Russia has a large video game market with over 141 million people, but piracy has limited the legitimate market. However, the market is growing rapidly due to digital distribution, free-to-play games, and companies lowering prices. By 2016, the Russian game market is projected to reach $1.5 billion. Gamers prefer PC and social games, and payment is mainly done through cash-based eWallets or transfers due to credit card fraud concerns. The market has potential for further growth in ecommerce, social, and free-to-play games as incomes rise and piracy declines.

1. BRIC Video Games Markets
Market Data & Demographics
By Philip Driver
Part 2 - Russia
A nation of gamers waiting for the right model?

2. 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, the
legitimate market for games has been very limited. However, with digital
distribution and companies remodeling their pricing structures coupled with the
new free-to-play business model, Russia and other countries in Common
Wealth of Independent States (CIS) are experiencing huge growth.
According to a report from research firm DFC Intelligence, the Russian game
market will reach $1.5 billion by 2016.

3. 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 2011
Trillion
3.77 4.53 5.64 7.04 8.69 10.76 19.07
RUB

4. Russia GDP vs. BRIC Regions

5. BRIC Internet Usage Comparison

6. 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)

7. Russian Internet Population Mix

8. 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.

9. 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 Software's highest-grossing countries, says co-founder
Gabe Newell. Indeed, outside of Germany, adds Newell, it is Valve's largest
continental European market.

10. 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

11. 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.

12. 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.

13. 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.

14. 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.

15. 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

16. Russian Games Market
> Changes to the segmental structure of the online games
market in Russia, 2008 – 2011

17. 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 Developer's
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 Russia's leading event of the type
> http://www.rgdconf.com

18. 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

19. Russian Gamer Stats – newzoo survey

20. 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.

22. In key growth markets, like Russia, India, and Mexico, cash-based
payment options are still king.

23. Russian Payment Methods

24. Social Gamer Payments

25. 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.

26. 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).

27. 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).

28. Russia – Marketing Strategy & Demographics

29. Russia Regional Diversity
Russia has nine time zones, a huge mix of people,
languages, religions, buying habits, per-capita
incomes and distribution infrastructures.

30. 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

32. 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

33. BRIC Social Comparison
Traditional “Western” social media has poor market penetration in Russia

34. 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.

35. 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).

36. Russian Social Media

37. 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.

38. Russian Social Media - Gaming

39. Russian Ecommerce
> The market is growing by at least
25% each year; some major online
retailers are even seeing their
sales double or triple.

40. Most Popular Sites in Russia
> 1. Yandex.ru Search Engine Market Share
> Yandex 68.3%
> 2. Google.ru
> Google 23.33%
> 3. Mail.ru
> Rambler 7.7%
> 4. Google.com
> Bing 1.35%
> 5. Vkontakte.ru
> Aport 0.16%
> 6. Youtube.com
> 7. Facebook.com
> 8. Wikipedia.org
> 9. Livejournal.com
> 10. Odnoklassnikl.ru

44. Russia Advertising Spending

45. 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€

46. Yandex Advertising

49. vKontakte
> PPC and CPM models
> Ability to Target
> Location
> Interests
> Demographic
> Set up fan pages
> Supports creating social applications similar to Facebook.

50. Desktop Browsers - Russia

51. Mobile Browsers

52. 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.

53. Russia Mobile Landscape
> Russia leads Europe for listening to music on smartphones.
> Source: Our Mobile Planet, Oct 2011

54. 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

55. 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.

56. 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

57. Game Over
About the Author: Philip Driver is a digital distribution, online retail and marketing expert specialising in the
field of video games.
A video games industry veteran of nearly ten years he lives in the UK and finds that having children really gets
in the way of playing Skyrim.
You can follow him on Twitter http://twitter.com/PobiWan
Linkedin http://uk.linkedin.com/pub/philip-driver/14/538/b16

58. 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