The online gaming world, especially the fantasy sports niche, is tightening its purse strings for the upcoming ICC Men's World Cup. Why? Blame it on the revised GST law. From October 1, online gaming platforms dealing with real money will face a whopping 28% tax on their full face value. This move, insiders say, is a hard blow to the industry.
What Happened? According to an Economic Times report, many platforms are already feeling the pinch, resorting to cost-cutting measures like layoffs and, in some extreme cases, shutting shop.
An executive from a leading gaming platform told ET, revealing that they’ve slashed their marketing budget for the World Cup, which India is hosting, by a staggering 75%. This pullback began in July when the GST decision first made headlines and was cemented in August.
Another gaming bigwig shared that while they’ll still advertise during the World Cup, they’re playing it by ear. “The World Cup is a goldmine for user acquisition. But with the GST cloud overhead, our ad spends will be way less than planned,” the executive, preferring anonymity, mentioned.
Mansi Datta, the chief strategy officer at Wavemaker India, echoed this sentiment. She explained that gaming companies usually opt for “impact planning” – investing in events that draw massive audiences quickly. Cricket, especially in India, is a prime example. Datta recalled that during this year’s IPL in April-May, around 10-12 gaming brands were active advertisers. But for the World Cup? The numbers look bleak, thanks to the GST hike.
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GST on Online Gaming: Its Impact on other sectors
Disney, however, is finding a silver lining. With gaming companies cutting back, other sectors, like automobiles and construction, are stepping in. A source revealed that brands that were MIA from the ad scene 6-12 months ago are now making a comeback. Mahindra & Mahindra, for instance, recently partnered with Star Sports for the World Cup.
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The GST announcement has sent shockwaves through the gaming industry. Roland Landers, CEO of the All India Gaming Federation, highlighted the ripple effect this could have on the media and entertainment sectors. While big players might still flex their advertising muscles, smaller companies will likely go silent during marquee events.
The aftermath of the GST decision is already visible. Mobile Premier League, a Bengaluru-based gaming platform, announced layoffs and cost-cutting measures post the GST news. Other companies, like Rush Gaming Universe and Spartan Poker, followed suit. Plus, with potential government notices looming over past tax dues, companies are on edge. Gameskraft, for instance, after receiving a ₹21,000-crore tax notice, decided to phase out its super app Gamezy.
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