Interview with Max Donskikh,
President of Game Insight

I got into game development a long time ago. I started out in the company IT Territory, which developed browser games and excelled at it more than anyone else. The only thing you could compare it to is "Fight Club". Later, the holding company Astrum Online Entertainment was formed from it. I worked on the casual genre there, and we were one of the first in Russia to release games for social networks.
Many of my like-minded colleagues and I then ended up at Game Insight.

And what came next?

The gold standard for development hasn't changed in the last decade. To make a game, you need programmers, game designers, and artists. It's good if you also have an advocate of the game's concept who can push it. It's really good if this is the owner of the studio, or at least someone who is unconditionally committed to financial success. That gives the game a better chance of turning out. But if we're talking about the free-to-play games that Game Insight develops, just making a game isn't enough. The most important part begins post-release, at the operating stage, when there is already an audience. The audience has to be continually entertained with updates, new content, features, and events. All of this has to be released with a certain frequency so that players don't wander off, so they keep coming back. To set up this type of architecture, you need people with specialized knowledge. It's important to start at the development stage by planning how the game will develop in the future, both from the technology perspective, and from the game design perspective. In addition, operations now involve a huge amount of numbers, which practically didn't exist in the game industry previously. This involves constantly tracking audience metrics: what users are doing and how they are playing. So you need people who gather and analyze these numbers. This can be game designers, producers, or analysts – it doesn't matter. What matters is that they should be on the team. And of course, you can't get anywhere without marketing. So that's the current gold standard – you end up with a decent sized team.

Sure, they have a chance. Exactly the same as everyone else: a fairly small one. We should clarify first that indie games usually follow a different business model, since they are created by small teams. Small teams can't support the long-term and systematic development of a free-to-play product, so they take a different route: they create paid games or free games that are monetized with advertising. This is a slightly different niche, but yes, they still have a chance. In terms of indie games, I would divide the teams into two categories. There are developers who are on fire with an idea, drop everything else to pursue it, and invest their money in making it happen. This earns respect regardless of the commercial results. The other indie category is small teams who came together for whatever reason, and are trying to make a business out of it: they focus on what game will be best accepted by the market, where there is a niche, and where they can get a foothold. This isn't very different from normal commercial development, but the scale is smaller. Obviously, there are success stories, because indies often experiment with new genres and ideas. This is a big plus for the market. You mean there are positive examples like "we invented a new genre and it took off"? It happens, but it's not something you can put on the assembly line. You're lucky if you came out with a hit, so you need to treat it like a casino – take your money and go home. It's really rare to recreate your own success, because it's a new experiment each time, and to have every experiment be successful – it just doesn't happen. Small teams can usually only survive one failure. It's much easier for a large company in this sense: they have a financial safety net and they are able to continue working even after failed releases. They can still launch new games and find new successes.

Almost everyone chooses the growth option, but you have to keep in mind that this is a commercial venture now, and it operates on different principles. In the end, only a few are able to repeat their success.

Three or four years ago, marketing decisions were based on guess-work, with rough estimations of how efforts correlated to results in terms of installs and ultimately, money. There was very little transparency and analysis, and few tools were used. This resulted in the formation of something like cargo cults for how to launch or promote a game: get it in the top positions at the start, buy some articles, and get branding on platforms. Sometimes this produced a result, and sometimes it didn't. Why? It wasn't easy to figure it all out. And in our case, traffic is the blood of the business. You need a constant flow of new users. So tools for attracting users became increasingly complex. You needed to understand what was happening, how users got to the game, and what users were doing inside the game. Analytics kept pushing the envelope, and purchases were optimized for specific goals, not just "let's drive the game to the top, we'll get a bunch of organic traffic, and that's it – we're golden". Those were the general changes. Obviously, everything has gotten more expensive. Competition is increasing, and everyone knows that without a constant influx of new players, the business doesn't work. Budgets are increasing overall across the industry, so each user is costing more. What this means is that no one is interested in just buying users anymore. Because for the same money, which is quite a bit compared to what it was 3 or 4 years ago, everyone wants to get a specific user with a specific profile, and desirably, really desirably, a paying user.

It's yes, yes, and yes. They have an amazing setup, and a high LTV, and they don't worry about the money. Our companies can't really compare themselves to Machine Zone or Supercell. They are playing an entirely different game. First of all, it's an investment game, so they are steadily building up their volume. In the end, they are betting on some sort of dominance in the market and in the genre. If you can achieve that, it doesn't matter how much it cost – you are already benefiting from being in first place. Lots of teams try to live by this model, but very few are able to do it.

The stakes are really high, and since there are so many companies competing, it's not enough anymore to just have more LTV, money, or a good marketing team. You have to have all three of them, and 10 more things on top of it all.

This is the situation in Asia. If you look at the game market like a pie, the Asian slice is continually getting bigger. Japan and Korea are the highest profit regions for mobile games. China is growing fast too, although until recently it was believed that nobody pays for anything there. At the same time, they aren't easy to work with, because the audience is very peculiar both in how closed the market is, and in player preferences. For developers in Europe and the USA, as for Game Insight, the American and European markets are still the predominate income earners.
Only a handful of companies are able to break into Asia enough to make it a significant portion of their income. Everyone wants it, but there are a lot of obstacles. And for the time being, it's much more noticeable how Asians are entering the European and American markets.

If we are talking about Chinese games, for example, they can afford to have a thousand people working on development and do everything imaginable inside their game in terms of features and the amount of content. The result is that their local gamers expect the same thing from all games. So this spreads to other Asian markets. If we are talking about Japan and Korea, the events in their games have to be triggered several times a day. In Europe and the States, the rhythm is much more measured. So when a European or American game is released to an Asian audience, some Japanese or Korean player goes through the whole thing 10 times faster than the developers expected and finishes all the content, then sits and waits. He isn't going to wait long, and then he'll go back to Puzzle & Dragons or whatever.

We selected Turkey as a soft launch for our shooter Guns of Boom for several reasons. First of all, they play shooters there. Second, the game launched on Android, and the Android share is large there. Third, it's relatively inexpensive to attract an audience there.

We are planning to make money there and we are making money, but basically, after the world release the situation will change in any case, and the main markets will be America and Europe anyway.

I don't see a point in it. Game Insight hasn't done that for a long time. It could only be justified for some unknown reasons, like if you are making a farm about Prostokvashino. But other things being equal, why limit yourself to the Russian audience? Yes, it's easier to work with Russia and overall it's a place to start, but why would a game company depend on and build a business on the Russian audience? The mobile app stores, in comparison with the previous gaming epoch, have opened the global market to developers. So you made a game, uploaded it to the store, checked the boxes for where you want to make it available, and there you have all your players – America, Europe, Asia, wherever, and Russia too. And this is a global change on the game market, because previously you developed a game with money invested by 1C Company, and then you had to release it in each region separately, and that was really expensive and difficult. So yes, it made sense to only launch in Russia.

It's good everywhere. We've tried a lot of different things, but right now the focus of Game Insight is games for mobile platforms. Before this, we had a strong focus on games in social networks. When choosing a platform, the first thing you need to do is assess whether it is suitable for your game. It's foolish to ignore new platforms if they fit with the technologies and the audiences that you can find there. So if you can, try everything – there are opportunities everywhere.

I'm waiting for new ways to distribute games, new channels. Because all the platforms and channels follow basically the same path, if at different times. A new platform or channel appears, and the first ones to get there break the bank. Then there is a growth period, and with market growth the competition increases, and over time it becomes more and more difficult to find your user. Game Insight has ridden this wave twice already. First it was the social networks, a completely new area. Then we were one of the first to switch to mobile platforms. So I would say that I am waiting for another new leap forward, where we can adapt again and bring new games to new users. Maybe it will be VR, or maybe it will be games for messengers – we'll see. In any case, it will be interesting.