Stride Gaming targets India with latest investment
UK-facing business makes a move on the Indian market with a 51% stake in Rummy-focused firm Passion Gaming
Stride Gaming has made a move on the Indian market after acquiring a 51% stake in Passion Gaming, a Rummy-focused online gaming company.
The firm announced the deal as part of its FY17 results on Tuesday after obtaining the 51% stake for a cash consideration of $3.75m.
The company has the right to acquire the remaining 49% of Passion Gaming over the next three to five years, using a combination of cash and shares based on the future financial performance of the business.
Passion Gaming was established in 2015 and is centred on the Indian skills gaming market with a particular focus on the popular card game Rummy.
“If you look at the big operators in this market, RummyCircle for example, these guys are operating on $10m EBITDA so the potential is undoubtedly there,” said Stride Gaming CEO Eitan Boyd.
Although Boyd expects the business to make an operating loss over the first two years, his estimates point towards $1m EBITDA for year three.
“We need a cash injection to propel marketing spend,” said Boyd. “It’s a liquidity game – you have to create liquidity and scale very fast, so to begin with it will be about increased marketing spend and increasing the headcount to support the influx of players and assist the technology.
“It will be a loss-making operation in the first two years, but the hope is that we start reaping the benefits by the third year.”
Skill games like poker, rummy and DFS are widely played and tolerated in India, with specific regulation varying state by state.
Stride said it chose the market due to the size of India’s population, as well as the potential for online and mobile growth in the country.
“The scale is enormous and the potential is vast,” said Boyd. “We entered skill gaming with a Rummy-based business because we are targeting India’s middle-class population of roughly 600 million people.
“There is also the penetration of mobile which has been a catalyst and key driver in all of our industry growth, and that of course is very high in India.”