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The South Korean games developer behind global hit PUBG: Battlegrounds is eyeing major expansion in India, hoping to capitalise on a ban on Chinese rivals in the fast-growing market.
Krafton is seeking acquisitions there as growth slows in China and the US, the company’s India head Sean Sohn told the Financial Times. It also plans to invest at least $50mn annually in India, where its flagship title has been one of the top-grossing games in recent years.
“It is not easy to come up with a big hit like Battlegrounds again,” Sohn said in an interview at the company’s headquarters in Seoul. “But it is our key challenge to develop another hit game.”
While India has the world’s largest youth population — 65 per cent of its 1.4bn people are under the age of 35 — its consumers are notoriously price-sensitive.
Spotify, the top streaming service in the country, launched operations six years ago but only raised its prices for individual premium customers for the first time in August. The monthly fee went from Rs119 ($1.36) to Rs139.
“India is a tough market. Users are not so receptive to new games and are reluctant to spend much on games,” Sohn said. “But they show strong loyalty once they get to enjoy a game.”
India’s gaming market is in its infancy, with a size just a fifth of South Korea’s estimated Won20tn ($14.4bn), he added.
But the number of gamers in India increased 12 per cent last year to 444mn, with nearly a third spending money on games, according to market researcher Niko Partners.
Chinese competitors are banned from operating due to tension between Beijing and New Delhi, giving Krafton an advantage. India has become one of its top five markets, accounting for about 10 per cent of record sales of Won1.5tn in the first half of this year.
That is largely due to the popularity of Battlegrounds, a “battle royale” game in which players fight to the death on a remote island. The game has attracted more than 200mn users in India and generates annual global sales of around Won10tn, according to analyst estimates.
Krafton, backed by China’s Tencent, has so far invested around $200mn in Indian digital content businesses, accounting for around 9 per cent of its global investments. It acquired India’s cricket game developer Nautilus Mobile in March for $14mn and led a $53mn funding round for fintech company Cashfree Payments earlier this year.
Elsewhere, it said in July it would acquire Eleventh Hour Games, the US developer of the action role-playing game “Last Epoch” for $96mn. It also agreed in June to buy Japan’s advertising and animation group ADK for $516mn.
“Krafton is yet to prove its ability to develop another hit game after Battlegrounds,” said Wi Jong-hyun, business professor at Chung-Ang University in Seoul, adding it was facing strong competition overseas.
“Unlike in India, Chinese game companies have a strong presence in other emerging markets,” he said.
