Hike’s Rush Gaming Universe (RGU) has let go of around 55 people, impacting 22% of the total workforce. This is the second company to bear the brunt of the government’s move to impose 28% GST on online real-money games.
“Business is in best shape ever. This 400% increase in GST is a bazooka pointed at us. We’ll need to absorb some of it,” Hike CEO and founder Kavin Bharti Mittal said in a statement. Entrackr has reached out to Mittal for further details.
Hike used to be a P2P messaging application and raised over $260 million in funding from the likes of Tiger Global and Tencent. However, it shut down its core product and switched to a different domain to enter the real money skill-based gaming space in January 2021.
Soon after starting from scratch, it raised undisclosed funding from Ethereum-based blockchain scaling service provider Polygon. The startup raised another undisclosed round from Web3 investor Jump Crypto, Tribe Capital and others in May 2022.
Hike’s revenue from operations jumped to Rs 19.21 crore in FY22 as compared to Rs 18 lakh in FY21. The company’s annual losses also narrowed 7.3% to Rs 118.7 crore in FY22 against Rs 128 crore in FY21. The company claims to have clocked 4X growth over the past 12 months and was operationally profitable since October 2022. The startup is yet to file its FY23 financial report.
The new GST rules may see more startups with real-money games making course corrections in the near future. Earlier this week, Mobile Premier League (MPL) laid off 350 employees citing the new tax regime. According to MPL, the new rules will increase its tax burden by as much as 350-400%.
The adverse impact on gaming startups was flagged by several industry players after the GST council move. Real money gaming platforms such as Nazara Technologies, Baazi Games, and Winzo Games and industry body All India Gaming Federation have also advocated against the new GST rule that is expected to be implemented from October 1.
