Gaming Report: Nazara Technologies Completes Acquisition of Kiddopia Creator Paper Boat Apps While Philippines Cracks Down on Offshore Gambling

While poker enthusiasts were glued to the 2024 World Series of Poker (WSOP), two significant developments were shaking up the broader gaming industry.

India-based Nazara Technologies, a leading player in diversified gaming and sports media, made a bold move by acquiring the remaining 48.42% stake in Paper Boat Apps, the company behind the popular children’s learning app Kiddopia. The deal, valued at ₹300 Crores, gives Nazara full ownership, which has been a major success, particularly in the US market. This strategic acquisition aligns with Nazara’s vision to expand its presence in the growing gamified learning sector and leverage Kiddopia’s strong brand recognition and user base. The company plans to integrate the app into its existing platform and explore new avenues for growth, including IP licensing, global expansion, and potential forays into merchandising and advertising.

Meanwhile, on the other side of the continent, the Philippines government made a decisive move to curb the proliferation of offshore gambling operators (POGOs). These online gambling platforms, primarily catering to Chinese gamblers, have faced increasing scrutiny due to their alleged links to organized crime, including financial scams, money laundering, and even more serious offences like human trafficking and murder. President Ferdinand Marcos Jr.’s announcement of an immediate and total ban on POGOs during his State of the Nation address was met with strong support from lawmakers. This move represents a significant shift in the country’s approach to the gaming industry, prioritizing social well-being and law enforcement over the substantial revenue generated by the sector.

Nazara Technologies Solidifies Foothold in the Gamified Learning Market with Full Acquisition of Kiddopia Publisher in ₹300 Crore Deal

On July 19, Nazara Technologies, the publicly listed diversified gaming and sports media company, announced the completion of its acquisition of Paper Boat Apps, the developer and publisher of the popular gamified learning app Kiddopia. The deal, valued at ₹300 Crores, involves the purchase of the remaining 48.42% stake from Paper Boat Apps’ founders, marking Nazara’s full ownership of the company.

Kiddopia, a leading app in the children’s edutainment space, primarily targets the 2-8 age group and derives a significant portion of its revenue from the U.S. market. The app has witnessed substantial growth since Nazara’s initial acquisition of a 50.91% stake in 2019, with the company now reporting a consolidated revenue of ₹219.4 Crores and earnings before interest, tax, depreciation, and amortization (EBITDA) of ₹56.10 Crores for the fiscal year 2024.

Nazara’s strategic move to acquire the remaining stake in Paper Boat Apps aims to consolidate its presence in the rapidly growing gamified learning sector. The company intends to integrate Kiddopia into its existing platform, leveraging the app’s strong brand recognition and user base to drive engagement and expand its reach.

“At Nazara, we believe an IP such as Kiddopia has immense potential that can be unlocked through several new initiatives, and acquiring full ownership underscores our commitment to intensifying our efforts in the gamified learning sector,” said Nitish Mittersain, CEO of Nazara Technologies. “We are excited to bring the talented team at Paper Boat Apps into the Nazara fold and look forward to working together to take Kiddopia to new heights.”

Anupam Dhanuka, promoter of Paper Boat Apps, expressed his satisfaction with the deal, stating, “Following the majority acquisition by Nazara, Kiddopia has scaled tremendously, and we are pleased to see it find a permanent home within Nazara. We believe that Kiddopia has significant potential for future growth, and Nazara is well-positioned to elevate it to the next level.”

This acquisition is part of Nazara’s broader expansion strategy, which has seen the company make several strategic investments and acquisitions in recent months. The company’s esports and events subsidiary, Nodwin Gaming, has been particularly active, acquiring Comic Con India, West Asia and Turkey-focused marketing firm Publishme, Singapore-based events firm Branded, and Turkish esports and gaming firm Ninja Global. According to reports, Nazara has earmarked approximately ₹830 Crores of its capital for further acquisitions, targeting companies in India, Europe, and North America.

The acquisition of Paper Boat Apps is expected to significantly bolster Nazara’s cash flow, providing the company with additional resources to fuel both organic and inorganic growth initiatives. Nazara plans to expand the Kiddopia franchise through various channels, including IP licensing, global market expansion, and exploring new revenue streams such as merchandising and advertising.

The company’s strong financial performance in FY24, with a 4.3% increase in total revenue and a 41% surge in profit after tax, further solidifies its position as a key player in the Indian gaming and sports media market. The acquisition of Paper Boat Apps is anticipated to further strengthen Nazara’s growth trajectory and enhance its market share in the burgeoning gamified learning sector.

The Philippines Cracks Down on Offshore Gambling

The Philippines is taking a firm stance against offshore gambling operations, particularly those catering to Chinese gamblers, due to growing concerns about their ties to organized crime. These operations, known as Philippine Offshore Gaming Operators (POGOs), have spread like wildfire across the nation, employing tens of thousands of workers, both legally and illegally.

President Ferdinand Marcos Jr. dropped a bombshell on Monday during his State of the Nation address, announcing an immediate shutdown of the entire industry. His declaration was met with enthusiastic applause from lawmakers, reflecting a shared concern over the unchecked growth of these offshore casinos.

Marcos didn’t mince words, stating, “Disguising as legitimate entities, their operations have ventured into illicit areas furthest from gaming, such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture – even murder. The grave abuse and disrespect to our system of laws must stop.”

Following the president’s announcement, the country’s gaming regulator wasted no time, confirming on Tuesday that it would revoke all POGO licenses and systematically dismantle the sector by the end of the year.

The POGO industry, a sprawling network of over 400 licensed and unlicensed operations employing around 40,000 people, generates an estimated annual revenue of 166.5 billion pesos ($2.90 Billion) in taxes and gaming. However, this seemingly lucrative industry has a dark side, with estimated economic costs exceeding 266 billion pesos annually, prompting the government’s drastic action.

The crackdown has already resulted in the closure of several large facilities suspected of housing thousands of Chinese, Vietnamese, and other Southeast Asian nationals who were allegedly forced into labour under appalling conditions.

While the Philippines and China share significant trade ties and collaborate on fighting crime, their relationship has been strained by ongoing territorial disputes in the South China Sea. The POGO issue has further complicated this delicate balance.

In a related development, Philippine senators have ordered the arrest of a town mayor in Tarlac province for repeatedly failing to appear at public hearings. These hearings are investigating serious allegations against her, including alleged ties to a major online gambling operation near her town hall and accusations of concealing her Chinese nationality to qualify for a public office restricted to Filipinos.

The mayor, Alice Guo, denies all charges but has been suspended from her duties, and her financial assets have been frozen. Philippine senators believe that rampant corruption within regulatory bodies and bribes to local officials have allowed the online gambling industry to flourish unchecked.

The Philippines’ decision to ban POGOs is a significant step towards addressing the serious problems associated with the industry. It remains to be seen how this move will impact the country’s economy and its relationship with China, but it sends a clear message that the government is prioritizing the welfare of its citizens and the integrity of its legal system over short-term financial gains.