A month since the 28% goods and services tax (GST) kicked in, online money gaming companies are looking at various models to keep players interested.
Most industry players are still in wait-and-watch mode. However, some are looking at various models such as subscriptions or coupons and cashbacks to offset the impact of GST on players while larger companies are understood to be evaluating whether they should absorb the tax for a few months.
“It is still early days and the 28% tax has not made much of a difference as of now. This is also because most players are still not aware of the new GST rate. In fact, most of them are just getting to understand the impact of the TDS on online gaming now,” said an industry source, adding that typically, it takes four to five months for the tax impact to translate on the ground level.
Most online gaming companies have also been working to transition and comply with the GST change. “It has been a huge challenge from the tech point of view to align systems for the new GST norms,” said the source.
However, online money gaming companies are also now looking at how to retain players by offsetting the impact of the tax. According to industry players, some firms have already started offering vouchers or coupons to players while others are rolling out subscription models under which no platform fee will have to be paid by the players.
Companies like Dream11, Fantasy Dangal and Mobile Premier League are understood to be already providing such cashbacks and vouchers.
“The idea is that if a player deposits Rs 100 in his wallet of which Rs 28 is deducted as GST, the company will provide the same in the form of a voucher or cashback,” said a source, but noted that it is uncertain how long this can be continued for.
Uncertain about the impact of the 28% GST, online money gaming companies are also pruning their ad spends in recent weeks to cut down expenditure. But industry’s hopes remain pinned on the GST Council’s promise to review of the tax six months post implementation.
Following the decision of the GST Council in July and August, a 28% GST on online gaming, horse racing and casinos came into effect from October 1 this year.