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UTV in Rs 128-cr deal to buy 2 gaming cos

Our Bureau

To acquire Indiagames, UK co Ignition Entertainment


The road ahead
The new businesses will give UTV competencies in game development, publishing, distribution across mobile, online, console platforms
To invest Rs 135 crore in animation movies over 3 years


MR RONALD D'MELLO

Chennai , Dec. 8

UTV is foraying into the gaming business, acquiring two companies for Rs 128 crore to emerge as what it claims is the largest entity in the gaming and animation sectors in India. It is also investing Rs 135 crore in making animation movies over the next three years.

UTV Software Communications is taking a 70 per cent stake in the UK-based, $15-million Ignition Entertainment Ltd, a console gaming company, and a 51 per cent stake in Indiagames Ltd, a mobile and broadband gaming company based in India.

Competencies

The Rs 263-crore being spent on these businesses will give UTV competencies in game development, publishing and distribution across mobile, online and console platforms, a $30-billion market worldwide.

The combined annual revenue from these entities is now around Rs 100 crore. It is expected to grow significantly over the next three years. UTV plans to touch Rs 1,000-crore turnover by 2009-10 through its four verticals — television, movies, animation and gaming and broadcasting.

UTV's Chief Operating Officer, Mr Ronald D'Mello, in a press release, said, "We believe we are investing in the future with these new acquisitions." The $5-million Indiagames, which employs 270 people, is being bought by UTV for Rs 68 crore. It does business across 67 countries through 80 telecom companies including Vodafone, Verizon, Hutch and Airtel. Its PC games, distributed online through broadband Internet service providers such as BSNL, MTNL, Airtel and Tata VSNL, are expected to be major value drivers. The Indian gaming market is estimated to be between Rs 100 crore and Rs 200 crore.

Speaking to Business Line, Mr Vishal Gondal, CEO and founder of Indiagames, said both companies were a "great fit" with each other. He will continue to head Indiagames. Post-transaction, the shareholders of the company will include Cisco Systems, Adobe Inc and Management.

The Rs 60-crore acquisition of Ignition Entertainment Ltd, which employs 100 people, gives UTV access to hardware manufacturers, game developers and distributors such as Sony, Nintendo, Microsoft, SNK, Konami, Atari, Virgin and Wal-Mart. Ignition is now developing War Devil, a top-end game budgeted at around 10 million and is expected to release it in 2008 exclusively on the Sony Playstation3 platform.

With these acquisitions, UTV plans to capture world markets and use the synergies for capabilities and cost-efficiencies in game development processes and marketing products worldwide.

Reuters quoted Mr Ronnie Screwvala, UTV CEO, as saying the deal would be funded through internal accruals and partly from the Rs 200 crore it received from Walt Disney Co. Disney bought a 14.9 per cent stake in UTV for Rs 60 crore in July and also bought the Indian firm's children's channel, Hungama, for Rs 140 crore.

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