there will be 500 to 600 million gamers in India half of India's population plays online games if you have a smartphone game but still that behavior of paying for content is not very very natural to Indians one school of thought is that the entire real money gaming ecosystem in India is pulling the society down people are getting addicted to gambling we are not born imagining a world where fiction entertainment doesn't exist it is going to be very very depressive and dark so in many ways gaming is that one industry which we believe is say th
Industries are going to originate from that's why our honorable Prime Minister Modi G says that this is going to be a faval part for a trillion dollar digital economy that is power we can take something and make it super engaging and fun so India has that amazing unique distinction between games of skill and games of charms which is absolutely phenomenal I have heard stories that people have lost their life savings and these are like more people two three lakh of life savings in real money gaming what's your take on it I have founder of zupy
with me D Mali welcome to the neon show thank you so super excited to have you today and discuss a broad range of topics on the gaming sector in India so let me start by right what's the what's the gaming overall in India which is being played online or on mobile and how do you slice and dice that market and who are the players in that market got it so thank you so much for having me here if I have to start very high level uh like you said there can be so many slices and
dices let's just I let's just focus on the mobile side of it because uh we don't have that kind of console penetration that is in West markets so mobile May if you look at it I'll say there I'll divide it into two broad segments one is free to play second is pay to play free to play that there could be further various segments you can have your strategy games first person shooter games casual games like Candy Crush ludoking board games etc etc so as per my estimate uh there will be 500 to 600 million gamers
in India overall uh half of India's population plays online games see if you have a smartphone game to and you will play again so and I think in terms of Revenue if I'm not wrong uh so this free to play has two major models of monetization one is advertisement and second is in purchases and if I'm estimate is not wrong it should be doing around million million Sal revenue and the metric which is Ru per user is quite abysmal when you look at us and other countries reason see rates are directly proportional to what your
attention is worth in any place where there is lower GDP or capita where there are a lot of you your attention is not going to be worth a lot of money that's why ad rates are not as high as in India in a purchases as a behavior is still getting very recently developed purchases market99 299 but up because up there micro payments ex exactly right but still that behavior of paying for content is not very very natural to Indians I would assume it would be among the top 1% of the gamers let's say if you're
saying 600 million 60 CR people are playing games on mobile yeah only 1% of that like 60 lakhs or 6 million people are paying for this very strong concentration on the top side so that is the broader free toplay segment and then there is a pay to play segment so the Nuance is pretty clear you can pay to play only if your game is dominantly skilled there's clear legal jurist Prudence around that so the key again emphasizing the key point is the game has to be dominantly skilled everyone uh knows there's nothing such as pure
skill and pure chance there are so many random variables even let's take a game like Cricket toss is a random variable even in chess who moves first decided randomly and there's a slight first mover advantage so the idea is always to look at the game in holistically and see whether the skill dominates our so in this I'll say there are three major categories one would be I say DFS daily fantasy sports then the second would be card games you will have poker and rummy there then the third category and this is just a terminology we
use is casual games so uh as per my estimate in fantasy sports you will have anywhere between 150 to 200 million users playing annually in card I'll say maybe 40 to 50 million users uh playing on an annual uh basis the largest segment is casual gaming so let's try to Define casual gaming casual gaming is like as it's in the name it's casual it's like easy to play light touch nod heavy first person shooter games it's like done something like a very casual entertainment time pass easy to play so that's where the largest space is
our estimate it is 400 to 500 million gamers are actual casual gamers they play at least few casual games so when we started in 2018 we were seeing uh daily fantasy sports which has been dominated by dream 11 so a lot of other players also coming in the fantasy space and similarly lot of people were just launching similar products in Ramy poker what we looking at it is C because everyone is targeting the same user and ltvs are also getting split key why cash back so for audience C is customer acquisition cost the cost require
One customer to play your game yes and LTV is lifetime value of a customer that how much that you can earn from this customer over a lifetime let's say the customer stays over 3 four years yes uh precisely then you're like let's look at this casual gaming space that when I say in the skill based digital I mean at least million plus kind of Revenue very curious so so we took it on ourselves it's not like the games haven't been tried so there uh once dream 11 became a big success everyone thought oh it's bit
like saying so for us it was more like game have worked so well but there lot of these other games that have been tried that haven't scaled so we went really deep into understanding the game mechanics and it was more like what are those fundamental mechanics at play which make these games sck so and the other very important thing was for us to understand what is a game of skill right so and you can and when we starting game of skill has always defined very subjectively principles spes you know mental alertness are memorization analysis hand
ey coordination okay these are good principles to start with but if you really want to commit your life to it you need to understand bit more scientifically and objectively what is a game of skill so the first thing we did was let's study all the literature out there so we studied every every research paper that has ever been written every legal judgment that has been done globally around game of skill game of chance consulted various professors and we ended up building a very objective criteria which we can discuss in detail maybe what is a game
of skill so the three tests that we figured out was I'll just quickly walk through one is that in any game of skill there is a learning up that is the more time you spend on the game your skill should improve uh so that is again uh all of these has to be stattic correlated second is Persistence of skill that is if you played enough number of games across two seasons the performance can't widely fluctuate like uh like I'm a big football fan so Manchester City if it's a it's a skilled team so it's performance
over two seasons can't be like wildly different they are Champion score 90 so again the you put stat uh Cor relations there and the third very interesting test was are you able to show certain users which have skill which have demonstrated skill levels which is almost impossible to be in a game of chance like let's say if on your platform let's say users have Play 10,000 games and there is someone who has actually won 9,000 games the probability of that happening in a pure game of chance pointos will be 10 to power - 90- 100
so it's it's like saying uh a monkey typewriter what is probability he can produce a hamlet it is that next to impossible so there are way more nuances uh that goes deeper into how these tests are conducted what is the right environment other subjective principles but this would be the high level idea of how to think about this one school of thought is that the entire real money gaming you know ecosystem in India is pulling the society down because people are even if it's a game of skill people are getting addicted to gambling and only
like 90% of the people will lose for 10% and the house to win right and skill-wise the people that would have dedicated time to building higher skills daily one or two hours they're spending on on betting on Real Money gaming in India what's your take on it is it uplifting the society or is it because it's such a lucrative opportunity and like gambling has been in India right if you see Mahabharat the largest war war or the largest this epic in uh from India or worldwide was caused due to gambling mhm see I I think
that's uh thank you for bringing this up and I think that's where industry and we have to do a much much better job at differentiating gaming and gambling it's actually bit sad that we read articles first IED think it's it's so interchangeably used see definition of gambling is that it's the exchange of money in and money out is happening on a game of chance gaming is anything that is dominantly skill-based is gaming and and our entire life we are taking calls right uh which college to go who to marry which city to live in which
job to pick all of these are calls choices we are making so skill-based gaming is not gambling that is the simple uh Nuance Viewpoint that again I think we have to do a much better job so that there's clear distinction that happenings here gaming care or gambling now I I'll give you my broader viewpoint on and uh I I'll maybe tell a bit about myself also so I was born and brought up in Rajasthan my dad was in poce uh now retired so small small cities I somehow had a huge love for philosophy psychology when
I was a kid I started reading philosophy psychology very very early so and all those big questions like your life Point what is the meaning of life all those questions then I went to itur I graduated in chemical engineering but I had a love Force psychology started lot of projects courses there and just a lot of it is just selftaught my my thesis is which is one are vitamin second are painkillers painkillers are like you know Ola Amazon swiy you can't survive without them yes daily life is dependent on them yes and then there are
vitamins which are you which enhance the quality of life life which is like gaming we are notor imagining a world where fiction entertainment doesn't exist it is going to be very very depressive and Dark World so that's where I think it's super important he humans have this fundamental need to be engaged and entertained that serves them that brings the moments of joy and happiness in them so that's that's our thesis that you know you need both the society needs Edison as well as be horns so and and it's very very nuanced uh what I have
seen is key and this we can track it over uh over history any new innovation or tool that comes in is seen as and this goes as back as to fire if fire say you know you could kill bacteria in your food cook food you can digest earlier light wild [Music] animals all of that then so many examples I can keep going on the same debate now is happening in AI right you know AI you can use bioweapons but the same time AI can be used to so much good so in many ways it's the
same with gaming any tool has a spectrum it almost always comes down to the right usage of the to so I'm not at all saying that uh they're not challenges there are challenges but let's look at the challenges let's try to solve those challenges and let's try to retain the good part of it and manage or address the potential uh side effects of anything that is out there it could be any possible thing in certain dosages if you engage in heal side effects so if you want we can go through the challenges and how we
think about addressing them you sure would love to and especially you know how do you prevent like people have heard stories that people have lost their life savings and these are like poor people two three lakh of life savings in real money gaming come in Savi your Dept and and this is AK to you know what what happened in real life if if they were playing if they were gambling with that kind of money so how does RMG industry prevent that from happening because it's a game for entertainment and and and not to you know
like 90% of the people will lose money for 10% to gain not to hold away or lose away your life savings so I I I'll fair question so a bunch of stats like uh if I remember correctly 95% of our users engage in average entry fee not more than 7even rupees which is chips size pack but totally get it how do you address there could be even 0.1% of the users who can engage with it more than required so let's let's look let's define the challenges and let's think of potential solution one is this responsible
gaming uh uh part of it then the second is AG gting part of it like RMG clearly is for 18 and above then third is the fair play part part of it like how do you ensure all the platforms are providing Fair opportunity to all the players the fourth part is again which I'll says responsible advertising part of it how do you uh advertise then uh so there could be other things on top of my head let's let's pick I think the biggest one is responsible gaming so so there is there are various ways in
this which it can be totally addressed that we have such Nuance a ml algorith GMS right now that can tell when you are engaging in any kind of behavior which might not be good for you so one of the simplest thing to solve this which has been done in UK is at the time of sign up you have to you have to enter the amount which are okay playing in a session in a week in a game in a lifetime so because when you're in the Flow State it might be hard for you to set
those limit but the moment you are coming on the platform you define Your Entertainment budget I'm me start I'll set my limits and those are my loss limit is 10,000 rupees for whatever yeah it's it's for you it's it's it's totally for you it could even be 1 rupe 2 rupe 3 rupe 4 rupee 1,000 rupe whatever works for you then but I I'll tell you the bigger problem is and that's why like uh most entrepreneurs are against regulation uh I again regulation is such a tricky topic it's it's a fine balance it's never Pro
or n see if you tightly couple it Innovation runs away if you leave it open then Wild Wild West all those things start to and and the most unethical players tend to win if it's a that's the that's the biggest problem in free markets that so there is I might be paraphrasing it then respons which affects everyone then regat comes and set up the guel so in many ways every new industry evolves in that way so the the thing is and even if let's say top four five platforms are able to follow all the most
responsible guidelines that doesn't mean the entire ecosystem follows it there's no Authority I have over you to ensure hey this is how it should be done so I think the better analogy is like stock market stock markets the same things happen like uh the ratios are actually uh the stats are actually worse in stock market and uh that percentage of people who actually make in stock market is abysmal the reason it's much more controlled is there's a regulator setting that which sets up the guidelines which which stops misleading advertising uh unethical Behavior by platforms all
of that that's why any trading platform has to align with those so the bigger solve is like everything is actually solvable you know you can put uh strong a IML checks uh limits uh you can have a blockchain based solution which we are pioneered to ensure fair play that there's no tempering going on behind the scenes of algorithm rngs boards nothing like that all these things are very very solvable but you need someone who comes and say yeah this is the way it should be which we don't have the authority to ensure every player follows
that yeah and are you a in favor of pro regulation uh and and how does how will that regulation and Regulatory body impact your industry mhm so again it's such a Nuance it's a such a such a Nuance answer like see it's it's like I said uh both the fine balance maybe it is the trickiest balance to strike between Innovation and regulation right which I just said key TI It stringently Innovation dies leave it open then it becomes Wild Wild West so it's it's going to be that I think is the trickiest thing to do
to come up with guidelines or Frameworks which allow Innovation to happen but also sets up because everyone wants to all the real players want to operate very very responsibility and contribute to the digital economy of India if you look at any serious platform most of the are already doing the things that are going to be part of Regulation so in many ways we welcome it because it provides a sense of clarity because you you see lot of investors sitting out there who are just waiting to see this issue get resolved and the kind of capital
you will see getting into the ecosystem will be absolutely crazy and that opens so many opportunities for the entire ecosystem see I think we have to look uh I'll give you an analogy the analogy is in many way you have to look at gaming like automobile industry in 20th century it's not just both cars manufacturers look at the second third fourth order effect Road R and industries manfacturing Services fuel on top of that car washes Etc Mobility so people could seek employment travel Hospitality so in many ways gaming is that one industry which we believe
is say th Industries are going to originate from whether it's the interoperable assets digital Assets in the blockchain space whether it's the VR whether it's the metaverse whether it's just the creative uh storytelling uh whether it's uh I don't even remember there are so many things that this one industry is going to let that's why our honorable prime minister Modi G says that this is going to be a pivotal part for our trillion dollar digital economy tream and then just the applications of gameification so gamification is again very poorly uh misunderstood word gamification is seen
as a adding leadership points leaderboards uh badges all of those things but gamification is more about how can you take certain things and make it enjoyable everyone knows working out is important meditating eating healthy is important how can you leverage those principles from games and actually leverage in things that make your life more Pro prosperous fulfilling etc etc I'll just give a quick example on that uh so this was done by a genius Hunter and gatherer ancestors I give this example a lot because I love it even the games kids play today which is tag
hide and seek chup chup were designed by them that is the power we can take something and make it super engaging and fun for you and you deliver skills through that and in many ways with this crazy Revolution that is happening of J the most important skill in the 20th century is going to be acquiring new skills and acquiring new skills is very very stressful that to when you get past a certain age so we will have to figure out a way to make it fun so that's where uh I can go on and on
but you get the idea like it's it's we have to look at it like this is going to be the Bedrock over which lot of capital comes in a lot of Highly talented people work go out and create even more powerful businesses so like even right now I think the SE the total gaming segment would employ 5 lakh people directly or indirectly but these are the top jobs these These are the businesses which have the most amount of amazing data scientists data analytics design animation Engineers all cutting it stuff is happening on this and this
is where all the Innovation happens and that's where like each problem you solve ends up becoming a business line in itself like just the example of flip cart flip cart business build Sol Logistics which become proper businesses in itself I assume right you right but flip cart though it's a 40 billion dollar company but the offshoots that came because they built this industry there are so many unicorns like ship rocket yeah delivery because they all started some second order third order so effect of flip cart and today it would command let's say 200 billion dollars
yeah uh of market cap in the overall Indian market yeah and that's that's that's just amazing like I I was looking at your podcast the same way you were mentioning infosis Mafia yeah so it was just one company but what has it done to the net export of software from India is it has changed the trajectory of our country yeah I think India's GDP runs on it services and the offsho of IT services is that once that today 20 years ago this Indian it exports were $5 billion today it's $200 billion but it's just not2
200 billion of it exports it also created Pary the SAS industry in India because once people started trusting Indian companies for IT services now they're trusting Indian SAS companies like fresh Works Z and this is just the start right yeah Indian IT services command product command next goow $14 billion and expected to reach $50 billion so massive second third order amazing third order now I want to cover some part of it right how does Indian gaming Market differ from rest of the world right uh like a16z in the US has a$1 billion gaming fund how
big is the US market what are the and how is it different from India similarly how is the one of the Pioneers in gaming industry the Korea Market how is it different from India that's that's such a interesting question I think I I think many ways it comes down to uh see any society or culture if I to break it down it has its social factors economic cultural eological bunch of these factors and technological so in in in many ways like what US companies enjoy is just a huge domestic Market they uh what would be
their GDP or capita I think 30k maybe I don't know some it's more than 30 the overall economy is like $40 trillion India is at 4 trillion India GDP per capita is $2,000 US GDP per capita is like $40 $50,000 got it got it yeah so so in many ways when it's a very interesting way to put it is if you look at the top grossing sports leagues I think four out of five would be us and the those are NFL U MLB Major League Baseball and then you will have NHL National Hockey League NBA
so and you look at Key these games and then is football which is played across wased in 150 60 countries and like these three four leagues have audience dominantly in US so that is just the power of the domestic market right that you make a league just for the domestic audience and there is Leagues football leagues which are watch by 17 this still dominates in terms of revenues so just a vast profit pools spending uh capacity High GDP per capita that exists is is just amazing so that's why and that directly reflects in your ad
rates in their purchases and you are more open to spend so so in so in many ways lot of us companies enjoy that a lot it happen to the normal uh to the uh local profit pools and they use those profit pools to expand yeah so while we still as India are getting there right so similarly I think like I think specifically Korea and Japan that's where more cultural nuances come in so again High GDP per capita being uh more Tech heavy Tech adoption has been on the earlier side and like just like anime uh
uh stories games have just been a more celebrated integral part and also maybe how the societies are structured uh I think average friends per uh population is much on the much lower side in Korea and Japan so in any case uh your digital communities or digital ecosystem becomes more of a place to go to so I I think that's that's where all those me grow social economical cultural factors come in so like even in us so lot of you will see 15 16 or even 14 year olds both parents are working so kids come home
they have nothing to do they engage in games but most of us most of Indians so what I what I mean is it's how Community looks like if there is a less Community less friends less family interaction so in any case you engage more in digital communities so all these factors come into the play and how it reflects than in the numbers I think what has happened is RMG hasn't taken anywhere off in the world right except India mhm so see that's that's uh what I'm saying India is unique in that standpoint so there there
are various kind of nuances there's certain countries where everything is allowed whether game of skill whether game of chance and there are certain uh countries where nothing is allowed so India has that amazing unique distinction between games of skill and games of chance which is AB absolutely phenomenal and amazing and that is something we need to protect so that it allows lot of amazing skill-based companies to come out of India and and build for the world because uh raw materials are all there we are we have amazing Engineers we have an amazing culture full of
Stories full of myths just deep huge amount of content that is out there so all the raw materials are there and but it's it's like you have to crack a profit pool first that's only when you can start reinvesting and developing the ecosystem it's almost like the 10 cent story in China right 10 cent has become so big uh that it started it's it's one of the largest investors also globally yeah so I that's very interesting to bring it out so in many ways we have seen there three pillars if you are able to correct
that you have really made it one is the I'll say profit pools if as a company you have profit pools uh then your distribution and then you built a great brand so many ways 10 cent did that so 10 cent their distribution came from V chat messaging apps their profit has come from the games so when and they built a very strong Trend 10 cent because they their products are the most well adopted so when you have profit pools and when you have large distribution you can perly go and win the internet ecosystem so if
I remember correctly they own like 18% in m one which is like food delivery for China now a gaming business has no uh food make you but that's the power of you know having large profit pools and large distribution great brand you can practically go and win the ecosystem yeah and and do you have similar success stories like uh in India like nazara is just on the starting of it I think dream 11 just started acquisition they buil their own 250 million fund uh Right and started acquisition but you are seeing these kind of companies
build ecosystems in India now the gaming companies I think the one company to in my head that uh that could be analogy could be Reliance in many ways it has the profit movs it has the distribution it has a brand and in many ways uh they are building the ecosystem right so practically if you look at any domain you will see lines there like if you now all the key M properties are there so GI is a perfect example that they are practically creating and winning the entire ecosystem so that again goes back to the
power of profit pools distribution and brand if you crack this Holy Trinity you are like Unstoppable and how is Gen changing the landscape of gaming and especially you know building apps for consumers in India so that's something we contemplate a lot on so it like very simple way to put it is it's just democratizing creativity so you already see Sora and all those tools coming out that from a text prompt I can create a video it's not going to be very far where from text you can create game mechanics and actual games so what that
allows is and this is like such a interesting discussion that happens in our company and also I learned help happens on film sets as well screenwriter but all three can now a screenwriter can produce a movie and to end a good director can use chat GPT and gen to create amazing scripts and create uh uh avatars or whatever assets to create a movie now actor might say I have the biggest because I have the IP right so it's the same thing in gaming like is it the game designer who designed the mechanics or is it
the product manager which is like the director or it's the engineer which holds so that is just sheer amazing and blows my mind if that trajectory follows what is there that can't be done like and just you you see like any any smart 1920 year-old sitting in a tier three town just who has amazing ideas just the abundance of creative ideas abundance of creativity that's going to come out is going to be absolutely Bonkers zup is quite a young company right six years old we have achieved massive scale if you can sh share some numbers
on the scale whatever is possible and then we can go deeper into right what's the culture of be like yeah so I'll say uh I'll like to keep it very high level because uh uh really believe in uh uh operating in stealth stealth is a feature not a bug uh as per us so we would have 100 million registered users uh so in the Casual gaming payto playay segment we will by far the market leaders so we have raised around $130 million profitable uh even post the uh GST uh 28% shift because we have built
very fundamental robust business model and an amazing team and culture we have built of innovation that allows us to do that and how big is the team right now so we are a team of now 300 people we based out of good okay and what's What's the culture tenants at zupi that you have yeah I I think one of the biggest culture tenants we have is just first principle thinking so and this I think is the biggest learning I've had in my life might seem very simple he doctor is a doctor lawyer is a lawyer
because theyve just acquired knowledge just not having those mental barriers that anything can be acquired if you can just ask questions anything can be learned anything can be done so that is is one of the most powerful tenant we have in our company he you're not just a designer you're not just a policy person you're not just an engineer everything is just out there so attracting those kind of people and breaking those mental barriers if you're able to do that because all of these are just societal barriers we have created I'm only good for this
but if you are able to break those mental barriers people can do amazing things what are the 5 10 books that have that have you g gone back again and again which have helped you build zy oh I'm I'm a quite unstructured learner so I I'll tell you my framework so if you want to understand human mind I I I've realized like there are five six domains you can marry uh very nicely so one is you start like what happened like a billion years ago that is evolutionary psychology how we have evolved from a single
cell to a multicellular organism because lot our genetic software is Hardware that's very powerful to study that you study what happened let's say 10,000 100,000 years ago which is anthropology how societies evolved how religions were formed so that's again lot of it is conditioned hardwired Behavior then you study you know genetics early parent child relationships hormones neurotransmitters Neuroscience even studying how language linguistic is insanely powerful because everything is just happening in terms of words and if my vocabul Changes Everything changes so on top of that uh there's lot of amazing uh work that is happening
on the computational psychology side because it's very powerful to see the brain as a neural network and that offers you just lot of plethora of insights and that doesn't help you just on the designing product side but helps you massively on the EQ side as well that once you because I think that's one thing I would love to change that we as Indian Society we don't have a culture of humanity see being in an engineering College While others were doing robotics you couldn't take psychology courses I was ridiculed for that engineer and so but but
that's that's what I say is we are country of Engineers are great at what and how of it but why so that's why you won't see uh many b2c okay I say vitamin business that have come out of India that has worked at a global level [Music] bwood but Bollywood is that one example of white man that has worked at global scale so I think that to me is immensely important that we build that culture of of understanding the why because your customers are humans your investors are humans your other stakeholders everything is human your
teammates are humans so if you are able to understand that and more you are able to break out through your Loops of fear insecurities you can just become an amazing leader and can bring the best out of them and can just be a good human being to be around so and and what's been the source of these learnings that that you had on psychology you study a lot of videos or papers or book I think it's just a crazy inherent curiosity uh so like like I said it has been very unstructured so I I basically
have read lots of things I'm reading since I was 10 and 11 I've read all the great thinkers your Socrates Aristotle Buddha Guru nanak uh anything and everything and and the Beautiful part which I realized is lot of their learning start to converge oh show even that uh the fundamentals are actually same and in many ways it blows my mind like you read read rigas and everything they had already figured everything out and like years and years ago and now we are sitting here so it has been mostly uh uh research papers some books videos
it's just like hotp of everything sure no wonderful it's been amazing conversation they share I learned a lot about the gaming industry and how it got built in India it's very unique thank you for sharing the story for sharing the story of Z and how you build an amazing company thank you so much really glad that we could to the podcast thank you for
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