BRIC Video Games Markets Market Data & Demographics By Philip Driver Part 2 - RussiaA nation of gamers waiting for the right model?
Russia > Capital: Moscow > Currency: Russian Ruble > Language: Russian > Population: 141,930,000 (2011) > GDP: $1.85 trillion USD (2011)Russia has a huge appetite for video games but due to high rates of piracy, thelegitimate market for games has been very limited. However, with digitaldistribution and companies remodeling their pricing structures coupled with thenew free-to-play business model, Russia and other countries in CommonWealth of Independent States (CIS) are experiencing huge growth.According to a report from research firm DFC Intelligence, the Russian gamemarket will reach $1.5 billion by 2016.
Russian Economy > Russian retail sales rose by 7.2 percent in 2011 to 19.075 trillion rubles ($621.34 billion) compared to a 6.3 percent increase in 2010. > In 2010, Russia had the highest gross domestic product (GDP) per capita out of all BRIC markets, meaning that Russian consumers have more money to spend than those in other BRIC economies > Russian online retailing was estimated to reach $8bn, accounting for 1.6% of the total retail turnover by the end of 2010. By 2015, the volume of online retail in Russia will grow by 150% to reach $20bn, with 13-15 million Russians buying goods on the web at a monthly rate of $1.7bn. > The economy of Russia is the ninth largest economy in the world by nominal value and the sixth largest by purchasing power parity (PPP) Russian Retail Sales Year 2002 2003 2004 2005 2006 2007 2011Trillion 3.77 4.53 5.64 7.04 8.69 10.76 19.07 RUB
Russia Internet Usage > Russia is the largest internet market by population in Europe. > Internet Penetration is approx. 45% > Internet penetration in urban Russia has reached 57% but 65% have a computer at home. > The number is expected to reach 67.9 million users by 2012 (49.2% of population)
Urban Russian Internet Usage PC, Internet, and Broadband adoption. PC and Internet adoption in urban Russia among younger consumers is on the same level as in Western Europe.
Russian Games Landscape > Publishers with a local office > 1C Company > Wargaming.net > Disney Interactive Studios > Electronic Arts > Microsoft > Sony Computer Entertainment > Nintendo > Video Games Landscape Traditionally, the bulk of sales have come from the PC market, but the growing popularity of online and browser games means more people are buying console games than before, although PC is still No.1. “Console gaming showed increasingly good dynamics with both PS3 and Xbox 360 consoles reaching an installed base of 500,000. But Russia still remains mostly a PC territory.” (MCV Factfile) Russia is one of Valve Softwares highest-grossing countries, says co-founder Gabe Newell. Indeed, outside of Germany, adds Newell, it is Valves largest continental European market.
Video Games Russia > A high proportion of pirated production and illegally downloaded content makes assessment of the market of computer games more complicated. For PC games, the piracy rate in Russia is estimated at over 70%. > Russian retail market still dominated by PC Games with an approx. 80% market share. > The average high street cost of a PC game is $15 with the average cost of a console game $70. > In 2011 social games reached 20% of the total market for online games. 2010 > Russian market for video games is the largest in Central and Eastern Europe ($ 1 billion in 2010) > In terms of online gaming, Russia ranks second in the EMEA Region
Video Games Russia - Sectors > The highest growth has been in social games, which accounted for $80 million in 2010. > Online games and game for consoles are also actively developing.
Gamer Demographics > PC Games the most popular in Russia > Followed closely by Social and Mobile > Console games have poor penetration due to costs compared to other formats.
Online Games > The major recent change for this space was the formation of Mail.ru Group > Currently there is little competition in the Russian market for online games > Leading Western companies consider the Russian online gaming market very promising and are actively introducing their projects. > Online games in Russia are expected to see rapid growth over the next 5 years > Many global games are already seeing huge numbers of usage in the region. > World of Warcraft, World of Tanks, League of Legends.
Mail.ru Group > Mail.Ru Games is the leader of the interactive entertainment market in Eastern Europe, uniting the best developers of client and browser-based MMOs as well as games for social networks and mobile devices. > Mail.Ru Games’ portfolio consists of more than 70 online games, including a series of smash-hits developed in-house like Legend: Legacy of the Dragons, Allods Online and Lovely Farm along with the popular foreign online blockbusters - Perfect World, Lord of the Rings Online, Warface and others.
Case Study – World of Tanks > World of Tanks was released on April 12, 2010 in Russia. > Created by Wargaming.net a strategy game developer operating since 1998 from Belarus. > On October 4th, 2012, the game reached 40 million registered users, with record-breaking 500,000 concurrent players online on one server based in Countries Russia. Russia China > Wargaming makes money when gamers buy extras. EU For example, it costs 20c to outfit a tank with “desert North America camouflage.” Singapore Vietnam > Generating "double digit" million dollar revenues a month, according to Wargaming CEO Victor Kislyi. > 25-30% Payment ratio. > Article “World of Tanks monthly revs hitting "double digit" millions” gamesindustry.biz
Russian Games Market > Changes to the segmental structure of the online games market in Russia, 2008 – 2011
Local Governing Bodies and Organisations > RADiT - Russian Association of Developers and publishers of Game Industry and Interactive Technologies (RADIT) was established in 2010. > http://www.radit.ru/ > All-Russian Conference on Game Industry - Event devoted to game industry development with focus on online games (browser games, client based games, games for social networks) > http://www.acgirussia.com/ > KRI Conference - Russian Game Developers Conference, or KRI, is an annual professional event devoted to game development, publishing and distribution. Since its inception in 2003, KRI has quickly established as Russias leading event of the type > http://www.rgdconf.com
Russian Pricing Strategy > Localised Pricing – 30% or more lower than EMEA > Russian users now used to paying much less than European counterparts. > This is mainly due to lower disposable income but also to help combat rampant piracy rates. EMEA Price RU PRICE 59.99 EUR = 2,464 RUB 1,499 RUB = 36.48 EUR
Russian Gamer Stats – newzoo survey > Gamers play on average across 4.7 platforms (casual, PC, mobile) > 2,800,000 Playing social gamers use text messaging to pay. > 69% of game time spent on online or mobile games. > 39% of MMO gamers owns a Nokia phone.
In key growth markets, like Russia, India, and Mexico, cash-basedpayment options are still king.
Payments > Strong preference for cash (eWallets) or transfer payments. > Phone (text) payments popular for social games. > Russians used to paying utility bills in cash via a kiosk. > Rampant credit card fraud makes online purchasers extremely cautious. > All of Russia’s top eWallets services, QIWI, Yandex and WebMoney, offer cash kiosks where gamers can submit payments to specific properties or top-off a general usage account.
Games Monetisation > Russia 6th for MMO payments > 26% of social gamers also paying gamers. > Russia has a strong hardcore player base which is more prone to targeted purchases of high-value productions (AAA MMORPG’s and downloads).
Russian Gaming AOV Players from emerging countries have a lower purchasing power which is reflected in their average spend per purchase (25% less than American players on average).
Russia Regional DiversityRussia has nine time zones, a huge mix of people,languages, religions, buying habits, per-capitaincomes and distribution infrastructures.
Russia Regional Diversity > Central Region (including Moscow) represents 31% of Russia’s online population. > Three-quarters of Russians live in urban areas, these individuals generally have a higher spending capacity and positive attitude to technology (including games).> The profile of Russian consumers varies greatly by age and region
Online Video Usage in Russia > 42.3m Russian users aged 15+ viewed a video in August 2011 > Russian users watched over 4.2 billion videos during August 2011 > The average viewer spent 12 hrs watching online video in July 2011 and watched 101 videos > 51% of the Russian viewers are female, but they only consume 44% of the videos > Users aged 15-24 account for 32% of viewers and 40% of all videos viewed
BRIC Social ComparisonTraditional “Western” social media has poor market penetration in Russia
Russian Social Media > Russians are the heaviest social networkers worldwide in terms of time spent per user. Source ComScore > In August 2010, 34.5 million Russian internet users (74.5 percent of the online population) visited at least one social networking site. With an average of 9.8 hours per visitor during the month, more than double the worldwide average of 4.5 hours.
Russian Social Media> vKontakte > Reach and engagement: 23.4 million users (54.2% of the Russian online population), 20 minutes average daily duration (Source: TNS-Aug 2011)> Facebook > Reach and engagement: 10.7 million users (24.7% of the Russian online population), 3 minutes average daily duration (Source: TNS-Aug 2011)> Odnoklassniki > Reach and engagement: 16.5 million users (38.1% of the Russian online population), 25 minutes average daily duration (Source: TNS-Aug 2011).> MoiMir > Reach and engagement: 18.9 million users (43.8% of the Russian online population), 9 minutes average daily duration (Source: TNS-Aug 2011).> Twitter > Research by Yandex in July 2011 indicated that only 6.4% of Russian Twitter accounts were active on a daily basis (vs. 60% in March 2010).
Russian Social Media - Gaming > The number of games in Russian social networks is rapidly growing > In 2011 the market share of online social games reached 20% > Due to the social nature of Russian internet use this segment is expected to be a major source of continued growth. > According to Mail.Ru Games, in 2011, the total social gaming market in Russia reached 236 million dollars, which is 180 percent higher than in 2010. > The leading network by number of installed games is Odnoklassniki with 493 million installations (according to AppData.ru). Another popular Russian social network Vkontakte ranks second with 398 million installations, while My World@Mail.Ru lands on the third place with 280 million installations.
Yandex Advertising > Yandex Direct > Pay per click advertising > Similar to Adwords > Allows accurate geo-targeting. > Yandex BaYan > Banner Ads > Yandex Catalog > Russian Directory > Similar to Yahoo/Dmoz > Free to list > Extra paid option 130€
Russia Mobile Landscape > Mobile phone penetration in Russia is over 95% > 12% of Russians have more than one phone. > Most mobile phones are pay-as-you-go: 94% use this type of payment, compared with 46% in Western Europe. > Mobile Internet adoption in urban Russia is on the same level with that in Western Europe. > Around one in five urban Russians regularly accesses the Internet on a mobile phone this number increases among urban Russians who also use a PC: 30% say that they regularly use their mobile phones to access the Internet.
Russia Mobile Landscape > Russia leads Europe for listening to music on smartphones. > Source: Our Mobile Planet, Oct 2011
Russia Mobile Commerce > Currently due to restrictive pricing plans most users do not spend large amounts of time online via their phones. > Rostelecom recently won the majority of the 4th generation wireless network licenses in Russia and had been given 18 months by the government to implement a 4g infrastructure. > Russian market for mobile games > last year mobile content market grew to nearly $ 1.8 billion > Market for mobile applications in 2011 reached total volume of $355 million > Most popular among users are games and entertainment - they account for 44% of downloads > The exciting new trend in the 2011 market was increase in sales of applications, purchased in AppStore and Android Market, accounting for $ 170 million
User Reviews > Reviews are major influencers of user behaviour in Russia. Blogging is still a major contributor to Russia’s digital landscape with many users relying on information from these sources.
Russia Video Games Market Conclusions > Growing market with further potential for ecommerce, social and free to play. > Increasingly higher disposable incomes and a growing middle class. > Gamer culture and one of the few regions with a balanced gaming gender split. > Majority PC Market. > Piracy barrier to standard entry but Free to play and online models readily accepted and profitable. > Local payment methods a must. > No established major high street retailers. > Good urban internet penetration and technologically “savvy” users. > Russians highly internet social and enjoy creating their own content. > Strong affinity for quality brands. > Already a top locale in EMEA for digital distributors – Steam, Origin. > Key marketing areas > Social > Mobile > Yandex
Game OverAbout the Author: Philip Driver is a digital distribution, online retail and marketing expert specialising in thefield of video games.A video games industry veteran of nearly ten years he lives in the UK and finds that having children really getsin the way of playing Skyrim.You can follow him on Twitter http://twitter.com/PobiWanLinkedin http://uk.linkedin.com/pub/philip-driver/14/538/b16
References & Resources• The Gamer is always right – White Paper – www.superdataresearch.com• Monetizing Emerging Games’ Markets – Global Collect/Newzoo• An Introduction To The Russian Consumer – Forrester Research• European Internet Statistics Compendium – Econsultancy• Computer game market in Russia – Cursor• The future of Internet Advertising – ComScore• Ecommerce in Russia – East-West Digital News• From Russia with Web – The Runet• Gunning For Russia: A Market Worth Investigating? – Gamasutra• MCV Country Factfile• Gamesindustry.biz• PC Gamer• IAB Russia• Google• Wikipedia