Mobile Premier League (MPL), a prominent domestic online gaming platform, has cut its workforce by around 50%, affecting around 350 jobs. The move comes as the 51st GST Council meeting maintained the 28% tax on the gross value collected from online gaming, prompting the MPL to take measures to address its financial challenges.
The Bengaluru-based startup initially informed employees about the upcoming job layoffs last week, followed by an official communication. Sai Srinivas, founder and CEO of MPL, explained in an internal email that the primary variable cost as a digital company involves staff, server operations and office infrastructure. Downsizing is considered essential to the company’s effectiveness and survival.
The MPL, highly valued in the gaming sector, suffered a significant loss of about $149.3 million on FY22, a three-fold increase from FY21’s $48.3 million. The company counts investors such as Peak XV, Times Internet, MSA Novo, Crown Capital, Composite Capital, and Moore Strategic Ventures among its supporters.
Founded in 2018, MPL offers numerous monthly tournaments and boasts more than 90 million registered users across India, Indonesia, Europe and the United States.
The cuts in MPL are in line with the government’s levy of 28% GST on online gaming. Industry experts argue that this tax regime, targeting GST on deposits rather than technology platform commissions, will make the business economy unviable, particularly affecting MSMEs and startups employing innovative business models.
The Federation of Indian Fantasy Sports and e-Gaming Federation jointly said that while the revised tax structure seeks to tackle uncertainty, it refers to the industry with a significant 350% increase in GST, potentially bringing back the Indian online gaming sector for years to come. The GST Council, however, hinted at a review of tax rate and valuation decisions six months after the implementation of these amendments, which offers a glimmer of hope for the future of the industry.
