In just four years, gaming startup Gamezop acquired 25M users, grew its revenue to Rs 21 Cr ARR
Gaming is a great way to socialise and unwind. Unfortunately, gaming apps are heavy and installing too many of them on your phone hampers your device’s performance and may heat it up as well.
Imagine a platform that can help you play as many games on a single platform. Founded in 2015 by siblings
Yashash Agarwal and Gaurav Agarwal, Gamezop is a mobile gaming startup that works very unconventionally to acquire users. Unlike other players in smartphone gaming, Gamezop doesn’t ask users to install apps.
Instead, it embeds games inside its partner apps where they can be played instantly; just like how videos can be played on a social media page.
How it started
The idea was conceived when Co-founder and CEO Yashash, was in college and realised that the experience of getting into casual games was too cumbersome, owing to the necessity for installing each one as an app first.
“Before YouTube was launched in 2005, each video was downloaded as a file and played on VLC or some other media player. That is exactly where smartphone gaming is today: each game needs to be installed as an app, which is extremely frictional and unwarranted. Gamezop makes games instant, like YouTube does with videos,” Yashash Agarwal, Gamezop’s 24-year-old CEO and Co-founder, told YourStory.
Gaurav was working at Bain & Company and decided to join Yashash in 2015.
Gamezop does not build its own games. It partners with game developers and brings them a network of partners. It uses technology to make the game work in low bandwidth areas and works with AWS to scale the cloud infrastructure when the number of users it increases. The games get pushed to partner apps where users play the game within the partner's website or app, thereby increasing retention of the user over a period of time.
Each partner app that integrates Gamezop serves as its entry point, and with more than 1,000 partner apps, Gamezop has that many entry points. This approach has reaped many benefits. Currently, Gamezop has over 25 million monthly active users for which it hasn’t spent even a rupee. Its network covers 97 percent of the smartphones in India, which have at least two such Gamezop entry points. This removes the necessity for installing apps to play games on smartphones.
Its user traffic measurement website SimilarWeb, showed 33 million visits on Gamezop in February 2020. To put into perspective, Paytm had 20 million visits in the same month, MakeMyTrip clocked 21 million visits, and ShareChat had 13 million visits. Within the realm of gaming, everyone else seemed to have fallen short: Dream11 had 20 million visits and global giant Miniclip lagged behind at 8 million.
All other players mentioned above have spent hundreds of millions of dollars in marketing to get to their numbers and are still burning money to incentivise users. Gamezop has reached it in less than $400,000 in funding. Its revenue grew 165 percent last fiscal year and it closed at 45 percent EBITDA.
Its business model is a B2B2C model, which was made to scale for partner apps. When partnering with Gamezop, the time spent on the partner website increases by up to 40 percent from the first day. Gamezop makes the deal more lucrative by sharing the revenue it makes from games with partner apps. As a result, over 1,000 apps from across categories – social, travel, news, ecommerce, utility, and even astrology — have integrated Gamezop. Its business model is ad-driven, where game ads appear during the games, and the revenue is shared with the partners.
Its partners are Samsung, Firefox, Ixigo, NewsPoint, and Xender. The startup's puzzle and logic games are popular across its partner apps like Times and Firefox.
“One wonders what is the secret ingredient at play here; sticking to the basics is key. It’s a lean model: we don’t make the games (third-party game developers have submitted over 3,000 games to Gamezop) and we don’t spend money to acquire users. The focus has been to balance execution with building moat,” he explains.
When commanding 27 million monthly active users, the startup has the option to run multiple formats. Aside from Gamezop’s flagship casual gaming format, one format that worked really well for it is its real money gaming (e-sports), similar to the likes of heavily-funded Mobile Premier League. This format is now rolled to 10 percent of Gamezop’s partner apps. While competition bleeds to push APK side installs for a low ticket transaction product, Gamezop, with a host of partner apps bringing them users, is profitable on the other hand. The startup has also launched a third format on select commerce apps to boost transactions.
“With 2019, the age of loss-making venture-funded businesses is over. The future belongs to smart businesses that are profitable. While the GMV fad has also taken over gaming businesses, such high burn models don’t have profitability anywhere in the horizon. We have been in the space for a while now and our shareholders expect more maturity from us,” says Yashash.
Smartphone gaming companies are mostly pushing installs of their apps. Meanwhile, real money gaming companies need to push installs of an APK (these apps are not allowed to be on Google Play and have to be downloaded as files from websites), which is a very cumbersome process replete with several warnings.
Gamezop operates entirely on the web and steers clear of these issues. Over the last five years, the startup has invested Rs 20-25 lakh in its business.
“There isn't a lot of precedent in building a gaming business by piggybacking on non-gaming apps. In the early days, we had to tell non-gaming apps about the importance of adding a gaming section within their apps. Eventually, they saw value in our business model: we shared 50 percent of the revenue with our partner apps and adding games enhanced user engagement significantly on these apps,” he adds.
The startup can partner with gaming studios such as Juego Games and 19Studios.
Over the last four years, Gamezop has scaled to over 1,000 apps that have integrated their games. In March 2020, this amounted to 27 million unique users at zero spendings.
There are over 100,000 apps published by Indian app developers alone on Google Play. Gamezop works with less than one percent of them. Clearly, there is a large and serviceable opportunity in India.
“Also, 15 percent of our 25 million active users come from outside India. In 2019, we set up an office in Sweden and in 2020, we have our eyes set on Southeast Asia. The goal is going to be to replicate our partner-led distribution model across select geographies around the world,” says Yashash.
Aside from the distribution, in 2019, it also forayed into the realm of real money gaming. This format is now rolled to 10 percent of Gamezop’s partner apps. “We will push this model very aggressively to our incoming partner apps in 2020,” says Yashash.
Yashash adds that they are the only startup globally which is running real-money-based esports entirely on the web. Running real-money-based esports on the web is much more capital efficient than pushing APK installs, however, building security architecture requires a lot more planning and effort.
“This additional effort which we have put in to tighten security on the web has been our moat. As a result, cost of user acquisition for us is 7-8X cheaper vis-a-vis cost of user acquisition for other players who push android application package kit,” he adds.
Gamezop is profitable with a $3 million annual run rate. They expect this number to grow 3X in the next 12 months.
Edited by Kanishk Singh