UTV eyes strategic investor in console gaming arm

MUMBAI: UTV Software Communications is planning to divest stake in its UK-based console gaming subsidiary, UTV Ignition.

The company is looking at a strategic investor that would infuse fresh capital for funding UTV Ignition’s next phase of growth.
UTV has already pumped in $70 million to seed UTV Ignition’s growth. The subsidiary company, in which UTV Software Communications holds 90 per cent stake, has developed 3 AAA IPs and two smaller IPs that are set for release.

“We are looking at diluting stake in Ignition to a strategic investor. We will be even comfortable with a 50:50 joint venture. The fresh round of capital will help Ignition to scale up from 2-3 games to 5-6,” says UTV Software Communications managing director Ronnie Screwvala.

UTV Ignition is set to first release El Sheddai this year, a game developed from its Japanese studio. The other two big bang IPs - Reich and War Devil – are set for release next year.

UTV Ignition has also developed two smaller IPs - Hells Cook and Dragons Crown.

UTV expects to get a revenue of Rs 3 billion this fiscal from its console gaming business. UTV Ignition earned a revenue of around Rs 650 million in the last fiscal.

UTV has created the games on multi platforms - PS3 and Xbox 360. They can later go on to more platforms including PC. 
“The break even quantity per game works out to around 1 million units for us. There is a dearth of AAA IP games due to the global economic downturn. The timing is good for us,” says Screwvala.

UTV is eyeing Rs 500 million and Ebitda margins of 10-15 per cent in FY’11 from its mobile games division, carried out through UTV Indiagames. The mobile games subsidiary, in which UTV holds 60 per cent stake, has exclusive rights to develop IPL mobile games.

“UTV Indiagames has an exclusive games channel on Reliance Big TV. We will make two more DTH announcements soon,” says Screwvala.

On the online games front, UTV expects to post a revenue of Rs 400 million and have operating margins of 15 per cent.

UTV Software Communications has deployed Rs 5.56 billion towards the gaming segment.

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