By Salman SH and Nikhil Pahwa

Paytm parent One97 will form a 55:45 joint venture with AGTech Holdings, an Alibaba Group owned unit, to provide “entertainment products and services”, including casual mobile and social games, to Indian users. One97 will invest $8.8 million in the venture for its 55% stake, and AGTech Holdings will invest $7.2 million for its 45%.Any additional money required run the gaming venture, apart from the initial capital investment, “will be met by external financing to be raised from banks and financial institutions,” the company added.

Ali Fortune Investment Holding Limited, which owns AGTech, is owned by two Alibaba group companies: Alibaba, with 60% stake and Ant Financial, which has 40% stake. Ant Financial owns more than 30% in One97.

This joint venture, an announcement says, “is AGTech’s first significant strategic international expansion and an important milestone for the company”. The joint venture will have 5 directors: 3 will be nominated by Paytm and 2 by AGTech Media.

What the gaming venture might offer in India

As of now, AGTech website lists games across genres like puzzles, sports, racing, arcade, but there was no mention what it would offer specifically in India. AGTech’s mobile games are listed on Taobao.com, an ecommerce marketplace based out of China which aggregates a number of online services including an app store. Note that Taobao is owned by the Alibaba Group. So with Paytm, the plan could be similar: develop games and publish them on Paytm using an app store approach.

In fact, this is something that One97 has tried before: Back in 2013, One97 consolidated all its digital goods categories , including top-ups, games, ringtones, and videos. At that time, there were plans for separate apps for games, videos etc. One97, originally a mobile VAS company operating as a vendor for telecom operators, also has a games aggregation service for mobile operators called Gamepind.

That Paytm is a payments business might help with microtransactions now: Five years ago, another Chinese-backed company tried gaming with microtransactions: Ibibo, which was then backed by Tencent. Perhaps the time is right now.

Competition in Indian mobile gaming space

Some notable names in the mobile gaming space include publisher and developer Nazara Games which owns a 26% stake Mastermind Sports.  Nazara develops and distributes branded and original mobile games and also claims to be a distributor for developers such as Electronic Arts. There is also Bangalore based  Mech Mocha, a mobile gaming startup which raised $5 million in May.  Other companies focused on the mobile gaming sector in India include: Viaan Studios, 99Games, Games2win, PlaySimple.