Krafton's Significant Investment in India: A Strategic Move

The introduction of PUBG Mobile, later rebranded as Battlegrounds Mobile India following a government ban, marked a pivotal moment for India's gaming industry. BGMI, still one of the nation's most popular games, is managed by Krafton India, the Korean publisher's subsidiary dedicated to this region, and continues to drive the company's strategy in the area. During the India Game Developer Conference, I had the opportunity to speak with Krafton India CEO Sean Sohn, who also oversees operations in the MENA region and previously worked at the company's headquarters. Our conversation delved into how the PUBG firm approaches this market, the opportunities that lie ahead, and how India fits into Krafton's global strategy. The interview has been edited for brevity and clarity. What is the significance of the Indian market for Krafton? So, it's been three and a half years since we initiated operations in India. Our primary product is BGMI, which is exclusive to India and replaced PUBG Mobile, accounting for over 95% of our revenue from India. We also have a corporate development team that has invested approximately $170 million in India's startup ecosystem, encompassing gaming, esports, and digital content platforms. That's a brief overview of our activities in India. In terms of global revenues, India accounts for roughly 10%, which is not as substantial as markets like Korea, China, or the US, but it is growing at double digits, whereas the global gaming market, particularly in more mature markets like China or the US, grows at only about 3% or 4% per year. Compared to other global gaming companies, we have made a significant investment in the Indian market and have a sizable team based in Bangalore. What have been the most significant lessons learned since establishing a presence in India? For the publishing aspect, one of the key lessons we've learned is that India is still developing a more diverse taste for games. While shooter games like BGMI are extremely popular, as are card games and traditional board games like Ludo or Rummy, other genres such as strategy, MOBA, and sports are significantly smaller than in the global market. We've launched new strategy games and invested in a sports game company called Nautilus Mobile, but it's not very substantial. Therefore, it's essential to be patient and tailor your offerings to local tastes; otherwise, the return on investment might not be as favorable as in larger markets. How do you create games that effectively target the Indian market? We're fortunate to have a successful cash cow in BGMI, which can sustain our team and allow us to bring more titles to the market. Having a local team on the ground is crucial. It's a challenge to decide whether to invest in a team or allocate significant time to managing the market based on revenue, but we have a solid foundation, so we can try to expand our offerings. How has your approach to BGMI differed from PUBG Mobile? The core gameplay is the same, but there are negative perceptions of gaming in general and shooter games like BGMI in India. We've introduced safeguards and solutions to address concerns from the government and the public. We've also made the game more localized to ensure players are comfortable, such as changing 'Kills' to 'Finishers,' removing blood effects, and adding warnings before each match. BGMI has contributed to a shift in India, encouraging players to spend less time on real-money games and more on midcore titles. We've seen the emergence of India-developed rivals to BGMI. What makes midcore games popular, and how can companies capitalize on this trend? Indian gamers have a sophisticated demand for high-quality gaming content, but there aren't many local developers who can meet this demand. While there are good gaming studios in India, their output might not be sufficient or large enough to cater to local demands. Indian gamers often prefer global games, but global game companies don't always cater to local tastes. We believe there are few global gaming companies like ours with a local team and tailored marketing approach. Although midcore games are gaining popularity, other genres like sports games, such as FC Mobile and eFootball, and racing games like Asphalt 9 and Need for Speed, are also performing well. Why is Krafton investing heavily in an emerging market like India? Emerging gaming markets, including India, Latin America, and Southeast Asia, are becoming more significant in terms of economy and have distinct cultural and economic backgrounds compared to mature gaming markets. India, MENA, Latin America, and parts of Southeast Asia are crucial in demonstrating potential trends in the gaming industry. We aim to create a model case for emerging markets, allowing us to apply a similar approach to setting up organizations and expanding markets with a localized approach that appeals to local tastes. Hopefully, we can learn from our experiences in India and MENA and apply them to other emerging markets, making Krafton's global presence more universal. Currently, our key markets are North America, China, and Korea, but other markets are growing. How does Krafton's acquisition of studios like Tango Gameworks benefit regional operations like Krafton India? Acquiring good studios that can create new IPs is a significant advantage for Krafton. Tango Gameworks has shown its capacity, and although Hi-Fi Rush may not be a blockbuster, it has a dedicated fan base, which is why our headquarters saw its potential and decided to acquire it. This will strengthen our ability to generate new IPs. We also have projects that involve converting IPs from PC and console to mobile, which we see as having significant potential. How does India factor into Krafton's M&A strategy? In India, there are a few good studios, but they are either self-sustainable or have been acquired by larger European companies. We are continuously looking for opportunities, perhaps with early-stage companies that have experienced teams, and we try to help them build something with our incubation program or equity investments. Krafton recently partnered with Pocketpair to bring Palworld to mobile. Given the popularity of anime and Japanese media in India, do you expect Palworld to perform well? I believe it will. Although Pokémon might not be as big in India as it is in Korea, Japan, or the US, gamers and young people generally enjoy having virtual pets in games. Palworld's success on PC can be attributed to this universal appeal, and if we can transfer that to a mobile platform, customized for mobile gameplay, it will likely be successful.