BENGALURU: Online gaming and fantasy sports start-up Mobile Premier League (MPL) has reduced its workforce by 50% or about 350 people. This move comes after the government retained 28% GST on online gaming.
In an email to employees (viewed by TNIE), the company's founder and CEO Sai Srinivas said, "Last month has been extremely challenging and uncertain for all of us. Last week, it was confirmed that a 28% GST will be levied on the full deposit value rather than on Gross Gaming Revenue. The new rules will increase our tax burden by as much as 350-400%."
He added that as a business, one can prepare for a 50% or even a 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions.
As a digital company, its variable costs predominantly involve people, server and office infrastructure. The company has already initiated work on revisiting its server and office infrastructure costs.
"In a short span of four years, we have achieved a lot. MPL India was on track to continue the amazing business performance we have since December when we turned EBITDA positive. In fact, we recorded our best ever month in terms of business performance in June and we beat that in July," he added in the internal mail.
Many gaming companies and federations such as the All-India Gaming Federation had said that this 28% tax will severely impact the online gaming sector and result in a situation where a majority of players including MSMEs will no longer be able to survive in the face of the increased tax liability of 400%.