Korean entrepreneur gives a gaming makeover to India's struggling Internet cafes
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Do you remember the days when kids used to visit cyber cafe to play video games? We used to see them standing outside the cafe waiting for their turn to come. But today, due to high internet and smartphone penetration, these cafe operators are facing tough time to survive. This is the main reason why cyber cafe is facing slow death in Tier-I cities.
According to a recent survey by KPMG and IAMAI, smartphone penetration in India is expected to surge to 314 million mobile internet users by 2017. Further, about 44 per cent of all smartphone and tablets are used for gaming globally, and by 2018, the total count of mobile game users is expected to reach 1 billion.
A Korean entrepreneur Joomin Lee saw this opportunity very early and decided to take the crowd back to the cafes to play games. After resigning from Sify in 2008, he used all of his savings and started Funizen along with two other guys. In the past seven years, Lee has been able to establish Funizen as a successful gaming enterprise offering an array of gaming solutions in India. From publishing the very popular multiplayer online (MO) game by the name Elsword India to running the largest game payment site - Gamemela.com, the company has witnessed growth multi-fold.
Recently, the start-up had also received $2 million in funding from Silicon Valley-based investor, which is among the top 20 venture capitalists in the US. Lee is further in talks with investors to raise around $10 million in next round of funding by the end of this year.
With more than 70 members across 7 metro cities (Delhi, Kolkatta, Mumbai, Pune, Bangalore, Chennai, and Coimbatore), the start-up has already introduced gaming in over 3,000 Internet cafes across India. With a market reach of over 3,500 i-cafes, Funizen aims to go upto 5,000 by the year end. In an interaction with Entrepreneur, Lee shares his entrepreneurial journey and why he chose India to start his own venture.
How Funizen was conceptualized?
I have witnessed the evolution of the gaming business first hand. Online games, especially MO (Multi-player Online) and MMO (Massively Multi-player Online) games started in Korea and later spread to Taiwan, China, and Thailand. From there it went to Vietnam, Europe and to Indonesia. It was clear that India will emerge as the next big market. Having worked with a big company as a Head of a Department, I needed a small, strong and passionate team for my start up. Slowly all of my team members at Sify followed me and Funizen was born. The name is a combination of ‘Fun’ and ‘Citizen’, as we thought of all the fun we would have while working. I believe that unless we enjoy our work, we cannot spread the joy to others.
What’s the revenue and business model of Funizen?
Our revenue comes from two sources:
One is from sales of e-pins. If you visit gamemela, our game portal site, you will see that people can buy e-pins of world famous games there. We purchase the e-pins from overseas gaming companies and sell them to gamers through cafe owners, who are given margins for the sale. Of course, home gamers can purchase e-pins through net banking or credit/debit card on gamemela’s site.
The other source of revenue is our publishing game ‘Elsword’. It is in an initial stage, so the revenue is not much, but it is showing steep growth in registration and sales. Hopefully, it will grow and crack the market soon. For your reference, the market size of China’s online game is $20 billion as per the last year’s figures, and I believe that within 5 years India will catch up. We aim to bring more and more games into India, whether it’s PC games or smartphone games.
What is the USP of Funizen?
In India, while everyone is talking about the game contents, our approach is different. We know that game content itself cannot open the market. It’s more about distribution and payment channel. Huge numbers of games fail to enter Indian market because of the lack of channels – promotion, distribution and payment. Once we build a firm and solid channel online and offline, we only have to select good overseas games to upload them on our channel. For this, we have built i-café channels, and have moved to home gamers. Now, we are making a smartphone game app, which will provide these functions too.
What challenges did you faced in terms of taking your product to the market?
We have had many. Successful business comes from a cooperative ecosystem. This means, as a content business, I need the cooperation of hardware manufacturers and ISPs (Internet Service Providers). In other countries, these three players help each other in a win-win situation. But in India, hardware companies and ISPs are already well established and underestimate the power of content or try to control it. Their view is that – we are missionaries of digital content and we are struggling to break their prejudice. At the same time, we are getting support from i-cafes and small ISPs and hardware distributors. Most of them love to work with us and once we successfully showcase the power of ecosystem, big players in other business will understand what we have done so far.
Second biggest challenge is peoples’ (esp. old generation) prejudice regarding the game. However, the entertainment business is growing very rapidly nowadays. It creates more value and more and more people love to work for this industry. We hope Funizen becomes the good case of Indian digital content industry and act as a catalyst in changing the image of game positively.
What are your future growth and expansion plans?
Think about Flipkart or Snapdeal. Nobody says it’s a PC e-commerce or a smartphone e-commerce company. It’s just an e-commerce business. Gaming business is same. Whether people play it on PC or smartphones, their experience has to be shared and boosted. We are making smartphone app which will enable single account holders and payment enablers. We have expanded from i-café networks to home gamers and soon plan to reach out to smartphone gamers.
How is the response from the customers till now?
Since we started promoting Gamemela, we have seen 30 per cent monthly growth this year. We aim to have 2 lakh gamers’ membership by the end of this year.