GDC China: Secrets Of Success In The Russian Market

Russian publisher and developer Nival's Maxim Matveyko, the company's VP of business development, outlined the complexities of Russian-speaking markets -- a comprehensive overview of opportunities and challenges for the Chinese audience and those beyond. Though the company began as a traditional boxed PC game publisher, "in 2008 the company switched to the online space, and we started to publish and develop online games in the Russian market," Matveyko explained as part of his speech at GDC China in Shanghai on Tuesday. Given the toughness of the online market, the company has undertaken an effort for "gathering statistics from all of the games we're operating, and we're extensively researching and analyzing the market." The market he lectured about comprises Russia and other Russian-speaking countries, for a total of 15. "PC offline is still the biggest part of the game market, but the most quickly growing part is in the online space," he said. Since 2007, the territory's online game market has grown 100 percent every year. "In the coming years, we believe that online games will become number one, as has happened in other countries around the world," Matveyko said. In Russia, the "majority of the country is not well-connected to the internet. This is probably the biggest issue of the Russian market. But Russian internet providers are working on that pretty quickly... but Russia is so huge that covering it with high-speed internet will take a lot of time," he said. Outside of major cities, dial-up is the norm, meaning client downloads don't work outside of those markets; however, they mark the majority of the country's internet use. "Russia has an interesting opportunity for developers and publishers -- we have three major social networks which are Russian-only," Matveyko advised. They are "Mail.ru, Vkontakte is equivalent to Facebook, and Odnoklassniki, which is the copy of Classmates.com, is also pretty huge," said Matveyko. "All of the major Russian social networks have an SDK available for developers and it's fairly easy to release the game using the social network... They provide payment solutions as well... You just plug in and get profits from that," he said. However, "If you go directly you will have communication issues, mostly... You will have not problems, [with] legal [issues], but you will have to have a bilingual agreement, you will have to somehow get money out of Russia... Working with a publisher in Russia might be a good opportunity, at least to start." Subscription versus Free-to-Play In that market, "The fastest growing segment is online, client-based, free-to-play games. The second fastest growing market segment social games," Matveyko said. "Browser games... were quickly overgrown by client-based free-to-play games... and subscription games are still not doing that good. The only successful title is World of Warcraft." He added: "People have very low disposable income so they are not used to a monthly fee, but once they are in the game, they are able to pay a lot." There are tremendous difficulties with subscription-based games, he said. "People don't trust credit cards... and prepaid cards never arrived on the market. People don't budget their finances... [due to Russia's economic turmoil since the fall of the USSR] people don't get used to planning their budgets, so that's why subscription games aren't dominating the market." Important Facts and Stats Now some stats: "For the free-to-play market... user acquisition cost is between $1-3 U.S. dollars, which is pretty high and growing pretty fast at the moment. For social games the user acquisition cost is still considerably low, so a lot of free-to-play publishers are looking at the social games market." Meanwhile, he said, "The lifetime value of the users is $10-30. Most will spend $10, but some will spend thousands." Most pay via payment terminals -- which are ubiquitous throughout the country. According to Matveyko, "Game servers should be installed in Moscow... the majority of other cities are connected [to the net] through Moscow." Moreover, all of the ISPs are interconnected locally, so "if you install your servers with one of the providers in Moscow you will be connected to all of them at high speed." "Russia is well known for very experienced hackers so it's necessary to have anti-cheating and anti-hacking software installed," he warned. Server costs are also very high due to import taxes, as are colocation fees. "We don't have any [government] regulations yet, but the industry is self-regulated," Matveyko said. The industry is currently developing a rating system. "This is not pushed by the government but it is accepting that," he said. "For many years Russia used to develop offline games, and now it's not that easy to switch from offline to online for many developers. There are many uncertainties." However, Matveyko is optimistic: "We strongly believe that the number of developers will grow and that will be cool." A Surprising Leader Chinese free-to-play MMO Perfect World is the number one game in the Russian market, Matveyko said. "The majority of games that are dominating the Russian online free-to-play market are pretty old... Users start to build a community around the game, and even when you publish new shiny games, it might not be as successful as the title which arrived two to three years ago." On the other hand, when it comes to browser-based titles, the "majority are made in Russia, with a Russian mindset, and probably a weird Russian sense of humor," he said. "The market grew for three years very fast, and what we see now is a certain level of market saturation... The majority of Russian game players went online an when they went online they were seeing the games which are pretty similar in a majority of features," he said. So what makes a leader? Community. "It's not about game quality and features. People are not willing to switch from one game or another; they stick with their friends and their guild," Matveyko said. How will you win them over? "You need to as a developer you need to create something really unique, and really new to attract people and we don't see many games recently released which have this kind of innovation." And bear this in mind: "The market is populated with MMORPGs, very hardcore, with a lot of PvP." Trends "Russia is going to be probably the biggest market for free-to-play games in Europe," Matveyko said. "Internet connections are getting more and more affordable and available. I hope we'll be able to have a lot more users in the coming years... But still people have a low disposable income so games will be free-to-play." "Russians are used to microtransactions," he said, and new payment methods are coming online, too. Unfortunately, "The Russian government is following the Chinese way. We think the Great Firewall is coming. Regulations are coming also, but the regulations are not coming from the government itself -- the industry is pushing the government to regulate the market to make it safe for players, operators, and publishers," he said. Other industries have failed in the country due to regulatory problems -- so the game industry is seeking to collaborate on sensible regulations, Matveyko said. While at present, "usually a licensing deal [for a foreign game into Russia] contains a licensing fee, a minimum guarantee, and a 25 percent royalty for the Russian market... There's a trend where companies want to have a higher profit... The deals which are emerging now have a higher revenue share but not much licensing fee and minimum guarantee." When asked if family-based MMOs will make an impact on the market, Matveyko seemed cautiously optimistic but unsure what the path to success is. "I think that all of the major publishers in Russia are now looking at the family space and kids games... This market is not yet well-established. We still don't know this market's full potential." Nival's Prime World
 Matveyko took this opportunity to do a brief case study of the company's upcoming game, Prime World, to show how it fits into the market strategies he described. The goal of the developer is "to create the mixture of Heroes of Might & Magic and DOTA." Said Matveyko, "Graphically we are trying to have the best elements from both Western and Eastern fantasy... The graphical style is unique and non-unique." What does he mean by that? "It looks appealing to both audiences -- at least we believe that." The game's PvP is session-based, and the persistent part is what sets it apart from other DOTA-style games. The game allows players to build a castle, which is Unity-based and will be "available on all devices, and social networks." There will also be combat-free minigames which allow players who are not focused on PvP to assist their team.