7seas entertainment ltd share price Management discussions

Overview

7Seas Entertainment Ltd (7Seas) is Indias First ISO 9001:2015 certified Independent Games Development Company. 7Seas focuses on developing and Publishing Game IPs in all genres for different age groups. 7Seas developed & released games 30+ Mobile Games and 100+ casual online games,. 7Seas is focusing on Free to Play Casual Racing, Shooting, Action, Puzzle, and Simulation Games. 7Seas developed first of its kind Short Gaming News App – Gamer Shorts.

At, 7Seas, it is an ongoing process to produce good quality of games for all the genres complete End to End Game development methodology process is implemented. 7Seas adopts multifaceted revenue strategy.Its suite of gaming content allows gamers to easily play the games

Industry Structure, Development and Outlook:

The gaming industry has come a long way since its inception, with new advancements in technology, graphics, and gameplay leading to an ever-growing fan base and market.

Global Gaming Market Overview: According to Statista, the video game markets revenue is projected to reach is projected to reach $385 billion in 2023, with a year-on-year growth of 7.9% until 2027.Despite looming macroeconomic challenges, the global games market will generate revenues of $187.7 billion in 2023, a +2.6% year-on-year growth.

The more the gaming market grows, the more ways there are for the different players in the ecosystem to boost their revenues from it.Even free-to-play games are now generating massive revenues. In fact, mobile games are one of the most important revenue sources for the market, as stated by Newzoos reports that point out that there will be a spend of $200 billion on in-game purchases by 2023.

A remarkable 79% of the online population engages with games in one way or another.All types of game-related engagement tend to increase with each younger generation (Newzoo). 42% of Gen Alpha engages with games across all dimensions, including playing, viewing, and other forms such as socialization, podcasts, in-person events. This level and breadth of engagement among youngsters signals that gaming is becoming more than just a pastime.

Trend is Mobile Gaming: The trend that is evolving the most is mobile gaming. It has become increasingly popular in recent years, and this is expected to continue in 2023. With the rise of 5G technology, mobile games will become even more accessible and offer more immersive gameplay experiences. Mobile gaming is also becoming more mainstream, with more and more people of all ages and backgrounds playing games on their phones.

Gaming in India Market Analysis:

The India Gaming Market size is expected to grow from USD 3.02 billion in 2023 to USD 6.26 billion by 2028, at a CAGR of 15.68% during the forecast period (2023-2028). India recorded about 421 million online gamers in the year 2022. This was an eight percent growth from the previous year and is likely to reach over 442 million by 2023.

The online gaming industry witnessed tremendous growth during the period of coronavirus outbreak. Indias young online gaming business saw extraordinary growth, propelling it into the worlds top five mobile gaming markets. The rising millennials and Gen Z population of the Country brought the online gaming world to life. India is poised to serve as a lucrative avenue for the gaming industry. Revenues come from free-to-play and freemium games, which can be downloaded and played for free but allow gamers to spend money in the game to enhance the experience.

India offers a significant opportunity for mobile gaming publishers and investors, as it is poised for stellar growth in the coming years. Mobile gaming is incredibly popular in India, catering to more than 13 crore users. The India mobile gaming market size reached US$ 2.2 Billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 5.9 Billion by 2028, exhibiting a growth rate (CAGR) of 18.9% during 2023-2028.

A. Opportunities and Threats:

Though the overall scenario for the gaming companies is extremely competitive, there are some niche areas where there are many opportunities for Global Growth. The management is exploring these areas to consider entering new specific multiplatform - Multi languages areas for mobile platform and develop expertise in such new Gaming Genres.

B. Business performance and Segment Reporting:

During the year under review, the Company has recorded an income of Rs. 552.21Lakhs and profit before tax of Rs. 53.24 Lakhs as against the income of Rs. 51.65 Lakhs and Profit before tax ofRs. 2.47 Lakhs in the previous Financial Year 2021-22.

Key financial ratios:

[Pursuant to Schedule V (B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended]

S.No. Financial Ratios	Financial Year 2022-23	Financial Year 2021-22
1. Net capital turnover ratio	(2.46)	(0.36)
2. Net Profit Margin (%)	0.10	0.05
3. Trade receivablesturnover ratio	11.77	2.89
4. Return on Capital employed	(0.65)	(0.02)
5. Current Ratio	0.44	0.69
6. Return on Equity (%)	0.26	0.02
7. Trade payablesturnover ratio	-	-
8. Debt Equity Ratio	-	-

The company is engaged in the business of Software Games Development, which as per Accounting Standard is considered the only reportable business.

C. Outlook:

Gaming Industry is more focused on new technologies. The performance of the Company has dropped in comparison to previous financial years. Your company will improve its performance by focusing on new gaming technologies platforms.

D. Risks and Concerns:

The Company needs to promote the Games Portfolio to reach Global Gamers. It also has to focus on developing games for new multiplatform technologies in Mobile Gaming Industry, the company would need access to Funds.

E. Internal Control System and its adequacy:

The Company maintains a system of well-established policies and procedures for internal control of operations and activities, and these are continually reviewed for effectiveness.

The business risks and its control procedures are reviewed frequently. Systems audit is also conducted regularly to review the systems with respect to Security and its Adequacy. Reports are prepared and circulated to Senior Management and action taken to strengthen controls where necessary.

F. Human resources and Industrial relations:

Your company continues to have cordial relations with its employees. During the year the company has employed 30 members in its company and has taken some HR initiatives to train and develop talent pool. In order to improve the performance of management and to scale up the business operations, the company planned to recruit experienced personnel at various levels and technologies apart from strengthening other departments with competent people.

G. Disclosure of Accounting Treatment:

The Company has not carried out any treatment different from that prescribed in Accounting Standards.