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Russia is one of Valve Software's highest-grossing countries, says co-founder Gabe Newell. Indeed, outside of Germany, adds Newell, it is Valve's largest continental European market.
Russia? Is it really worth jumping some hurdles to penetrate that marketplace? Apparently, yes, according to those in the know. They enthusiastically recommend to developers -- especially those in the PC space -- that they consider putting in the extra effort to sell there.
"Russia is just like Germany -- a very PC-oriented game market that is today behaving a bit like an emerging market, like Brazil," says Peter Warman, co-founder and CEO of NewZoo, a Netherlands-based market research and consulting firm focused on the games industry.
"People there love PC games, especially free-to-play (F2P) games. So if you're in that sector, there's practically a guarantee of success. If you're in a different market, Russia may not be as interesting for you."
Warman estimates that there are almost 40 million gamers in Russia -- compared to a total population of about 140 million -- with about 25 million actually spending money on their gaming.
According to his research, 47 percent spend on boxed PC or Mac games, 36 percent on console games, 35 percent on MMOs, 29 percent on downloaded PC or Mac games, 26 percent on social network games, 24 percent on casual games, and 23 percent spend on mobile games. (The average Russian plays in 4.7 of these segments.)
And while only 50 to 60 million Russians have internet access, that is expected to increase to 80 million in the near future, creating a high potential for game market growth from the current size of the marketplace, which is about $1.5 billion (including an estimated $210 million spent on game downloads).
"High-quality PC games appeal to Russian gamers, regardless whether they are boxed games, downloadable, or played in a browser," says Warman.
But because many of those gamers don't have the budget -- or don't want to spend their money upfront -- free-to-play MMOs have a particular appeal because the gamers can start for free, and then either spend a little more on microtransactions or, according to Warman, "shell out ridiculously high amounts."
"Just as Russia is divided into really poor people and those who drive around in Ferraris -- with few people in the middle -- there is a big divide in gaming between those who spend nothing and a small group -- perhaps 10 percent -- who go over the top and can spend $5,000 a month within a F2P game," he explains. "It's obviously important to discover that very specific niche that caters to that latter group. You can see that reflected in, for example, the success of Wargaming.net's World of Tanks. That's why that game is making such a huge amount of money."
World of Tanks
What developers ought to avoid in Russia, says Warman, is the console space, which is extremely small and which attracts the most piracy, a problem for which Russia is well-known.
Indeed, according to Warman, 72 percent of Russian gamers admit to ever having used online file sharing to acquire PC and Mac games for free, which is the highest percentage in the world, compared to 64 percent in Brazil, 37 percent in France, 35 percent in the U.S., 30 percent in the U.K., and 22 percent in Germany.
"That is one reason why the local developers and publishers have embraced the F2P business model where piracy, of course, isn't a big issue," he says.
Warman also recommends releasing games in Russia and elsewhere simultaneously. Otherwise, he says, Russian gamers get wind of a game they don't have in their country and they seek it out and download it from a file sharing site.
"Russia's hardcore gamers are fanatics about having the newest, coolest stuff first," he explains, "and if it's not readily available to them, they'll find it someplace."
This is just what Newell said. "The people who are telling you that Russians pirate everything are the people who wait six months to localize their product into Russian. The easiest way to stop piracy is not by putting anti-piracy technology to work. It's by giving those people a service that's better than what they're receiving from the pirates."