Hike, the Indian social media and gaming company, has announced that it will lay off around 55 people, which is about 22% of its total workforce, as a result of the recent introduction of 28% GST on online gaming. Hike currently operates a Blockchain-based real money gaming platform called Rush Gaming Universe (RGU).
The move comes days after gaming giant MPL announced a 50% reduction in its workforce because of the same reason as Hike’s. For those uninitiated, Hike and MPL’s decision comes after the government decided to levy a 28% GST on online gaming services, which was previously taxed at 18%. This move has been criticized by the online gaming industry, which claims that it will hamper the growth and innovation of the sector.
Kavin Bharti Mittal, founder and CEO of Hike, elaborated on the lay off situation and said, “Business is in the best shape ever but this 400 per cent increase in GST is a bazooka pointed at us. We’ll need to absorb some of it and as a result, there will be a reduction in the workforce at Hike/Rush.”
After shutting down its core business of a chatting application back in January of 2021, Hike ventured into a new segment and created “Rush Gaming Universe,” a Web 3 gaming platform. Known investors supporting Hike include Tencent, Foxconn, Bharti Group, Tribe Capital, Polygon, and Flipkart’s co-founder Binny Bansal, and others.
It remains to be seen wether there would be more casualties of this move by the government. While MPL and Hike were the notable ones, gaming start-ups which were still operating at a smaller scale such as Quizy, have already announced that they will be shutting down their business.