FOCUS: Foreign firms’ retreat may hurt prospering Russian games mkt

By Yekaterina Yezhova

MOSCOW, Apr 11 (PRIME) -- Russia’s 177.4 billion ruble gaming market may be hurt by the flight of foreign companies and payment woes in 2022, but the local firms will fill the niche, analysts said.

“Probably now we will see redistribution of cash flows from the companies that have left the market to those that stay,” investment company Veles Capital analyst Artyom Mikhailin told PRIME.

Cyprus-headquartered Wargaming, a developer of a range of popular computer games, including World of Tanks and World of Warships, said on April 4 it will leave Russia and Belarus.

The company joined a pack of other studios that decided to withdraw from the Russian market, including Ukraine’s GSC Game World, a firm behind the S.T.A.L.K.E.R. games, which halted sales of its products in Russia in mid-March.

The U.S.’ Rockstar Games, a developer of games GTA, Max Payne è Red Dead Redemption, also stopped selling its products in the country.

“In 2022, the market could sink losing some cash flows, including due to a fresh piracy onslaught. The people’s financial footing will also play a big role here. We may expect higher influence of the Russian and Asian games companies on the internal market in the future,” Mikhailin said.

Investment company Freedom Finance said that the exodus of the foreign studios will ease competition on the market of video games and give national firms a chance to boost their shares. “We presume that prices of foreign games for the Russian consumer could soar amid a weakening ruble,” they said.

The market’s most fast growing segment of mobile games, which accounted for 43.1% of the 2021 total volume, according to My.Games, would be stable thanks to its diversification, and the majority of players will not change a lot, Mikhailin at Veles Capital added. My.Games, a games division of Internet company VK, said the country’s gaming market increased by 9% in 2021 to 177.4 billion rubles.

“Another problem is more complicated transactions and options of payment for the inter-game bonuses and items, which can undermine the overall payments,” he said.

My.Games said that mobile games sales increased by 14% in 2021 to 76.5 billion rubles.

Games for PCs rose by 4.2% to 85.4 billion rubles. The free-to-play (F2P) segment among PC games increased by 7% to 68.9 billion rubles. The premium segment shrank by 6% because of a small number of major releases, delayed due to the pandemic, according to My.Games.

F2P is a business model for online games in which the game designers do not charge the user or player to join the game. Instead, they hope to bring in revenue from advertisements or in-game sales, such as payment for upgrades, special abilities, special items, and expansion packs.

The market of console games grew by 8% to 15.5 billion rubles. “The main driver was the previous year’s projects and new generations of consoles, which are gradually coming to the market,” My.Games said.

Mikhailin at Veles Capital said that with games for PCs and consoles, the premium segment was the hardest hit since most of the largest producers had quit the country and ended purchases of their games in the online stores. “There are problems with payment even for the remaining games in the largest PC games store Steam,” he said.

“Options to buy games were also severed significantly for consoles, and the players have to register accounts in other countries or shop for versions on physical carriers. The F2P segment was less affected, because access to the games is mainly kept, but problems with payment can also occur.”

In 2021, Russia was the world’s fifth largest consumer of gaming content, following China, the U.S., South Korea, and Japan.

“We expect a rise of the share of consumption of gaming content by Russian gamers soon amid growth of popularity of cybersport in the country. We expect the fastest increase of sales from the cloud services, which doubled in 2021 to U.S. $1.57 billion. We think they may double this year too as this direction is gaining momentum,” Freedom Finance said.

(74.8501 rubles – U.S. $1)

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