Nazara 2.0: The Rebuild After A Quarter In The Red

Nazara is recovering from one of the most bruising quarters in its history.

The Mumbai-based listed gaming major reported a loss of INR 34 Cr in the second quarter (Q2) of the financial year 2025-26 (FY26), after it wrote off nearly INR 1,200 Cr worth of investments in PokerBaazi and Freaks4U, thanks to the real-money gaming (RMG) ban in India and its sudden collapse in Europe due to the ‘esports winter’ in the region.

Nazara, which had a 47.7% stake in Moonshine Technology, the parent company of online poker platform PokerBaazi, had it coming when the Indian government dropped the bomb on the industry in the form of the Promotion and Regulation of Online Gaming Act, 2025, prohibiting all forms of online money games, regardless of whether they are based on skill or chance.

PokerBaazi couldn’t ignore the compliance, and, as a result, terminated all its money game offerings with immediate effect. Rather than waiting for regulatory clarity, Nazara wiped the slate clean, reducing the asset’s value on its books.

In Q2 FY26, Nazara recognised an aggregate reduction of INR 914.7 Cr in its investment in PokerBaazi, shedding nearly 90% of the investment value to a mere INR 96.5 Cr.

“From Nazara’s perspective, we usually like to keep our books clean and take a conservative approach, which is why we went ahead and took this impairment up front in this quarter itself,” Nitish Mittersain, CEO of Nazara Technologies, said in the company’s Q2 earnings call.

Europe is another simmering concern for Nazara. The region is facing a slowdown due to falling sponsorships, reduced investment activity, and monetisation challenges. Besides, layoffs in the sector have grown unabated globally, and many esports companies across Europe have shut down altogether. AI is also disrupting the sector, leading to further cuts in both marketing budgets and staffing.

Through its former subsidiary Nodwin Gaming, now an associate company, Nazara had invested in Freaks4U, an esports services firm operating in a region that once accounted for some of the industry’s most valuable sponsorships.

Nazara also booked a loss of INR 223.7 Cr in Q2 due to Nodwin’s impairment of its investment in Freaks4U.

The twin impairments seem to have catalysed Nazara’s pivot away from an aggressive expansion strategy and toward a more integrated strategy.

Earlier this month, Nazara revealed a new brand identity and logo, which reflects a broader strategic reset. Out of these setbacks has emerged a clearer plan — focus on durable intellectual property, accelerate game development through AI, and build a unified platform that strengthens every title in its portfolio.

“As technology is progressing and at a very rapid rate, we believe that interactive, immersive experiences will really scale up and really become much deeper. And I think that’s a direction that Nazara is really looking to go, leveraging AI and virtual reality,” Mittersain said.

So, How Does Nazara Plan To Strengthen Its IPs With AI?

Nazara’s revival rests on the assets that hold long-term value and durable intellectual properties (IPs). Instead of chasing one-off licensed games or opportunistically buying studios, the company is building a multi-franchise portfolio that can thrive across platforms, markets and formats.

The company has been placing significant focus on its IPs. With this, it is recognising that the true advantage of owning strong IPs lies in the ability to transition seamlessly across new platforms and emerging technologies.

One example is Animal Jam, a key IP in the company’s portfolio. The team is currently working to bring Animal Jam to the Roblox platform. Going ahead, the company plans to create an immersive Animal Jam world within the metaverse.

“Nazara seems to have realised that volatility comes from categories, but resilience comes from IPs. This pivot was long overdue,” a former Nazara executive said.

Its long line-up of titles, which includes Love Island, Big Brother, Animal Jam, World Cricket Championship (WCC), Kiddopia and the new Bigg Boss game, shows the depth of this shift.

Fusebox Games, once known mainly for Love Island, has been remade into a multi-IP studio, adding Big Brother, Bigg Boss and The Traitors to its pipeline in under a year.

The strategy is already reflected in the numbers. In Q2 FY26, Nazara’s mobile gaming revenue jumped 81% year-on-year (YoY), while mobile gaming EBITDA surged 95%. The momentum continued through the first half of the year, with H1 FY26 mobile revenue up 83% and EBITDA up 109%.

AI is accelerating this shift.

The next major release in Nazara’s cricket franchise, World Cricket Championship (WCC) 4, is being developed with extensive use of generative tools. As Mittersain noted, “WCC 4… is completely coded in AI using Claude.”

AI compresses development cycles, reduces bottlenecks and allows teams to test gameplay ideas quickly. For a company with multiple long-running franchises, faster iteration turns every IP into a more valuable compounding asset.

This is why Nazara is reorganising its mobile division around IP first. New games are chosen not only for their launch potential but also for how well they integrate into a larger, connected universe backed by shared technology, analytics, and loyalty systems.

“They’re finally behaving like a global publisher, not a collection of studios. If they execute, this becomes a scale business, not a cyclical one,” the former Nazara executive said.

Turning Portfolio Into A Network

The next area of focus is transforming Nazara’s previously scattered mobile studios into a single, unified platform. For years, the company grew horizontally through acquisitions. But this created fragmented data, uneven live-ops cycles and increased acquisition costs, problems that FY26 finally pushed Nazara to fix from the inside out.

A new set of centres of excellence that are focussed on user acquisition, analytics, AI, monetisation and live operations is driving this shift. These central teams now play a key role in how each game grows, acting less like support units and more like force multipliers, Mittersain said during the call.

Moreover, Nazara’s focus on effective monetisation and global growth is closely linked to the expansion of Nazara Publishing. The goal is to build a large direct-to-consumer (D2C) network using first-party data, stronger cross-promotion, better monetisation tools, and a loyalty system.

Nazara recently finished a project with Google, which lets players use a single Nazara ID across all its games. This unified ID will support shared rewards, progression, and several new features that the company believes will make the platform much stronger in the future.

The company will first roll this out in its existing games, including World Cricket Championship and Bigg Boss, and then expand the network over the next few quarters. Following this, Nazara plans to work with global, as well as Indian, game developers to publish and monetise their games in the country.

The long-term vision, per Mittersain, is to build a ‘large consumer network’. With India having around 500 Mn gamers, Nazara hopes to eventually bring 50 to 100 Mn of them into its ecosystem and serve them more effectively.

Nazara’s Offline Play

Just as Nazara is tightening its digital strategy, it is also increasing focus on offline businesses, including Smaaash and Funky Monkeys, which have quietly become stabilising forces.

The move that once puzzled investors — why would a tech-driven gaming company buy physical entertainment centres? — no more raises eyebrows.

In a quarter dominated by impairments and volatility, Nazara’s offline segment delivered steady EBITDA and predictable cash flow. With discretionary spending rebounding and families returning to physical entertainment spots, the offline centres registered some of their strongest footfall numbers in two years.

In Q2 FY26, Smaaash posted INR 24.2 Cr revenue and INR 3.5 Cr EBITDA, while Funky Monkeys reported INR 5.4 Cr revenue and INR 2.5 Cr EBITDA. In Q1 FY26, Funky Monkeys had recorded INR 4.9 Cr revenue and INR 2.3 Cr EBITDA.

Funky Monkeys, in particular, is scaling faster than expected. The company is now rolling out new locations under a strict unit economics framework, treating each centre as a cash-yielding asset rather than a brand-building exercise.

Smaaash, on the other hand, is undergoing a deeper reimagining. The company is preparing a full-scale Smaaash 2.0 launch in FY27, a shift that integrates Nazara’s digital sensibilities with the brand’s legacy in experiential entertainment. Management believes the relaunch could reset the business entirely.

Behind the scenes, Nazara is also laying the groundwork to connect offline and online engagement. The company plans to embed the upcoming Nazara ID into its physical centres as well, turning footfall into digital users and creating a two-way funnel between mobile games and entertainment venues.

Nazara’s Emerging Market Play

Nazara is also reshaping its global bets. The plan is simple — follow youth, and youth is in the global south.

Therefore, Nodwin is doubling down on Southeast Asia, the Middle East and Africa, regions with the fastest-growing under-25 populations, rising mobile gaming engagement and some of the strongest esports viewership growth.

Despite the Freaks4U write-off, Nodwin’s core business continues to show positive momentum, driven by events, creator-led content and youth-culture IPs.

Its Comic Con and tournament properties are gaining traction, and new creator partnerships are expanding its reach across emerging markets. Nodwin is now preparing another capital raise to accelerate this push, focussing on festival IP, influencer-driven formats and mobile esports rather than mimicking the shrinking Western model.

All in all, Nazara is entering FY27 with fewer distractions, a clearer strategy and a sharper focus on what truly scales. The write-offs, though painful, have inspired the company to streamline its portfolio, double down on durable IPs and rebuild its engine around AI, analytics and a unified player network. With offline assets providing steady cash flows and Nodwin sharpening its emerging market play, Nazara now looks more disciplined and globally minded than ever. Can it sustain its new momentum?

[Edited by Shishir Parasher]