In this insightful interview, Mona Motwani, founder and CEO of Ixia Capital, discusses the burgeoning opportunities in emerging igaming markets like Africa, the Middle East, and India. She explains how Ixia Capital leverages trends in data consumption and player engagement through their unique VC studio model, focusing on creating and funding their own projects. Mona highlights the transformative role of blockchain technology in gaming monetisation and the importance of navigating diverse regulatory landscapes. She also delves into key technological advancements—such as cloud gaming, AI, XR, and blockchain—that are poised to drive the next wave of innovation in gaming and esports. Readers can expect to gain a deeper understanding of Ixia Capital's strategic approach to fostering growth and innovation in the global igaming industry.
Gaming Eminence: You’ve highlighted the significant growth in data consumption and player engagement in emerging markets such as Africa, the Middle East, and India. How does Ixia Capital plan to capitalize on these trends, and what unique challenges do you anticipate in these regions compared to more developed markets?
MM) "The growth in data consumption and player engagement in emerging markets like Africa, the Middle East, and India is truly remarkable. At Ixia Capital and Studio, we're particularly excited about these regions because of their unique characteristics and immense potential.
In the Middle East, for instance, countries like Saudi Arabia and the UAE are introducing policies to encourage game localisation and hosting major esports tournaments. This government support is creating fertile ground for innovation. In Africa, we're looking at a market with about 185 million active gamers in Sub-Saharan Africa alone, with a gaming market size of $6.2 billion in 2023. With its 568 million gamers and rapidly increasing mobile internet penetration, India presents another huge opportunity.
Investment opportunities are now beginning to focus more on three regions, particularly the Middle East (Dubai, Abu Dhabi, Saudi Arabia), Africa, and India. Key segments that are drawing investment attention are game developers, esports platforms, and associated tech startups.
The challenges in these markets are unique. In Africa, for example, we need to consider infrastructure limitations and the prevalence of mobile gaming. In India, the regulatory landscape for real money gaming is evolving rapidly. In the Middle East, while there's strong government support, we need to be mindful of cultural sensitivities in-game content.
I remember my first visit to an eSports event in Abu Dhabi last year. What struck me was the diversity—not just young developers, but enthusiasts of all ages. Abu Dhabi's proactive approach to hosting and promoting these global events is transforming the region into a gaming hub. The inclusive atmosphere, coupled with the government's support, is driving innovation across generations. For instance, the recent Dubai Esports and Games festival attracted over 34,000 attendees, showcasing the growing community and engagement around gaming."
Gaming Eminence: Given your strategy to focus on gaming, gambling, esports, and digital assets, how do you see blockchain technology enhancing monetisation models in these sectors, particularly in the varied consumer bases of your target markets?
MM) "Blockchain technology has immense potential in gaming and gambling, particularly in enhancing monetisation models—making it ripe for investment.
One of the most exciting applications we're seeing today is in the realm of digital asset ownership, Blockchain.
Blockchain allows for true ownership of in-game items, turning them into tradeable assets. This not only creates new revenue streams for game developers but also adds real-world value to players' in-game achievements.
In the gambling sector, blockchain is enhancing transparency and trust. Smart contracts can ensure instant, verifiable payouts, which is particularly valuable in markets where trust in traditional financial institutions might be lower.
The application of blockchain technology varies across different consumer bases. In more developed markets, we're seeing a focus on high-value digital collectibles and complex economic systems within games. In emerging markets, the focus is more on accessibility and creating new economic opportunities through play-to-earn models.
Looking ahead, blockchain is set to become an integral part of gaming infrastructure. We'll see more interoperability between games, with players able to use their assets across different gaming ecosystems. This will create new challenges in terms of game balance and economy design, but also incredible opportunities for innovation."
Gaming Eminence: You've mentioned a maturing regulatory landscape that could spawn many winners like the social media boom. How is Ixia Capital positioning itself to navigate and leverage these regulatory changes in its key markets?
MM) "The regulatory landscape in the gaming and gambling industry is indeed maturing, and at Ixia Capital, we see this as a catalyst poised to unlock unprecedented growth and innovation in the sector.
Currently, we're seeing a spectrum of regulatory strategies across our focus regions. In the Middle East, for instance, the UAE's Virtual Assets Regulatory Authority (VARA) published comprehensive crypto regulations in 2023, setting clear guidelines for virtual asset companies. This kind of clarity is invaluable for startups in the blockchain gaming space. In India, we've seen the government officially recognize esports as a multi-sport event in 2022, lending credibility to the sector. Africa presents a more fragmented regulatory landscape, with each country taking its own approach.
At Ixia Capital, we're positioning ourselves to navigate and leverage these regulatory changes in several ways. First, we're building strong relationships with regulatory bodies in our key markets. This allows us to stay ahead of regulatory trends and provide valuable insights to our portfolio companies.
Second, we're focusing on startups that are building robust compliance frameworks from the ground up. In the long run, we believe this approach will be more sustainable than trying to retrofit compliance onto existing systems.
Third, we're diversifying our investments across different regulatory environments. This not only spreads our risk but also allows us to gain insights from various regulatory frameworks.
We see several opportunities arising from these regulatory changes. Clear regulations often lead to increased investor confidence, potentially unlocking more capital for the industry. They can also drive innovation as companies find creative ways to comply with new rules while still delivering engaging user experiences.
Personally, I've seen the impact of regulatory shifts several times in my career. I recall my experience at Sportradar, where I was leading government relations for the Indian Subcontinent. It was a challenging time for the industry, but it also led to significant innovations in geo-blocking technology and responsible gaming tools. The real-money gaming segment's contribution of about 60% of its revenues to the Indian exchequer in FY 2023-24. While initially challenging, these experiences taught me that regulatory changes, while sometimes disruptive in the short term, often drive positive long-term developments in our industry."
Gaming Eminence: With Ixia Capital’s focus from pre-Seed to Series-A startups, could you elaborate on how you select and support startups at these crucial early stages? What key metrics or indicators are most influential in your decision-making process?
MM) "At Ixia Capital And Studio, our approach is a bit different compared to traditional VC funds. We’re what’s known as a ‘VC Studio'—a concept well-established in the US but relatively new in India. Instead of selecting and funding external startups, we’re creating and funding our own projects.
We're currently focusing on launching projects under the Ixia Fund. Our model allows us to have more control over the development and direction of these projects from the ground up.
When it comes to decision-making, we're analysing market opportunities, identifying gaps, and creating projects that can fill those gaps. Our key indicators are market potential, alignment with our expertise in gaming and digital assets, and the ability to leverage our network in emerging markets like Africa, India, and the Middle East.
Our support for these projects goes far beyond financial backing. We're intimately involved in every aspect—from ideation and development to launch and scaling. This hands-on approach allows us to rapidly iterate and pivot if necessary, leveraging our team's extensive experience in the gaming and digital asset spaces.
You see, the studio model offers several advantages over traditional VC investing. We can move faster, have more control over the direction of our projects, and potentially capture more value. It also allows us to build a portfolio of complementary projects that can benefit from shared resources and knowledge.
This approach is particularly well-suited to the rapidly evolving gaming and digital asset markets in emerging economies. A key lesson we've learned is the importance of localization in gaming. What works in one market may not necessarily translate to another. We can therefore tailor our projects to local needs and preferences while leveraging global best practices.
As this model is relatively new in India, we're also educating the market about the benefits of the fund studio approach. We believe it offers a compelling alternative to traditional VC funding, especially in sectors requiring deep domain expertise like gaming and digital assets."
Gaming Eminence: Considering your view that gaming is competing with social media and OTT for mindshare, what are the key technological advancements you believe will drive the next wave of major players in the gaming and esports industries? How is Ixia poised to lead or support these advancements?
MM) "The gaming industry is indeed in fierce competition with social media and OTT platforms for users' attention.
One of the most significant trends we're seeing is the increasing convergence of gaming with other forms of entertainment. Games are no longer just games – they're becoming social platforms, content creation tools, and even virtual economies. This is particularly evident in the behaviour of Gen Z users, who spend an average of 12 hours per week on video games and virtual worlds, almost matching their time on social media.
In terms of key technological advancements, we're particularly excited about a few areas:
Cloud Gaming: This technology has the potential to make high-quality gaming experiences accessible to a much wider audience, particularly in emerging markets where high-end hardware might be less common.
AI and Machine Learning: These technologies are not only enhancing game development processes but also creating more dynamic, personalized gaming experiences.
Extended Reality (XR): The combination of AR and VR technologies is opening up new possibilities for immersive gaming experiences.
Blockchain and Web3 Technologies: As we discussed earlier, these are creating new models of ownership and value creation in gaming.
At Ixia Capital, we're positioning ourselves to support and capitalise on these advancements in several ways. Firstly, our investment focus includes not just game developers, but also the broader ecosystem of associated tech startups. This allows us to support innovations across the entire value chain of the gaming industry.
We're also placing a strong emphasis on mobile gaming, particularly in our focus markets of the Middle East, Africa, and India. With the increasing penetration of smartphones and high-speed internet in these regions, we believe mobile will be the primary platform for many of these technological advancements to reach mass adoption.
Looking ahead, many top VCs predict we'll see a continued blurring of lines between different forms of digital entertainment. Games will increasingly become platforms for social interaction, content creation, and even commerce. We'll likely see more crossovers between gaming and other entertainment industries, with successful gaming IPs spawning movies, series, and vice versa.
In the esports realm, which has seen a 20% increase in hourly traction post-COVID, I anticipate we'll see it become increasingly mainstream, with more professional leagues, bigger prizes, and growing viewership.
Ultimately, the companies that will lead this next wave will be those that can create engaging, multi-faceted digital experiences that keep users coming back."