On the brink of rapid growth

Profit from marketing in Russian online games is no higher than 1% of the total volume, but this figure is likely to multiply as soon as the audience becomes bigger, according to Kommersant-Money magazine.

The most popular American online game World of Warcraft, developed by Blizzard, annually receives over $1 billion from its 8 million regular users. The total amount gamers spend playing online, paying for registration, and spending money within the games, was over $32 billion in 2006. According to Strategy Analytics research company, the online game market profits will continue to grow by an annual 25% reaching $11.5 billion by 2011.

The Russian online gaming market is developing and growing three times faster than the worldwide average. Its turnover volume tripled in the past three years and have reached $60-80 million in 2007. According to Sergei Orlovskiy, president of Nival Online, the growth rate of online gaming market in Russia is “close to 100% annually”. According to Google, there were more searches for online games than for free content downloads or online dating websites.

There are many reasons for growth of this market and potential profits from advertisement in online games. The internet is increasingly expanding into the regions, and internet users are even more willing to pay for online entertainment than they can afford. According to one game developer GD Team, there are over 5 million Russian registered accounts in online games. 10 percent of that figure are active users who play at least once a month. According to Evgeniy Maurus, director of “Guru” corporation, 500 thousand Russians constantly play free online games, and almost 200 thousand are paid users on foreign servers.

The share of browser games is about 60% of the total Russian online-digital entertainment market. These games don’t require to download any clients and can work on almost any computer. 90 percent of Russian online gamers prefer to play browser games. The market for client games is not developed. Russian players prefer popular foreign games like World of Warcraft, LineAge 2, and Everquest 2.

Despite this, the sum total of payments in Russia’s most popular browser game “Boitsovsky Club” reach $1.2 million per year, estimates Oleg Pokrovsky, director of development at “Tsentr internet-platezhei” company. About $1 million is spent on “Legenda: Naslediye Drakona”, and about $700-800 thousand in “Arena Online”, “Berserk”, and “Timezero.”

When talking about perspective, people in the industry say that the coming year will be full of new launches and localizations of client games. “World of Warcraft” will be localized, and is likely to attract client gamers not only in Russia but in other CIS countries. The leading online game developer Nival Online is launching “Allody Online” in 2009, which will be the most expensive client project in the history of Russian games.

According to Nival Online, gamers’ purchasing power will grow annually by 30 percent, and the number of gamers by 60 to 70%. Therefore, the advertisement profits are also going to rise. Right now the profit margin is only 1% of the total volume, but as the audience grows, this number is likely to grow dramatically.

“Somewhere in the more distant future, there are likely to be mergers, gaming IPOs, and greater development of advertisement capabilities,” says Ruslan Shelekhov, GD Team’s development director. He says that “developers learn to make a profit on the gamers by creating an environment where gamers want to spend money” (for example paid possibilities to grow the character, purchase his equipment and armaments, etc.) “Two years ago we received about $1 per player, now it’s $2-3 dollars,” says Shelekhov, adding that “only 10 to 20 percent of gamers in free browser games end up paying at all.” “In reality, active users spend about $20-30 per month in client games, and only $2-3 in browser games,” he concludes.


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