Nodwin Gaming’s Akshat Rathee and Sidarth Kedia on Krafton’s $22.5M Investment in the Company

On Monday, Indian esports and gaming company Nodwin Gaming announced that PUBG Mobile and PUBG owner Krafton, Inc. had invested $22.5M USD into the company. Prior to the official announcement, Nowdwin Gaming Managing Director and co-founder Akshat Rathee and CEO Sidarth Kedia spoke to The Esports Observer about what the investment means for the company’s ambitious plans, which include expansion in areas in and around where it already has a footprint, the possibility of creating franchised leagues, building out influencer networks in India, exploring new IPs to build esports around (including games based on real and popular sports), and continuing to work with Krafton on esports tournaments around the world.

The Deal

Rathee said that Nodwin accepted the investment from Krafton for several reasons, but chief among them was because it resides in a country (Korea) that doesn’t seem to have any issues with anyone else in the world. Nodwin, who does continue to operate PUBG Mobile competitions with Krafton around the world, learned a lesson from what happens when geopolitical incidents such as the border conflict between China and India occur, and have lasting, real-world consequences on IPs (for example, PUBG Mobile being banned because Krafton chose China-based Tencent as its publisher in the region).

“That’s one of the very important reasons why we picked a Korean company,” Rathee said. “What’s the use of taking money and then not sleeping for two years, because now you have to fight the government due to an investment from countries (Middle East, Asia, etc.) that our government is not comfortable with?”

Rathee acknowledged that India and the United States are mostly aligned on international politics, so when one country goes up against the U.S. or India, both stand together. This certainly has caused an increase in animosity towards China, and in turn against Chinese companies. This was evident last year as the previous U.S. administration tried to ban several apps and severed ties with Hong Kong over its cozy relationship with the Chinese government.

“Anyone who messes with India kind of messes with America, anyone who messes with America kind of messes with India in some ways, and taking a position that is contrary, is just too much risk [for us].”

Nodwin categorizes Krafton’s investment as a minority stake, with parent company Nazara still holding the largest interest in the company. Rathee says that they didn’t sell their soul to bring Krafton to the table, either.

“One of our initial investors, which is the current majority investor company called Nazara, will maintain their over 50% consolidation, majority stake. They do dilute, but they’re still there. All of our existing investors stay in the cap table, and then Krafton comes on board.”

When asked in terms of a percentage of Krafton’s stake in the company, Rathee declined to give a specific number, pointing out that both Nazara and Krafton are planning IPOs in the future and Nodwin doesn’t want to cause anyone to run afoul of any government regulators.

“So, that’s a great question,” Rathee said. “Can’t answer. Not a cop-out, but Nazara, which is our parent company, has filed to go public and any indication I give you publicly that goes in might give an indication on my valuation. That’s why I won’t go ahead and tell you what percentage or what valuation they came in at.“

Rathee said that the investment from Krafton doesn’t mean that it will be focusing on PUBG/PUBG Mobile exclusively. The two companies see synergies in mobile esports in general and Krafton, seeking to do an IPO in the next 12-18 months, wanted to have a company that was a leader in the space in its tool chest.

“Krafton said to us, ‘Hey, you guys have built something great in India, as far as esports goes, and you understand mobile extremely well. We are very interested in where mobile is going to go. So, while India is important, South Asia, where you are also working, in Africa, the Middle East, all the markets that we are in and that you are expanding in, we’d love to go out and have a play.’”

Expansion Plans

Nodwin plans to use the money to expand its footprint in the Middle East, Africa, and South Asia, and is already running operations in Bangladesh, Nepal, India, Pakistan, and in South Africa. It plans to expand into Kenya and Nigeria and then into the Middle East.

It also plans on creating franchised leagues in several regions it is operating in, though Rathee acknowledged that it is considering options on what that might look like, and didn’t have any particular IPs in mind that the company would build around.

“We do believe that franchising is an opportunity that is there now in some markets. I don’t know whether it’s a solo franchise, multi-game franchise, or with a publisher in those regions. Those are just very quick opportunities that could present themselves in the next two to six months.”

As for what games could potentially be used to build out these franchises, Akshat says that he has a “recipe” he uses regardless of whatever IP might be used.

“I have this four-point recipe system. So, I’m kind of like this professor who thinks, what do I put in this bowl? I can choose a language, a game, a region, and a format. Those are the four things that I can play around with, at any given time. So, for example, I could choose Street Fighter and English in India to target the 25-35-year-old male who has money, but wants to go to a bar and watch people playing the game. Or, I could go out and do a PUBG quickfire in the smaller cities of India in Hindi, because that’s where my community is.”

One important part of that recipe, the games, have to have a real footprint in whatever region they are in, Rathee said.

“If a game has less than 1M daily active users, I don’t think it’s an esport,” he said. “I just can’t support it. On a standard playbook, if you have less than 1M daily active users, we start getting into problems of depth.”

 Kedia echoed Rathee’s opinions on the matter, noting that a large daily active user number equals an audience that might actually want to watch other people play the game.

“Just to add to what Akshat said, if it’s less than 1M as we’re all aware, esports at the end of the day is a broadcast property. And if I don’t have enough people playing it, then there aren’t enough players watching it. And hence it just becomes one of those niche things with 50 people watching.”

India and Influencer Networks

While Nodwin has been doing a lot of business outside of India, home is where the heart is, and both he and Kedia have a lot of plans in the country.

“The investment allows us to launch bigger IPS, it gives us leeway to launch franchise IPs in India, which we believe the country is ready for now,” Kedia said..” So, other than the emerging markets, mobile-first markets, and expansion that we talked about, I think, this allows us a lot of headway to expand in India and do what we’ve been wanting to do and we’ve been building to do over the last five years.”

 Some of those IPs could include real sports properties that are not only popular in India, but in other regions it is already working in.

“We’ve been exploring for some time the answer to the question – does sport beget esports, traditional sports are they convertible to esports?” Rathee said. “India is a cricket country. Can we do something with cricket? India also likes football [soccer], badminton, table tennis, etc. Is there an opportunity to go ahead and look at those ecosystems?”

The other area that, which Nodwin has already started doing but wants to build out even more, is its influencer and content creator ecosystem in India. Rathee wants to take, for example, some of the biggest PUBG Mobile players who found themselves without a core game to focus on, move on to other things with success. He wants to harness these talents to help build awareness around new and emerging games.

“Influencers are really key to our growth, for what we have already built here, but also this new genre of content creators that could come onboard and provide feedback loops. A gamer becomes big, a lot of people follow him/her, and then the game they play potentially dies… we saw that with PUBG Mobile.  So there is a guy called Mortal who was one of the most watched people in PUBG Mobile. PUBG Mobile got banned, but that didn’t mean he doesn’t do gaming now. He becomes the instrument for influence or the person who can launch a new ???. These are the things that we want to be doing right now.”

Extra: The State of Valorant

Finally, when asked about the state of Valorant esports in India, Rathee offered a blunt assessment of its future:

“I won’t miss mince words. The game’s done well. It’s run very well through publishers. Riot has come to us and we’ve had a very frank conversation about it. Until India solves its problems with China, it’s very risky, because Riot is 99.8% owned by Tencent, so there’s no way of getting away from that.”

Rathee did say that Nodwin is working very closely with the publisher on Valorant esports in the Middle East and South Asia. 

“As soon as that issue is sorted, we are super gung-ho to work with Riot. I believe that neither Riot nor Nodwin wants to run afoul to regulators.”

Editor’s note: An earlier iteration of this article contained a quote that was missing context about Nodwin’s reason for signing with Krafton. The story has been updated with the proper quote and an additional quote about Valorant. The author apologizes for the error.

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