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Nazara is not a very capital hungry business; we are able to self-finance growth: MD

Risk capital available for tech start-ups in India has grown dramatically and for the right ideas, the right themes and the right execution, there is no dearth of capital whatsoever, says Nitish Mittersain, Founder & MD, Nazara Technologies.

It was a strong performance by Nazara Tech in the quarter gone by. Could you tell us what has driven the strong revenues as well as profits for your company?
We have put in a lot of efforts in the previous year which are coming to fruition for us. We have always said that we are very focussed on positive LTV-CAC equations. We do not burn money. That is being seen in our results and we are very optimistic that the rest of the year will be very good for us.

Your business is a very different kind of business. You tend to do a lot of R&D and then launch products but what are some of the upcoming launches you are excited about?
For our cricket game, we released a new version called World Cricket Championship 3 and that has seen good traction and we have some major updates coming up in the next quarter over there which we are very optimistic about. We acquired a skill based company called OpenPlay and we are rolling out a multi game platform through that which also seems very promising.

We have continuous updates coming on our kids app called Kiddopia and we believe that it will continue to grow for us. So the teams are working hard across the product categories that we have. We have constant iteration of products and new releases coming. That is what keeps the cycle going for us in momentum building.

Your Freemium has actually seen a de-growth this time around. What are the factors that actually led to this de-growth or what is impacting that particular segment? Also, what is your outlook for the second half of the year?
The Freemium business comprises mainly of a World Cricket Championship game and in Q2, the cricket season was at a low ebb and that kind of mirrors the numbers and the daily active users we see on a cricket game that is one reason.

The second is we are still working very actively on getting the high conversions in our game up to a level where the LTV-CAC equation becomes positive for us. Until then, we are not spending money on advertising although in Q2, we did some experiments on advertising. We still saw that the LTV-CAC was not positive for us and we have withheld spending more money over there.

The Freemium will really grow and has huge latent potential to grow the minute we crack the LTV-CAC equation on the cricket game and I believe teams are working very hard on it. The minute we do that, we intend to invest significantly in terms of scaling up our user base through marketing and that should have a multiplier effect on the revenues going forward.

Do you believe that markets are more and more willing to give technology companies a benefit of doubt which means if you want to raise money for any sort of R&D investments, there are enough investors available and that is a key positive because you do not need to take debt then?
Yes, absolutely. It is for all of us to see the risk capital available for tech start-ups in India has grown dramatically and for the right ideas, the right themes and the right execution, there is no dearth of capital whatsoever.

At Nazara, we are not a very capital hungry business. We have grown our business in a lean manner through very little capital raises over the last two decades. The way we operate all our businesses is we try and get them to cash flow profitability and strong cash flows as soon as possible and that is how we are operating today across the businesses that we have declared our results on. They are all cash flow generating businesses for us. So we are not very hungry for capital. We are able to self finance the growth but it goes without saying that if we have an opportunity which can use large capital, there is a lot of it available for us.

Could you shed some light on the total number of subscribers? Also, what is the cost of acquisition per subscriber and how many do you eye by the end of the year?
Different businesses have different ways of tracking users and I can give you a couple of examples; the Kiddopia business today has about a little over 300,000 subscribers, 90% of them come from the US market and we operate a very healthy profitable business over there where the LTV CAC equation is very positive for us.

Similarly, at our Sportskeeda destination which is a e-sports content destination on the web and app, we have about close to 60 million users coming there to access this content. It is a little bit seasonal depending on how the sporting season is going on but the numbers have grown significantly over the last year or so. So every segment of our business has a different set of users. Sometimes the geography is different and the business models are different but across all these businesses we are usually operating on a profitable LTV CAC equation.

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