We’re thrilled today to announce the launch of Lumikai, an early stage VC focused exclusively on India’s gaming & interactive founders.
We’ll be investing cheque sizes between $200k to $2M across 15–20 early stage India gaming and interactive media companies, and are proud to be backed by some of the most iconic names global in gaming — including market leaders from Japan, US, Finland, and South Korea.
We’ve also been the worst kept secret in the Indian games ecosystem. This year in stealth mode we spoke with over 140 interactive startups, mostly referred or sent our way by India’s gaming community. It’s truly heartening to see the ambition, aspiration and dreams of new founders building the next generation of interactive media for India.
Why India, why now?
With the cheapest data rates in the world (1GB of 4G = $0.09!), the introduction of frictionless payments, and 450M+ game-ready smartphones, India’s mobile first users are embracing gaming at a geometric rate.
This has been accelerated by the national Covid -19 lockdown, from March 2020 Indian mobile data traffic increased by 35% during Q2 alone. The three main private telecom operators; Reliance Jio, Bharti Airtel and Vodafone Idea saw combined daily traffic reach ~380 petabytes per day; up from 250 petabytes in the quarter before. Home fiber broadband connections rose 150%. Peak usage hours have shifted from evenings and weekends to all day, every day.
As of April 2020, 67% of India’s millennial audience were active gamers, representing a 53% increase in game play time from March. For comparison, social media saw a 13% increase in time spent and VOD a 15% increase during the same period.
India is now the fastest growing gaming market on earth, and on an unprecedented scale.
India the net importer?
India previously has had a reputation for being a net importer of interactive entertainment. Historically, majority of the top grossing titles on the Indian app stores have been global hits.
But trace back the evolution of India’s mass media and you see the same inflection points — a market transitioning from global imports to a healthy balance of global (Tier 1) and locally resonant (Tier 2–5) entertainment, with local content representing the true mass market. We’ve seen this time and again in film, music, animation, cable TV (anyone remember The Bold & The Beautiful?).
India’s mobile data explosion has only accelerated this shift to local mass market content, with a universe of local game streamers, mobile micro-dramas, and vernacular TikTok creators dominating the new digital creator economy.
India’s ‘Digital Convergence Natives’
Entertainment globally is now transitioning from ‘lean back’ to ‘lean forward’ interactive experiences. The rise of Jio 4G has marked a data supernova event placing India’s 300M+ gamers at the forefront of this new digital sociology. Rather than the slower, linear progression of gaming habits in more mature global markets, hundreds of millions of (predominantly under 25 years old) Indian mobile users gained access to a wide range of digital services (social media, video, chat, gaming) simultaneously.
At Lumikai we’ve built a unique set of theses for this user sociology, users we call “digital convergence natives.”
These users by nature are more open to games and platforms that are intrinsically social. Coupled with the shift to deeper mechanics and more diverse gaming experiences, a new generation of India founders are now building innovative products, tools, technology and platforms for this paradigm.
Content is King: PUBG & Real-Money Gaming driving Indian monetisation
Monetisation = Content X Retention X Frictionless Payments.
In 2018, PUBG Mobile’s entry into India provided the first proof points for domestic midcore gaming at scale, local monetisation though culturally resonant cosmetics and battle passes, and games as social networks with 40% of Indian players using the game primarily as a hangout destination, while leveraging audio chat.
Yet while broader demand for games is at all-time high in India, only 12% of games on the App Stores games cater to Indian audiences. This is a massive white space for Indian developers to capture.
In the past, developers who leveraged familiar Indian mechanics to build games content in discreet categories like Rummy, Teen Patti, Poker, gained massive traction with a focused, loyal customer base — and became highly profitable and sustainable businesses. The recent popularity of Ludo reveals a widening of the casual Indian gamer base.
Real money fantasy gaming platforms have also expanded horizontally into casual games, leveraging multi-player competition, social interaction, and micro esports with instant real money gratification. RMG platforms may feel outside the remit of traditional gaming, but across India they’re training millions to transact real money in games for the first time.
To achieve monetisation at scale, India’s developers need to understand their audience, leverage their right mechanics, rapidly iterate and more importantly innovate, think deeper and aim higher rather than building copycats and me-too games/platforms.
India’s unrivalled talent ecosystem
India now has over 300 game development studios, up from 25 half a decade ago. While India arguably has the world’s deepest bench of raw creative and engineering talent, the journey to harness this for the national gaming opportunity is just starting.
This hits-driven preconception of the business has meant that Indian games creators have typically been underserved and underfinanced by the traditional financing community. Without risk capital, the access to talent particularly in design, rapid iteration, analytical sophistication and global best practises so essential to build successful gaming experiences has largely been absent for India’s creative’s founders. It took 150 rejections for Dream 11 to be financed.
Indian developers have largely been confined to work for hire projects/consulting to finance their passions, or by necessity have chased the low hanging fruits of building low ARPU/ hyper casual games sold to publishers, or worst building me-too products which are “in-trend” (fantasy gaming in 2018, RMG platforms in 2019, esports in 2020, etc).
But the talent and ideas are out there, and these founders needs a new kind of capital to thrive.
We are patient capital
India now has over 300 game development studios, up from 25 half a decade ago. While India arguably has the world’s deepest bench of raw creative and engineering talent, the journey to harness this for the national gaming opportunity is just starting.
At Lumikai, this is what we seek to unleash. We are happy to invest the time, capital and effort. Gaming is a complex industry and it requires specialist insight. This is why globally there’s also been a rise in specialist sector focused funds in games: LVP pioneered games investing during the Nordic mobile boom, to more recently Makers Fund, Transcend Fund, Play Ventures etc. We’re happy to count all these as Lumikai superfriends, and it’s time for India to have its own focused games fund as well.
At Lumikai, the founding team has 40+ years combined experience as investors and operators in the games & digital media space. We provide operational knowledge, insights, global connects and best practises to our founders to help them compete with the best. We’re also excited to bring some of the most iconic names in the global games and media industry, both as investors into the fund, and our advisors to help founders in their journey.
Investing in interactive media also means you need to invest early. Breakout gaming companies hit inflection points and achieve profitability very fast. Lumikai is investing in 15–20 early stage companies across not just interactive studios, but the ecosystem of services around this — platforms, technology, tools and infrastructure.
Talk to many of India’s gaming founders, from unicorns to fledgling innovators, and one comment remains constant: India represents a once in a generation games market opportunity for the taking.
All that’s come before now sets the stage for what’s to come — a golden age for India’s gaming and interactive founders. Our role is to help these founders achieve their vision, both for India and also the world.
Let the games begin!
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