 "WinZO forays into Brazil gaming market amid 28% GST hike, to invest $25 mn")
Vernacular gaming platform WinZO announced the launch of its app in Brazil on Thursday, where it plans to invest up to $25 million. This move follows closely after the Centre's decision to impose a 28 per cent GST on online gaming, a step viewed by industry stakeholders as a severe setback to India’s budding gaming sector.
The decision to venture into the Brazilian market stems from a strategic initiative to diversify and confront challenges introduced in India for all firms by the 400 per cent surge in GST, the company conveyed in a statement.
“We always aspired to be a global entity… The international expansion has been hastened due to the expected impact on our revenues and unit economics in the wake of the new GST framework. We sought a market that is both business and regulatory-friendly, one that could offset the losses we'll incur in India,” Saumya Singh Rathore, co-founder of WinZO, informed Business Standard.
According to the company, taxation rates on online gaming globally, encompassing nations like the United States, the United Kingdom, and Australia, are directed at the commissions for casual games of skill. These nations charge tax rates of 6.75 per cent, 21 per cent, and 19 per cent, respectively, on commission fees. Brazil, as WinZO highlights, imposes indirect taxes ranging between 2-5 per cent as municipal tax, applicable to the commission accrued by the company, significantly lower than India.
“The profit margins for casual gaming, excluding fantasy gaming, aren't substantial enough to internalise this impact. Casual gamers – predominantly from Tier-II regions and beyond – on average, expend Rs 300 to Rs 400 monthly for a daily engagement of 45 minutes and don't spend over Rs 10-15 daily,” Rathore noted.
With a user base comprising 150 million gamers and numerous partner game developers, WinZO aims to capitalise on Brazil’s expansive gaming domain. The Latin American nation has experienced a pronounced increase in mobile gaming popularity, recording approximately 4.6 billion mobile game downloads in 2022.
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“WinZO is dedicated to crafting a Made in Bharat consumer tech product that resonates with and addresses the interactive entertainment preferences of global young audiences. We've established a tech framework serving over 150 million young users from Bharat at present, capable of global scalability,” expressed Paavan Nanda, co-founder of WinZO.
This month, WinZO will also introduce and showcase the inaugural India Pavilion at the Brazil Game Show, Latin America's premier gaming exhibition.