Mobile Premier League (MPL), an online gaming platform based in Bengaluru, is reducing its workforce by approximately 50%, affecting about 350 jobs. The downsizing decision was made in response to the 28% tax on gross value collected from online gaming announced during the 51st GST Council meeting. MPL aims to address its financial difficulties by implementing these measures.
MPL's founder and CEO, Sai Srinivas, explained in an internal email that as a digital company, personnel, server operations, and office infrastructure are the primary variable costs. Downsizing the workforce has become an essential step for the company's viability and survival.
In the fiscal year 2022, MPL suffered significant losses amounting to around $149.3 million, showing a threefold increase from $48.3 million in the previous fiscal year. Notable investors backing the company include Peak XV, Times Internet, MSA Novo, Crown Capital, Composite Capital, and Moore Strategic Ventures.
Established in 2018, MPL organizes monthly tournaments and has garnered over 90 million registered users from India, Indonesia, Europe, and the US.
The layoffs at MPL coincide with the government's decision to impose a 28% GST on online gaming. Experts in the industry argue that this taxation approach targeting GST on deposits instead of technology platform commissions will make the business economics unfeasible. This will particularly impact MSMEs and startups employing innovative business models.
The Federation of Indian Fantasy Sports and E-Gaming Federation expressed concern over the revised tax structure, stating that it burdens the industry with a substantial 350% increase in GST. They believe this can potentially setback the Indian online gaming sector for years. However, there is hope for the industry as the GST Council has indicated a review of tax rates and valuation decisions six months after implementing these amendments.