um like there's Because of the back office ah culture, right like mostly what we end up managing is something which is already big and ah we are a cost arbitrage. Product first that we build something which we will scale globally.
Speaker: That mindset, ah ah i mean that opportunity will be have to given ah if not from a funded company, even if it's like a bigger incumbent which has a back office, give give some opportunities which where you know people can prove themselves. is ah you know I personally am also in the content creation space and I find AI is great for creating text content, but I haven't yet seen video content being created or at least my kind of video content being replaceable by AI. But what has been your experience with AI?
Speaker: Is it empowering ah the game development are and in what ways? In big ways. So I think the main grunt work on if you were to kind of build a game, the pre-production of it, right? Like, do you have the content logic?
Speaker: Do you have all the, you know what's the artwork that will be needed for the entire game? ah they ah If we were to take a UI or a UX route, what would it be? Like, you know, options.
Speaker: ah um if What kind of boosters will you introduce? What will be sink of the coins? of ah What will be the economy? So there's, i mean, the grunt work for this used to take months at times weeks, ah you know, because like not everyone launches scrappy, right? Like some people like to build high fidelity production games, they they will not associate with something which is that scrappy as perhaps we would be okay with at this point.
Speaker: I mean that, in that actually has cut been cut down to like a few days, right? So, I mean, if you really, really are at it, if you look use the AI leverage, you can do all of this in like a few days.
Speaker: Alright. I think there's they've given that it's more shorts at the gold kind of a market ah where you have to mishmash a lot, ideation is important. Do you see yourself acquiring studios or will you be just a pure play publisher?
Speaker: I mean, I mean, never say never. I mean, we, I mean, I would look at it, whatever brings us, I mean, financially, whatever helps us to get to that large, like higher to $100 million scale rate. But I think the, if you ask me about the near term focus, it is to find that hit, uh, which kind of, you know, uh, stress tests the system and proves that, okay, I mean, all of these efforts that we've put into like building all of these compounding systems actually does deliver something large.
Speaker: So, uh, first focus is that, And once we get that, I think we would have tested the playbook, the infra and everything. And ah even if we were to kind of make an acquisition, we out we would know what to look for within ah ah that, like, you know, the game's code systems that where we can add value. like only like little but is It only makes sense to acquire something when you can do a better job at it or you can improve something in it.
Speaker: What the incumbent was already doing. So I think to do that first, we'll have to do this ourselves. you know and And you think you'll reach 100 million with just casual, hyper casual or would you also go on to mid-core and... Yes, think we can get there with that. um Maybe like a couple of side quests on some a casual, ah it's called casual entertainment now, the apps like wellness apps, etc. I mean, maybe a side quest there. Again, nothing which is of like present priority at the moment.
Speaker: But I feel that yeah with casual and hybrid casual alone, we can get 200 million. This WellNet app, like again on Instagram, I see like Tai Chi for men above 40. I'm a man above 40. So I see these kind of ads. So that's what you're saying.
Speaker: Yeah, there are a lot of gamified apps, by the way. Like Try Finch, F-I-N-C-H, does like a two, three million dollars a month. ah so it's ah It's a game, um but, you know, it'll give you like a routine. You'll have to follow it. You'll get some points.
Speaker: And then it'll ask you for a subscription. Awesome. Thank you so much for your time. I really enjoyed that chat on Ragh. Great, great chatting with you too, Akshay. Thank you.
