Mobile Premier League (MPL), the mobile e-sports and digital gaming unicorn, is laying off 350 employees, which represents about 50 per cent of the company’s workforce, according to sources.
“This has been a heart-wrenching process because it impacts a lot of our friends and colleagues,” said MPL co-founders Sai Srinivas and Shubh Malhotra said in an email to employees and seen by Business Standard.
The move comes at a time when the GST Council has recommended imposing a 28 per cent tax on full deposit value, with no distinction made between games of skill and chance. Gaming platforms currently pay an 18 per cent GST on platform fees.
"The new rules will increase our tax burden by as much as 350 per cent-400 per cent," MPL co-founders said. “As a business, one can prepare for a 50 per cent or even a 100 per cent increase, but adjusting to a sudden increase of magnitude means we need to make some very tough decisions.”
They said the company’s variable costs predominantly involve people, servers and office infrastructure. Therefore, it must take steps to bring these expenses down in order to survive and to ensure that the business remains viable. The firm had already initiated work on revisiting the server and office infrastructure costs.
The company said it has already initiated work on revisiting server and office infrastructure costs. "However, despite this, we will still have to reduce our people-related costs. Regrettably, we will have to let go of around 350 of you,” said the co-founders. “Personally, this is the toughest decision we have ever had to make. It's as if we aced our class and now find ourselves needing to repeat a school year.”
They said that MPL India was on track to continue the amazing business performance it has seen since December when it turned EBITDA positive. “In fact, we recorded our best-ever month in terms of business performance in June and we beat that in July. If anything, this makes this decision all the more difficult to come to terms with,” said the co-founders. “We have spent a lot of time evaluating and re-evaluating this decision; asking ourselves if we should wait or not. Eventually, we came to this conclusion because we believe that in uncertain times the sooner we are able to deliver certainty to everyone, the better.”
The firm was started in 2018 by Sai Srinivas and Shubh Malhotra. The platform allows users to participate in free as well as paid competitions across many games in multiple categories, including fantasy sports, sports games, puzzles, and casual and board games.
In September 2021, MPL raised its Series E round of financing led by Legatum Capital at a pre-money valuation of $2.3 billion. This made it India's second gaming unicorn or start-up valued at over $1 billion. The firm competes with players such as Dream11, WinZO, and My11Circle. It has raised a total funding of $375 million from investors such as Peak XV (previously Sequoia India), RTP Global and Telstra Ventures.
The company had been in a global expansion mode. MPL recently launched its app in Nigeria, marking its first foray into the African gaming market. With this move, MPL is now present on four continents: Asia, North America, Europe, and Africa.
In early 2022, MPL joined hands with GameDuell, a Berlin-headquartered leader in community card and board games. MPL has also established a strong presence in the USA, where it has been operating for two years.
The Covid-19 pandemic-induced lockdown in 2020 also provided a fillip to an already-booming e-sports industry in India and the world. However, later like other startups, MPL also faced the challenge of the funding winter and macroeconomic uncertainty, according to the sources. It had been trying to cut costs and become profitable. Last year in May, the firm laid off around 100 people and exited the Indonesian market.
The company reported a 3X surge in its loss to $149.3 million in the financial year 2021-2022 from $48.3 million in FY21, according to a media report. The firm saw its revenue from operations increase 29 per cent to $65.5 million in FY22 from $50.8 million in FY21.
India continued to remain the top market for MPL contributing more than 88 per cent to the firm’s total revenue of $66.8 million. Total expenses jumped 116 per cent to $215 million from $99.4 million in FY21. Advertising and promotional expenses rose 81 per cent to $92.2 million. MPL also spent $58.6 million on employee benefit expenses in FY22, a 255 per cent jump from $16.5 million in FY21.