Richie Shoemaker questions MY.GAMES’ CEO Vladimir Nikolsky about cutting ties with Russia and the future beyond its borders.
In the immediacy of the invasion of Ukraine there seemed to be an expunging of the R-word word from certain wikis and company websites, while headquarters proudly ascribed to Moscow and St. Petersburg were quietly relocated to Cyprus with just a few stealthy edits. It caused some of the industry’s more cynical observers to assume Russian-aligned studios and publishers were – understandably – attempting to avoid association with the machinations of the Motherland while they figured out a long-term plan to deal with a collective identity crisis.
For the Russian publisher MY.GAMES things were simultaneously easier and more difficult. Easier because even before its founding (when it was known as My.Com) it had long been established in Amsterdam and had already begun the process of breaking away from its parent organisation to afford it a more global outlook. More difficult because that parent was Mail.ru, the tech company behind social media giant VK, which just a few months before the invasion had effectively been put under state supervision when a controlling stake was bought by “Putin’s banker” Sergei Pugachev.
Reportedly to avoid sanction, last year VK (nee Mail.ru) sold MY.GAMES for $642 million to entrepreneur Aleksander Chachava, who for years had set himself up as an investor in outward-looking Russian tech startups. Then, a few weeks later in December, the plan was announced that MY.GAMES was to sever all links with Russia: While a new company, Astrum Entainment, would take over Russian interests, MY.GAMES would be free to focus “solely on international business development”.
The effort was to be headed up by Vladimir Nikolskiy, who as Mail.ru’s long-serving COO and VP of games had co-founded MY.GAMES in 2019. Six months on, the divestment process has seen MY.GAMES open up across Europe. In addition to its main offices in Amsterdam and Cyprus, outposts have sprung up in Georgia, Serbia and Armenia. In addition, studios have been acquired in Portugal and Switzerland. Warface, the company’s flagship game in Russia, was recently forked and is set for a relaunch and a new name to reflect a broader global audience.
MY.GAMES has always seen itself as a European global publisher. What events in Ukraine have done is force the company to stand on its own two feet, perhaps earlier than was initially intended. How it has achieved this and to what extent was what we were eager to find out.
How has the Russian development community been affected by events in Ukraine?
It has certainly had a significant impact on the community, causing many professionals to uproot their lives and their families to relocate to a safer location. Literally all the game publishers with exposure to the region have been supportive in helping their staff adapt. MY.GAMES exited the Russian market and ceased all its operations there, and we have done a lot to minimise the stress of the relocation process for our employees, with our existing distributed workplace setup making that transition as smooth as possible.
A number of Russian games publishers have been leaning on their Cyprus links to avoid obvious associations with Russia, whereas MY.GAMES seems able to recognise its roots but wants to make a clean break – is that an accurate characterisation of the situation?
Yes, that’s fair. MY.GAMES has been adopting a more globally-focused strategy for many years now, with our main HQ in the Netherlands, and with our Cyprus office having opened several years ago. While we’re able to acknowledge where we came from initially, our position, focus, and presence have long been elsewhere. International development has been our focus for the last seven years. With the announcement of MY.GAMES’ restructuring efforts to cease operations, revenue, and ties in Russia in December 2022, a lot of work has gone into the transition over the following months. Behind the scenes, our goal has been to preserve the wellbeing of users, partners, and others involved.
At what point did the realisation dawn that it was necessary to exit the Russian market, given the huge challenges it would entail? What were the other options?
The decision to cease MY.GAMES’ operations in Russia was a complex but necessary undertaking to continue our global growth. As I mentioned earlier, a lot of work went on behind the scenes to make this happen. A few years ago, we were considering different options for the development of our international expansion, but our priority has always been to offer top-quality titles to gamers worldwide, and support promising and talented game developers around the globe.
Prior to announcing the divestment, MY.GAMES quietly ceased publishing Farm 51’s FPS World War 3. Can you explain what happened there?
We collaborated closely with The Farm 51 studio to bring World War 3 to the CBT stage. As the game entered a new phase, Farm 51 started working with a new partner who appreciates the potential of the product and we wish the team continued success.
In business terms, to divest implies the loss of peripheral or underperforming interests, when MY.GAMES in Russia was far from peripheral. How invested in Russia was MY.GAMES?
During the restructuring of MY.GAMES, the Russian division was spun off as a separate company, which is now responsible for developing the Russian market, while MY.GAMES decided to focus on international development and stopped operating in Russia. Over the past 5-10 years, Russia’s contribution to MY.GAMES’ overall revenue has gradually decreased. At the beginning of 2022, less than 20% of the company’s revenue came from the region, and only 17% of its monthly active users were from Russia. As a result, the decision for MY.GAMES to fully exit and cease all operations in Russia was fully aligned with its strategy, allowing for greater focus on the US, EU, and APAC markets, as well as expanding into high-growth potential regions such as MENA and LATAM.
What have been the main logistical challenges in exiting Russia?
During our restructuring and wind-down of MY.GAMES’ operations in Russia, our primary challenge was to establish the necessary infrastructure, processes, and stability to facilitate a smooth transition for both our players and employees. We also had the big task of relocating employees not only to our existing hubs in Cyprus and the Netherlands, but we also had to open new ones in Armenia, Turkey, Serbia, and Georgia.
Logistical challenges included the procurement of IT resources, implementing new communication and task management channels to accommodate a growing number of regional hubs and an increasingly distributed team, and all while ensuring the quality of our services and products are consistent with our high standards, with team members fully supported throughout Nevertheless, we were able to redistribute and organise workloads across teams in multiple locations effectively.
Ensuring uninterrupted daily work for our remote workforce, who constitute over 90% of our employees, was an arduous task. Our team worked tirelessly behind the scenes to overcome the challenges, and I am proud of them for doing an exceptional job.
What have been the downsides?
Although, leaving the business in Russia has obviously been a financial loss, but a necessary one, in order to make a decision that fully aligns with our goals and values. Any transformative move will present challenges, but we are optimistic and excited about the growth and development MY.GAMES has planned for the next five years and beyond. We are absolutely confident that our Amsterdam headquarters, our regional hubs, and our expansion into new verticals position us for growth that far outweighs the logistical challenges we faced in 2022 with ceasing all MY.GAMES’ operations in Russia.
We remain committed to our goal of becoming one of the top companies in the gaming industry, and to achieve this, we are placing even more emphasis on product development. Our strategy includes investing in cutting-edge technologies, fostering a culture of innovation and creativity, and partnering with talented developers and publishers worldwide.
Remote working is something MY.GAMES pioneered long before the pandemic hit in 2020. How has that helped the company divest?
Indeed, more than 90% of our team has been working remotely since 2020, and this has helped MY.GAMES greatly once we made a decision to cease all operations in Russia and started the restructuring process. Technically, we were building our infrastructure in the way that supported the needs of our developers, and enabled them to work on projects remotely and launch such hit titles as Rush Royale, which became one of MY.GAMES most successful games of all time and achieved 1 million daily active users in March this year. In terms of the company’s culture we have been encouraging people to travel, meet gaming professionals all over the world, and exchange experience – this hugely benefits the team and helps it better understand the needs of players from various regions of the world.
Our focus this year is to keep building the infrastructure for our international hubs where we all can meet and work on joint projects when needed. As mentioned, MY.GAMES has its headquarters in Amsterdam, a large office in Cyprus and co-working spaces in Turkey, Georgia, and Armenia. We’re planning to open several new hubs in regions where we plan to boost our presence soon.
On PC [Steam], it seems that only two games that MY.GAMES publishes are made outside of Russia, both of them developed in China. Will you be divesting development resources as well as publishing operations?
All the products that remain under the MY.GAMES licence are now maintained by studios and developer talent outside of Russia, as will any future products. All development resources in Russia were divested in by MY.GAMES as part of our restructuring process. We boast a sizable international development team dedicated to creating new products and improving existing titles. Additionally, we maintain an in-house publishing team that oversees our publishing operations.
MY.GAMES is known predominantly for publishing homegrown and Chinese MMOGs and live service games, with increasing successes in mobile publishing. Will the product mix change in the months ahead?
We’ve always been a product-oriented company and have always put the interests of our players first. The product mix will continue to grow and develop, but with an increased focus on premium products, new IPs, and new talent to support global growth.
MY.GAMES has enjoyed some success supporting underrepresented countries and languages, such as launching Conqueror’s Blade in Turkey. Is that a strategy you aim to continue?
As I mentioned, one of our missions is to make more games available in the developing markets of the Middle East and Latin America, and to help the local gaming industries grow as a part of our global strategy. It is important for us at MY.GAMES to support promising game developer teams around the world, and share our expertise and knowledge with them, especially in those developing markets. Additionally, given the potential for revenue growth in developing regions in the games market, combined with fluctuations and uncertainties in established ones, it’s a great time to be thinking carefully about the right targets for sustainable growth.
We also support game makers and pay special attention to regions that have limited access to games. In fact, we launched an initiative – Game Drive – to address this issue and bring gaming to more people around the world
In what regions and markets are you currently looking to expand operations?
Alongside our presence in Europe, US, and Asian markets, we are also looking at plans to develop new hubs in the MENA region, which is projected for $1bn revenue growth (64%) over the next three years, as we are committed to expanding our presence in emerging markets and investing in growth opportunities. We prioritise product development and strive to deliver the best gaming experience to our users, so it will be an exciting challenge to bring that mindset to a new audience of gamers.
Under what circumstances would you re-enter the Russian market?
For quite some time now, we’ve been focused on our international growth strategy, and this is set to continue. As such, we ceased all operations in Russia and no re-entry to the Russian market has been considered. It isn’t in our plans.
Disclosure: From 2018 to 2021, Richie Shoemaker was a freelance content editor for My.Com and MY.GAMES, working remotely alongside content, community and localisation teams based out of the Amsterdam office, in close collaboration with Mail.ru’s creative services and production operations in Russia – operations that have since been relocated.