OnMobile expands focus on gaming through acquisition

OnMobile Global, a mobile value-added services provider in Bengaluru, acquired Rob0 Technologies, a gaming technology company in Canada, on Tuesday.

OnMobile had taken a 25 percent stake in Rob0 Technologies in May 2020, as part of a long-term strategy to grow as a gaming platform. The Canadian startup is less than three years old, and has developed an "AI-powered visual retention analytics offering," OnMobile told stock exchanges on Tuesday.

According to the exchange filing, Rob0's plug-and-play cloud software is used by game developers. It can show precisely when and why players leave a mobile game, and provides quick insights to optimise games, and maximise revenues.

OnMobile's revenue has declined for two years in a row to Rs 561.4 crore in financial year 2020-21 (FY 2021), though its profits grew 67 percent in the last fiscal to Rs 46 crore. More than 80 percent of OnMobile's revenue is from overseas markets.

The company, under CEO Krish Seshadri since 2020, seeks to build a robust gaming platform business.

OnMobile's core business of tones and videos have accounted for an average of 38.5 percent and 41.2 percent of consolidated revenue respectively in the past four fiscal years.

Despite healthy growth of profits, the over-dependence on two key segments is a risk for the company. In the first quarter of FY 2022, videos and tones still accounted for 48.8 percent and 38 percent of OnMobile's revenue.

The company seeks to raise capital and focus on gaming to diversify for the future.

OnMobile launched 'Challenges Arena' in April 2021 to tap emerging gaming technologies. This B2B gaming product, with thousands of quizzes and puzzles available in Android Package Kit (APK) and web app format, is distributed through telecommunication companies and over-the-top (OTT) operators globally.

In the first quarter of financial year 2021-22 (Q1-FY 2022), OnMobile saw 'Challenges Arena' subscribers grow to 0.49 million from 0.35 million in the previous quarter. It expects the number to increase to 1.6 million by the third quarter of the current fiscal.

Its consolidated revenue of Rs 132.37 crore in Q1-FY 2022 fell 1.2 percent from Rs 133.98 crore in Q4-FY 2021, while the annual decline was over 8 percent, compared to Rs 144.02 crore in the June quarter last year.

In terms of the geographical split, the latest quarter saw the Indian contribution at 14.3 percent, lower compared to 15.4 percent in March 2021. Europe, and West Asia and Africa—with 59.1 percent and 18.5 percent revenue contribution each—are the largest markets for OnMobile.

Its major clientele includes collaboration with Samsung, in December 2019, to build a contest ecosystem for its My Galaxy app. OnMobile has also partnered with Walmart-owned digital payment firm PhonePe to launch gaming on the latter's Switch platform.

The gaming focus spans ONMO, where OnMobile doesn't build the games, but hosts games.

"That's fundamentally the structure and nature of that business," CEO Krish Seshadri told analysts on May 31. "On top of the games, we provide features which are social in nature. Our monetisation models hinge around eSports, battles and challenges."

In an investor presentation dated August 9, 2021, OnMobile said it will invest in gaming because it is an industry projected to grow rapidly. "There is a massive subscriber penetration opportunity across several global telecom operators,” it added.

The ONMO beta version, launched in May this year, is built with an Artificial Intelligence (AI) engine and cloud technology. It has more than 50 games and 2,500 challenges on the platform. OnMobile has advanced on conversations with 15 telecom companies, and is at a sign-up stage with three operators in Europe, Asia and Middle East.

In its investor presentation, OnMobile also highlighted that the gaming industry leads the global media entertainment sector for the year 2020 by $165 billion. Mobile gaming ranks first with $78 billion, followed by console gaming, and personal computer (PC) gaming with $56 billion and $36 billion respectively.

The rise in mobile gaming is a direct outcome of the rise in smartphone users across the globe. By 2023, it expects the number of 5G-ready users to touch 2.1 billion from 200 million in 2020, while non-5G ready users would reduce to 2.9 billion from 4.1 billion.