FXLabs to raise $5mn VC fund

FXLabs Studios, a Hyderabad-based developer of game products for PCs and video game consoles, is in the process of raising $5 million (approximately Rs 20.5 crore) venture capital fund to steer its growth plans, including pitching in for more PC games based on popular Bollywood movies.

The company is a joint venture between Sashi Reddi, chairman and CEO of Philadelphia-based software testing firm AppLabs Technologies, and city-based Suresh Productions. Thus far, around $6 million (Rs 24.6 crore) has been infused into the company, with half of it invested by Reddi in his personal capacity.

"We have started negotiating with a few US-based venture capital firms, which have a proven track record in gaming, to add impetus to our plans. The fund-raising exercise should be completed in the next four to six months," Reddi, founder and chairman of FXLabs, told Business Standard.

Close on the heels of the company entering into an agreement with Yashraj Films in February 2007 for the videogame version of the Bollywood blockbuster Dhoom 2, it is lining up two other games based on prestigious Bollywood properties. "While the first deal is already in place, talks with the second production house are in final stages. We expect the two games to be launched simultaneously with the movies by next April and December respectively," Reddi said, declining to share further details.

The Dhoom 2 video game would be released by December this year, and the company has plans to distribute it to Indians in the US, UK and other geographies. "We are tying up domestic internet cafe chains like Reliance WebWorld and game rooms, besides DVD stores for distribution of this game," he added.

FXLabs' first game, Inferno, would be out in the US by September this year, with the Indian version with Hindi sound track slated for a release in October. The company has also signed an exclusive agreement with Archie Comics Entertainment for the development of the first video game based on the Archie characters including Archie, Betty, Veronica, Judhead and Reggie. The first game in the series, Archie's Riverdale Run, is expected to be released in March 2008.

According to him, with the launch of the three games, the company is expecting to garner revenues of between $3 million (Rs 12.3 crore) and $4 million (Rs 16.4 crore) this financial year. "With Dhoom 2 being the first ever game to be launched on a Bollywood property, it will be hard to assess the revenue generation. We are expecting one-third of our total revenues this year to come from Dhoom 2," Reddi said.

Nasscom has pegged the worldwide video and console gaming market at $29 billion, with India contributing a mere 0.25 per cent.

However, the growing popularity of these games is set to take the domestic market to $424 million by the end of this decade, he said.

"Our focus has always been exclusively on PC and online games and we will continue to focus on this," he added, ruling out any possibility of foraying into the mobile gaming market.