in 2021, the number of global unicorns in Media, Social and Gaming grew to ~120 with $26B+ flowing into the sectors (up by 85% YoY) establishing not only the depth & size of the market but the sheer longevity of it for years to come.

Globally, tech behemoths have made ripples with Facebook rebranding itself as Meta making ‘metaverse’ a household term and we witnessed two of the largest acquisitions in gaming – Microsoft acquiring Activision for $68.7B and Take-Two acquiring Zynga for $12.7B, a clear reflection of the mA Matrix Momentoth opportunity at hand.

indian players in these sectors raised $2.7B (up by 180% YoY) in 2021, a strong indicator of a maturing market.

The confluence of a few factors, namely, increased access to affordable smartphones, an explosion of data and increased adoption in digital entertainment driven by COViD, have made 2021 the inflection point for media, social and gaming in india. india boasts of 600M+ smartphone users today spending an average of 4+ hours per day consuming content. ~40% of indian smartphone users use homegrown short video apps filling the void created by the TikTok ban. Casual gaming is also evolving as a tool leveraged by enterprises across sectors to drive up retention for their consumer-facing apps.

As we try to make sense of the developments and trends emerging from the space, we share some of the themes that we are most excited about and are looking to invest deeper in:

1. Esports and E-streaming: 2021 saw a massive jump in the number of mobile gamers in india – india is one of the top five mobile gaming markets in the world in terms of users and india’s 400M+ gamers (growing double-digit YoY) are looking for newer forms of gaming entertainment. As gaming expands its userbase, we feel esports and e-streaming will become a key trend going forward. Although esports gamers account for less than 1% of the total gamer base, the revenue contribution of esports to the industry is already ~10% given the disproportionate number of hours gamers spend on mid/hardcore games.

5 of the Top 10 YouTubers in india are e-streaming gamers who earn $1M+ a year from YouTube alone. This has inspired a long tail of gamers looking to livestream for either recreational purposes or to earn a livelihood. Offering a best-in-class mobile-first tech experience for the gamers and audience alike, together with attracting and developing the next tier of streamers/gamers will be imperative to the success of a local esports/e-streaming platform. Given 85% of india’s gamers play on mobile, we believe that a cost-effective solution that equips the streamers with the right tools to stream through mobile, get discovered, and form, grow and monetize a community can have significant moats.

2. Creator Economy: COViD has led to a massive disruption in online content creation and consumption with people spending more time on the internet, both for consuming and creating content. People’s willingness to pay for good quality ROi positive content online has significantly increased. With indian creators earning ~$900M from YouTube alone in 2021, being a creator has become a legitimate career choice for many. Globally, Patreon has distributed $3.5B to creators since inception, an amount which is 100% generated from user subscriptions.

A platform can potentially provide a 10x experience by offering creators with distribution, tools specific to their genre of content to manage, monetize and grow their community/fans, and the users with differentiated premium content and access to a community of like-minded individuals. We are investors in the short-video platform Josh (Parent Dailyhunt) and are actively scouting for potential vertical and horizontal models in this space that serve the needs of creators and consumers.

3. Web3/GameFi/Non-Fungible Tokens (NFTs): With $20B+ worth of NFTs being sold on OpenSea in 2021, there has been significant investor interest in the segment lately. While speculation has largely contributed to the popularity of NFTs today, we believe that the underlying technology of being able to prove ownership of digital assets is powerful and has its biggest use case in gaming enabling gamers to truly own assets making them transferable outside the game.

4. Real Money Gaming (RMG) v2.0: With 120M+ users on various RMG/Fantasy platforms today, real money gaming is already a well-established category accounting for ~50% of the overall gaming market in india.

With the increasing depth in the indian RMG market supported by a large cohort of RMG gamers,

the market is ripe for newer fantasy/RMG games and formats. We expect the emergence of newer models such as Web3 Fantasy, creator/influencer-led Fantasy, etc. to enhance trust and engagement levels among different customer segments. Globally, we have seen models like Sorare achieve significant levels of traction in Web3 Fantasy through its officially licensed football player NFTs serving as the centre of its Fantasy game. We are investors in the RMG platform Zupee and are excited to partner with more players in the year ahead.

NFTs are also proving to be strong monetization tools for creators in exchange for privileged access to their time, collectibles, events, etc. As NFTs increasingly become mainstream, we also believe that companies that help the traditional web2 players transition to web3/NFTs through technical support, utility and community management, and payment integrations will become valuable.

5. Vertical Communities: As more people with differentiated and specific interests come online, a platform that specifically focuses on their main interests becomes more valuable and satisfying. Users looking for specific areas of interest can get lost on horizontal networks among all the irrelevant content. Specialization and therefore content developed around special interest areas is a burgeoning niche and we believe this will give rise to vertical communities across themes such as devotion, sports, GenZ, Bharat, travel, parenting, entertainment etc. We are investors in the devotion-tech platform SriMandir and expect the emergence of multiple new players across other verticals such as gaming, fashion, GenZ and more.

6. Gaming infrastructure SaaS/Ai models: Although the number of gaming companies have exploded, use cases around data science, matchmaking, driving smarter acquisitions, smart contextual product marketing are still largely unsolved challenges for companies of all sizes.

Hence, we need newer SaaS/Ai models to keep driving forward and broadening the horizon to make way for the futuristic and next-gen gaming companies. We see a clear upward trendline for this market with the rise of gaming companies in india. Further, the right product/solutions could potentially be relevant in other markets such as the Middle East, Latam and Southeast Asia.

We would love to get your feedback and thoughts on other interesting themes and macro trends that could emerge (video-driven, GenZ focused social communities, etc.) - please give us a shout on mediasocial@matrixpartners.in or any of the social handles below. We would love to get a (virtual) coffee and brainstorm on any of the ones above (and others we might have missed).

Twitter: @matrixindiavc @tarun_davda
@ayush_chamaria @rahulchugh29
@markivadnan

Linkedin: Matrix Partners india Tarun Davda
Ayush Chamaria Rahul Chugh
Vikram Nanda