Game developers - RBC: “No one expected Google to turn into a pumpkin”
The largest Russian video game developers told RBC about the prospects of working on a domestic game engine, the risks of monopolization of the industry and the sudden attention of the state to their business
Over the past year and a half, the Russian video game market has undergone significant changes. Almost immediately after the start of the special operation in Ukraine , almost all major publishers and developers stopped selling their games in RUSSIA, including Activision Blizzard (Call of Duty franchise), Electronic Arts (The Sims, games based on The Lord of the Rings and Harry Potter) and CD Projekt RED (The Witcher). it giants MICROSOFTand Sony, which are de facto monopolists in the console market, have stopped supplying Xbox and PlayStation, and have also limited access to their digital services for Russians. The American Valve did the same, limiting the purchase of computer games in its Steam store. In addition, some domestic development companies and publishers left Russia, including Game Insight (games Paradise Island, Airport City and Natives), Plarium (Raid: Shadow Legends and Terminator Genisys: Future War) and Nexters ( Throne Rush and Hero Wars).
In Russia, more than half of the population regularly or occasionally plays video games—about 88 million people by the end of 2022, according to the results of a study by the NAFI Analytical Center. Over the past five years, the number of players in the country, according to analysts, has tripled. In response to the sanctions, gamers began to invent workarounds for buying video games in Western stores, including providing access to foreign accounts on Avito, and also buying games on discs—their sales doubled.
In parallel with this, the authorities turned their attention to the domestic video game market . In February 2023, the Ministry of Digital Development and VK announced the launch of the development of the Russian game engine Nau Engine with a stated budget of 1 billion rubles. In April, the VKontakte press service announced the creation of the Association of Operating and Game Development Professionals (APRIORI), the members of which were VK, the Computer Sports Federation and several private companies. In August, APRIORI presented a strategy for the development of the gaming industry until 2030, in which it proposed to provide state support only to developers who will use the Nau Engine game engine. A proposal to tighten control over the industry was made by the Ministry of Economic Development, which in July prepared a bill on the labeling of video games.
CEO of Astrum Entertainment Sergei Efremov, co-founder and CEO of Lesta Games Malik Khatazhaev and founder and CEO of Cyberia Nova Alexey Koptsev spoke with RBC about the consequences of sanctions for the gaming industry, the influx of female audiences and the return of popularity of torrents.
What are the largest Russian video game developers known for?
Astrum Ent. is a Russian developer and publisher of games for computers and mobile devices, founded in 2007. The company's portfolio includes more than 20 releases. As a developer, it produces and publishes the games Warface and Allods Online, and as a publisher it collaborates, among other things, with Atomic Heart, Perfect World and Battle Teams 2. The average monthly number of unique users of the main games of Astrum Ent., according to the company’s own data, is 1 million, and the total number of registrations since the beginning of the year has exceeded 110 million. Starting from 2022, the company is also building a new holding based on the former assets of My.Games (ex-VK structure) that left Russia and developing a monetization service for game broadcasts.
Studio Lesta was founded in 1991, until 2000 it was engaged in computer graphics. In 2001, the first game “Ententa” was released. Ten years later, as a studio, Wargaming Saint Petersburg developed the naval multiplayer action game World of Warships. Currently, the Lesta Games group of companies manages the games “World of Tanks”, “World of Ships” and “Tanks Blitz” in Russia and Belarus. The total number of registered accounts on the Lesta Game Center platform exceeds 55 million. Every day, according to the company’s own data, more than 1 million people play Lesta Games games.
Cyberia Nova studio was created in Novosibirsk in 2015. In the first years, she specialized in graphics outsourcing for international companies, including Wargaming Inc. Currently he is developing the action movie “Smuta” - the first Russian video game, the development of which was funded by the Internet Development Institute (IRI). Iran's investments in the project amounted to almost 500 million rubles.
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“We had a week for emergency migration to Yandex”
— How have European and American sanctions affected your work? Have there been any problems with hardware or foreign software? If yes, how did you solve them?
Sergey Efremov : We encountered certain difficulties, since some of the significant services left Russia. Throughout the year, there was a search for alternatives, a transition to new services was carried out - mainly Russian analogues. It is clear that such large products as Photoshop, for example, have evolved over decades, and it is impossible to completely replace them. But Russian alternatives are suitable for most of our tasks. As for hardware, the countries of Southeast Asia came to the rescue. Of course, the cost has increased (by how much, Efremov does not specify. -), deliveries have slowed down: if previously a month passed from the moment of order to the moment of receipt, now you can wait up to four to six months. But by now we can say that we have solved all the problems without losing quality.
Malik Khatazhaev : The sanctions had a significant impact on us. We had established supply channels for both equipment and software. There are more than 200 items in our list of basic software alone. Many processes had to be reconfigured from scratch. In some areas, this has set us back or significantly slowed down development. But we are catching up, including finding opportunities to optimize what we would not have even touched before.
Alexey Koptsev : The key problem arose with the software. Production of “The Troubles” began with the support of Iran a year and a half before the current events. We collected references, historical sources, and necessary information. As a result, we accumulated about 2 TB of data, which we stored on GOOGLE Drive. And no one could imagine that the stable Google would begin to turn into a pumpkin. We were given a week to transfer the data; we organized an emergency migration to Yandex Cloud. Much was saved, but there were still losses. The second problem concerned office applications; we also used Google functionality. I had to change my shoes in the air and switch to a Russian-made office suite, which was much inferior in terms of convenience. I would like to believe that with Russian b2b software the situation will change for the better.
— How has the cost of video game development changed over the past year and a half? What are the dynamics of salaries in the market?
Sergey Efremov : I don’t know if it’s correct to use the word “good” in relation to this situation, but well, the CORONAVIRUS happened, which showed everyone that you can work remotely from anywhere in the world and not lose either in quality or speed of production. Therefore, even with the change in the geopolitical situation, we felt little. We still have 100% of our employees working from Russia, even if not all are located in Moscow. Developer salaries are rising in the market, but within the inflation range. The main expenses are personnel and marketing, and the share of expenses for hardware and software is relatively cheap. Therefore, we can say that the growth in development costs goes along with inflation. There have been no global changes to the extent that yesterday a game cost $1 million, and today the same game costs $2 million.
Malik Khatazhaev : The cost of game development in Russia is growing in direct proportion to the increase in employee salaries, since our main cost item has always been payroll. You need to understand that, although salaries in our industry have always been high, at the global level, development in Russia has become cheaper. This is a dangerous situation that could lead to Russia turning into a “country of outsourcers.” It is important to prevent this from happening. As for the dynamics of salaries, they have remained virtually unchanged in DOLLAR terms over the past year and a half.
Alexey Koptsev : Now is the time when it is very good to work not on high-budget projects, but on indie products, “garage stories.” Let me give you the example of Minecraft (a minimalistic sandbox game, one of the best-selling games with an audience of 140 million) - this is a pure “garage product” that didn’t even have marketing. It was eventually sold to Microsoft for billions. Now developers have a unique opportunity to make a cool game for little money . The audience is overfed with super graphics. In addition, a significant part of the players are children . And children play not in Elden Ring (received several industry awards as the best game of 2022 -), but in Granny Granny - this is a horror hide-and-seek game with absolutely monstrous graphics, but that’s exactly what the user likes.
“We are inside a closed box, and we can only dream about Steam”
— Do Russian development companies now have the opportunity to cooperate with Western video game stores? Do they put forward any special conditions for cooperation?
Sergey Efremov : Everyone understands that in the current realities it is impossible for a Russian legal entity to work directly with the West. Against this background, some developers left Russia, some began to actively work with Russian stores, and some have already managed to leave and return.
Malik Khatazhaev : There are no restrictions on cooperation specifically on territorial or national grounds: technically, Russian developers can place their game on any platform. Another thing is that there are many restrictions on making payments. Most banks in Russia are disconnected from the SWIFT system; using third-party services or infrastructure is also problematic, so it is almost impossible to transfer user payments to Russia.
Alexey Koptsev : Initially it was assumed that “The Troubles” would be made for the world market, that there would be an option to play not only for the militias, for example, but also for the Poles and so on. But what happened happened, and we found ourselves inside a certain closed box. And in the near future we can only dream of placement on Steam (the largest online service for digital distribution of computer games. —). I don't know what their position really is.
— What are the current key distribution channels for video games in Russia?
Sergey Efremov : VK Play, obviously. Now this is the largest platform on the Russian market, and I do not see any prospects for other players to compete with it in the coming years. In addition, our products are placed in RuStore. As for physical media, with the development of digital distribution, games on discs are purchased only by collectors or in cases of gift editions, as was the case with Atomic Heart, for example.
Malik Khatazhaev : I would name VK Play, RuStore, HUAWEI Store, AG.ru, plus their own platforms or launch centers for publishing companies. In addition, over the past year and a half, a game distribution channel that was almost forgotten in Russia, such as piracy, has grown significantly. If in 2021 the illegal trade in games accounted for no more than 8% of the market, now, according to surveys whose data we trust, it is already more than 18%, that is, a fifth of us are in the gray zone. Torrents, fake accounts, “folk translations” and other specifics of the early 2000s are back in trend.
Alexey Koptsev : Here you can remember mobile stores, but they are irrelevant for us. For now I can only talk about VK Play.
“It is impossible for an ordinary person to reach the Chinese heavens”
— Are you exploring Asian markets, CHINA , Turkey, India? Do you localize your projects there? What difficulties does this involve?
Sergey Efremov : Entering the Chinese market is an extremely complex maneuver. To bring a product there, you need to obtain a special ISBN license. But at the same time, there is an order from the President of Russia regarding entering the markets of the BRICS countries. Government participation will make expansion easier. Nevertheless, when entering the Chinese market specifically, Russian developers need to keep in mind the potential problem of localization, not only financial, but also technical. Since they write in hieroglyphs, their interfaces are short, and where they have half a line, we have a page of text. Therefore, adapting the game for the Chinese market will require modifications to the interface of any Russian product: for a shooter with few words, this will cost several hundred thousand dollars; for a complex multiplayer game the price tag will be much higher.
Malik Khatazhaev : Over the 30 years of our existence, we have been localizing our projects around the world, including the listed regions. We manage current games only in Russia and Belarus. But we are going to launch the Royal Quest game and other projects that have not yet been announced to all available markets. The main difficulty is the high cost of the examination. Determining the target audience of the game, finding out its interests and preferences, clarifying the key features of the region and adapting to them, making a high-quality translation, that is, going through the full localization cycle, is not cheap.
Alexey Koptsev: There is an interesting market in the Middle East, MENA countries. They have an interesting feature: they are ready to take our old products that have already lived their lives on the international market. It’s more difficult with China, because there is government regulation of games. It is impossible for an ordinary person to reach the Chinese heavens. But I don’t see any technical or cultural problems with localization there. Remember “The Dawns Here Are Quiet”: the Chinese liked this film so much that they even made their own TV series based on it. The Chinese, Japanese, like Russians, are very sentimental, unlike Europeans. So I think Troubles will have a chance in these markets. At the center of our story there will be a romantic line: the young prince Yuri Miloslavsky, trying to protect his love, noblewoman Anastasia Kruchina-Shalonskaya, finds himself drawn into geopolitical strife. He starts out as a man sworn to the Polish cross, and ends as an active participant in the second militia, a national liberator. And such a romantic story of a hero-liberator will be close to an Asian person.
“If the VK engine is a monopoly, we will get a “brain drain”
— Do you see any prospects for the game engine being developed by VK? Will you be ready to use it in your work as a full-fledged analogue of foreign ones?
Sergey Efremov : Let's start from afar: the appearance of your own engine in itself is very cool, because there are only a few of them in the whole world. Then you need to look at what happens: how effective it is, how good it is on different devices, how fully it suits specific tasks. For example, Unity was originally created as a multi-platform engine. For others, the emphasis was on visualization. They all have some specification in one way or another.
In general, a good engine takes a long time to make. On the other hand, the world has accumulated a huge amount of developments, open-source solutions that can be competently refined and implemented. In any case, we will look at economic feasibility.
Malik Khatazhaev: The engine developers themselves should see the prospects; it’s difficult for us to judge them without knowing what’s “under the hood.” When deciding to use a particular engine, we take into account a large number of factors: the presence of programmers in the team who are familiar with the engine, the ability to optimize and refine the functionality with our own hands, the level of additional services. There will be a good engine - we can consider the possibility of developing one of the following projects on it. This is not relevant for us yet. The current projects we operate are developed on proprietary (which is the private property of the authors or copyright holders. -) or open-source engines. The projects that are currently in development have already gone far ahead from the moment the engine was selected. We will make the next such decision no earlier than in a few years.
Developing your own engine that external developers can use is a very resource-intensive process. Import substitution and the transition to our own technologies are necessary, but it is necessary that the market receive at least a full-fledged analogue of one of the popular engines, capable of competing with well-known products in terms of functionality. The engine should not be forced under any circumstances. Trying to quickly replace Western analogues, without alternatively supporting the engine from VK or some other one, the state risks throwing back the game development industry and other software decades ago. In an area such as ITAnd specifically in game development, healthy competition and a constant search for new solutions are vital - and there is a risk that a state-backed monopoly developer simply will not conduct expensive research. Why invest in R&D if your engine is the only one on the market and everyone who wants to develop games in Russia must use it? If the decision on a monopoly is made, we will get a new wave of “brain drain”.
Alexey Koptsev : The main thing now is not to lose enthusiasm. I don't want to be a leavened patriot. I am ready to actively participate in the development of this engine and popularize it. But we'll see what happens in the end. In technical terms, Cyberia Nova has quite a lot of people on its staff who worked at Wargaming, and this team had experience moving to another engine, which could be useful to us.
— Have new restrictions on the demonstration and propaganda of LGBT people affected the industry? What effect do you expect from another amendment currently being discussed regarding video game labeling?
Sergey Efremov : I haven’t heard that the amendments to the law on LGBT have affected anyone in the industry. As for labeling, we need to look at the proposed text of the law. There's a lot to work on there. There are, for example, multiplayer games, and they can be very difficult to analyze and evaluate using uniform labeling criteria. It is difficult to legislate such things into law. There must be an individual approach.
Malik Khatazhaev : Restrictions on the demonstration and propaganda of LGBT people did not affect our projects in any way. As for the amendment on age labeling, this is now a vivid example of dialogue between the state and business. Previously, we were glad that the state simply did not pay attention to us, but times have changed. The discussed option, in which labeling in Russia will practically not differ from world practices, does not scare us. The main thing is that government regulation in any form - an amendment or something else - does not turn into a field for abuse, be it punitive actions ordered by competitors or simply corruption.
Alexey Koptsev : It is clear that we are civilized people. Despite the fact that I sometimes wear a blouse, I am fine with people having different preferences. I'll laugh it off by saying that no gays were seen in the Troubles. As for labeling, I, as a father of two boys, find this novel useful: responsible parents need to be given some kind of tool so that they can make responsible decisions. The main thing is that it is a regulation, a recommendation, and not a ban. For “Smoots,” for example, the label will definitely be below “18+.”
“The state must resolve the issue of personnel training”
— What actions, in your opinion, should the authorities and the relevant ministry take to support the industry? Does state participation in an industry that previously developed completely independently and freely help or rather hinder?
Sergey Efremov : It doesn’t interfere, that’s for sure. I would say that the most correct approach has now been chosen: the industry needs standards. Standards for the release of games, approach to visuals, selection of a product that enters the Russian market: if a game is for children, there cannot be violence in it, for example. The state, as one of the holders of the entire system, cannot but participate in the regulatory process. The authorities have paid attention to the gaming industry before. It’s just that lately we have become more open, the audience has grown. The same Atomic Heart, which “sounds from every iron.” More and more people are paying attention to games, studying this area, and changing their attitude towards it. It is no longer a strange entertainment for teenagers, but a respected leisure activity.
Malik Khatazhaev : Firstly, the authorities must take care of a high level of competition in the game development market. Secondly, the state should help with the entry of Russian games into foreign markets. It will be enough for large companies to ensure the loyalty of banks of friendly countries: in the current situation this is one of the main limiting factors. Small studios require a comprehensive package - benefits, financing, legal and administrative support .
Alexey Koptsev : Our main problem is with specialized education. If everything is clear with programmers, plus or minus, then who exactly are, for example, game designers from the point of view of academic specialists? And the state must resolve the issue of personnel training. And one more point, which is now practically undeveloped, is the creation of technology parks for developers like Skolkovo or the Kazan Technology Park. It is on such campuses that the creative process takes place most effectively.
“Gamers have a request for retrofuturism”
— How have audience demands changed over the past year? What is the most popular now?
Sergey Efremov : MMORPGs (multiplayer online role-playing games. -) have been popular and remain so, the demand for them relative to other genres is even growing.
Malik Khatazhaev : There was a request for retrofuturism. There is a larger female audience, even in our brutal projects. Some studies show that the video game audience is already almost 50% girls.
Alexey Koptsev : Who would have imagined that the classic RPG (role-playing game. -) Baldur's Gate 3 (developed by the Belgian Larian Studios, based on the board game “Dungeons and Dragons”, became the second most popular game of 2023 on Steam after Hogwarts Legacy) would become super popular . — )? I played similar games when I was young. And now modern youth have returned to their roots and are asking for more.
— What is your assessment of the video game market in Russia, how has it changed recently?
Sergey Efremov : The latest external estimate of the Russian games market for 2021 is $2 billion. According to our data, in 2022 the Russian market decreased to $1.4–1.6 billion. Of this, 30% were for mobile games, 66% for PCs , 3.5% - on the console.
Malik Khatazhaev : Buying games in Russia has become more difficult, so overall the market has fallen. The most noticeable drop is in the console direction: its weight was already small, but has now been reduced to a minimum and is probably estimated in tens of millions of rubles.
Alexey Koptsev : In 2022, we objectively reached the bottom. We are now starting to climb. It is difficult to say how this is expressed in numbers. An anecdote about an optimist with a glass of water comes to mind: I can definitely say that some vessel is full, but I don’t know whether it’s a glass or a decanter.
— What is your forecast about the size of the Russian video game market at the end of the year?
Sergey Efremov : The market this year has not decreased significantly; rather, it has been redistributed between Russian stores and alternative ways of purchasing games abroad.
Malik Khatazhaev : The final figure of the video game market in Russia by the end of the year, according to our estimates, will be about 100 billion rubles. cumulatively across all platforms and methods of game distribution.
Alexey Koptsev : It’s difficult to predict anything; there are a lot of “black swans” ahead. We see positive dynamics, we see new developments, but when they will take off is an open question.