Between the Lines: Eastern Europe’s Gaming Market

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insight segment we have got a ton of awesome stuff for you guys planned for this 2024 and we're kicking off 2024 with a fascinating topic um challenges and opportunities in the Eastern European gaming Market Eastern Europe has always been considered um a Mia AKA emerging in the video games Market with countries like Poland home to renowned CD project or because I'm half polish I'm obligated to say CD proect um really standing out as hot beds for talent and a major player in the video game Market the video game Market in Eastern Europe has projected revenues of 3 billion in 2024 and 35 million users by 2027 according to statista the largest of these markets is ostensibly mobile for many and especially my guests today Eastern Europe is thought of as a potential growth Market but it's not without its challenges Eastern Europe more than some other regions struggles with politically charge environments that are subsequently impacting regulations ability to fund raise and ability to operate Studios and distribute games and so today we're

going to be talking about this Market first defining what the Eastern European gaming Market means you know which countries or territories um and then we're going to examine the space from a couple different lenses uh is it attractive because there's a lot of talent there is it attractive because Gamers and players there are underserved and how do we from the investor and the operator perspective get comfortable with some of the geopolitical risk of distribution in the region or some of the legal ramification and business structures required to make it you know go vroom um and these are just a few of the topics we'll discuss today and so as per usual I am merely the conduit for the discussion and I've assembled a dynamic duo to help us talk through the topic so my first guest is arseny lebedev um co-founder and CEO of original games a mobile Studio building hyper casual and Casual mobile games he recently relocated his entire team out of Russia to Portugal I believe um and so welcome welcome to the podcast thank you

yeah um my next guest is Maria Kola managing partner at the games fund uh Maria has an established career in investing prior to starting the games fund with her other partners and I'm very lucky actually to have her based out here with me in New York in our small games community so welcome to the Pod Maria thank you hello thank you for having me here yeah all right folks this is going to be really good um the gaming industry is global entertainment and one of my favorite things to talk about on air is how things work differently in different markets and what are different Trends and um how things how do people do things differently so before we kick off uh I gave you guys some brief intros but would love for you guys to introduce yourself to the audience with specific attention to your career um spent towards the Eastern European gaming market and I'd also like you to add in your intro what you think is the biggest misconception about the eastern gaming Market um arson how about we start with you okay so you actually said the intro that I had written down um but I'll talk about um my career towards um this this

Geo so I've been in game since 2009 I started working at Large Animal Games which is a new york- based used to be a new york- based studio so I grew up in New York I have Russian Roots um but my first um I had an agency uh that had its development based in St Petersburg Russia and that kind of Drew me to the region um and since then my career um has been always in in that region um you know with original games we decided to to leave the region recently talk about that yeah yeah I'm really excited to dive into that story I think it'll be it's going to be really interesting um and then what's your biggest misconception yeah so this is I mean this is a very difficult question and I think this could be controversial but I think that if you look at the region from very far away like really bird's eye pal pal World point of view um the culture there is actually quite similar

between those countries um and I feel like that's a misconception so it's like uh again from a very far point of view culturally all all those jeos are very similar you know good work ethic maybe even the same language um and I think folks may not understand that they look at them as different countries but you know on on a work ethic and kind of worldview point of view it's very similar really interesting um Maria would love to get your take on that but uh also would love to hear about your background and uh also whether or not you agree with arseny or whether or not you have a different misconception uh well I was a long time uh gamer uh before but um uh I started my career in management consulting uh and worked for couple of private equity and VC fund generalist VC funds and in 2017 I got an offer to join mgbc uh it was the corporate VC arm of my games and I thought that it was a great shift for me like the area where I can combine all my passion for art and technology and my

investment skill set uh so I accepted the offer and I joined mdbc as investment uh director and again it was 2017 so we were the first investor in the region in the Eastern European region and I think we were just in general the first five um like VC funds in the whole world um and I think it was also great for me to start the career uh in the gaming from the Strategic side so I can have an access to all the portfolio companies more than 100 of our games uh to all this data and kpis and like daily meetings with development publishing departments uh so it was quite cool and uh I led around 35 Investments and uh so we contributed to the success of these uh companies and six out of these 35 Investments were eventually acquired by my games so it was kind of internal exits for us but at the same time I witnessed the rise of the VC in the industry uh so I've seen

that many kind of us uh VC funds established uh many funds in Europe and uh there was an opportunity in Eastern Europe so the region was lack of investment VC Capital uh and like together with Partners we decided to leave the corporation and to launch the games fund so now I'm the co-founder and partner of the games fund is an early stage VC fund and we invest mostly in developers um while we still have an allocation for infrastructure and tools uh and our primary region is Eastern Europe although we can invest globally so we have companies in the US in nordics but still 70% of our portfolio is based uh in Eastern Europe or consist of Founders who are from the region awesome very nice uh yeah about uh about misconception so I think that um uh one of the misconception is that um there are many successful companies um that have let's say 1 billion plus Revenue so these are very successful big

companies but most of people are not aware that they have like Eastern European origin because in most cases these companies are structured somewhere else um and another thing is that uh many people tend to believe that Europe is very solid in terms of and homogeneous in terms of its gaming scene uh but uh this is not true I think that there are several hubs and they quite disintegrated so there is kind of nordics there is UK and there is Polish and some other hubs uh and if you hav an access to the Nordic pipeline it doesn't necessarily mean that you understand what's going on in Poland and vice versa interesting yeah so it's a little bit of an interesting clashing misconceptions but from different angles right arseny you're talking about the culture of the developer people maybe and being similar and you're talking about the markets maybe the kinds of games that people play platforms being heterogeneous versus homogeneous that's really interesting um and actually that might

be a great way to start right you know talking about you know you just mentioned the nordics Poland Eastern Europe um you know one of the things I wanted to talk about as I said in the intro was to clarify specifically where is the Eastern gaming market and what countries are they so Maria maybe I pass that to you how do you actually kind of lay out your Market map geog geography wise uh yeah I think that uh there are kind of uh two wellestablished centers it's Poland and it's Cyprus and uh again I understand that Cypress is not kind of Eastern Europe but uh the game development scene in Cyprus it consists of like 9 99% of Founders who are from Russia Ukraine and Belarus so that's why I kind of uh also add Cyprus uh when we're talking about Eastern European developers um so there were some emerging hubs like sybia Hungary um like Armenia Georgia but they're still quite Niche um but um still there are two uh things that combine all of these

countries so it's the incredible pool of talent and uh the cost of development that is much less than in the US let's say uh and you are talking po about Poland it's a very well established region with lots of successful companies and with lots of startups uh and um just recently I was checking the statistics uh in the steam wish list and this is incredible that Poland alone contributes to 15% of top 200 uh games in the steam wish list while us contributes to 16% so almost the same but Poland is 10 times Less in terms of population than the USA so the concentration of developers and the games in Poland is just outstanding uh and in Poland we also see the trend uh that many kind of top tier developers they living established companies and launching their own um kind of startups um and we see is as a natural

progression of the uh ecosystem uh development so that um at some point uh these big mature companies they have some restrictions for ambitious developers and these developers want to pursue some other opportunities with their own Venture and uh just uh within the last six months we've seen probably five startups x c CD project red um who raised who were raising funds and successfully raised funds either from strategics or from the from the games fund so right now we have like three uh companies in Poland um and I think this trend will continue uh but in terms of the games that are present uh in the Polish market I think uh that it's mostly PC and console games uh and I think historically it was mostly like uh story driven um premium games although right now it's kind of expand into cop and

multiplayer experiences as well interesting so but you left out Ukraine bellarus and Russia is it because the companies are not based there there's tons of G tons of leading games that are made in those regions and they should be considered part of Eastern Europe no uh you mean like uh Belarus Ukraine alone right now I mean the question is the question that I interpreted was what what is Eastern Europe uh how do you define this you mentioned Cypress and Poland I definitely uh I think definitely Belarus Ukraine and Russia it's part of Eastern Europe so no doubts here but right now it's challenging to invest in any of these countries of course and that Cypress is like the the the middle the middle ground right now right everyone's there and everyone's been there for a while yes yes so many developers from like Ukraine and Belarus and Russia they moved to Cyprus I think that we also see the influx of belarussian and Ukrainian developers who moved to Poland well not not Russians right yes um yeah but I

think it's also boosted the the Polish system that's really interesting I think because uh it seems that a lot of things have changed for this region over the past two years like pretty tectonically right you talked about Poland even just to talk about Poland's PC console Premier market right shifting away necessarily from a narrative Focus to co-op and multiplayer and some of these other countries right where the developers might be native nationality to another region but are relocating to another to another place um and so you know arseny I think you've actually you've had experience doing exactly that where you took a studio that was relo that was I think I guess initially maybe founded in Russia and you relocated to Portugal yeah I mean we can we can talk about it in detail a bit longer me if you want I think it's interesting to to make that separation right is like even even if it's a fully Russian team it's literally they're probably it's in Cypress like legally in Cypress um and

that I think that really hasn't changed there's plenty that have been like that including ourselves I mean we weren't in Cypress we were in Europe um but nowadays it's like it's impossible to raise money if if you have you know 100 people in in Moscow or whatever wow yeah and so again it sounds like a lot of that you know this was about GNA be an obvious question but I wanted to give room to Nuance you know where I might make an assumption but why did you relocate and when did you know you had to do it it's sounds like it was fueled by funding I think it's well we're not raising but um we're in a good spot but um I I think this was this was about two years ago when I started the journey and and I think I had a wakeup call when when we had a investor call and and um play Ventures is our lead investor and you know really really good guys so Henry calls up and you said hey Arsy you know it's not business as usual anymore um things are changing and things are you know escalating so I think that was kind of a wake up because yeah I I was I was stuck in a different point of view

um because you know still still in Russia I think things are kind of the same unless you're trying to get some money in um but yeah I think I think the wakeup call was politically things are escalating and I'm I'm super a political I don't I don't watch TV or anything just play video games um but the thing is just doing business there would have been prohibitive and it was very interesting we were speaking to um you know when you're Venture funded it's always good to talk to funds all the time just to be like hey I'm doing well you know blah blah blah um and we were getting fun saying oh sorry you're you're in Russia bye I literally have a a letter like that yeah from actually someone you may know Alex um and I think all of that stuff was like okay I Pro we probably need to start thinking about just just because the Optics it's like just the Optics but in this case it wasn't I couldn't just hide you know have a shadow office um we had to we had to literally you know physically move people people um because even that could

have constraints on even our like recognizing Revenue yeah if we had folks there yeah um so that was uh that I think that was the spark and you know that was two two februaries ago yeah I can agree with areni 100% And as the games fund we also had in our portfolio Founders who were based in Russia uh before 2022 uh but um of course it was obvious that uh we need to relocate these people and we need to relocate these companies and as the US fund we cannot invest in Russia anymore because of the sanctions um and because of the like reputational risks and uh we like relocated every single person during 2022 so it was kind of um a very shocking and uh um hard time uh but uh uh in my understanding and as soon as the team is relocated and this is proved by our portfolio

companies uh so there is no issue to raise money anymore yeah 100% like oh you're not there anymore okay here's the money that's really interesting and but of course all investors like many um our portfolio companies they raise next rounds uh who by nationality are Russians and of course they need to uh provide some representations and warranties that they're not based in Russia and none of their team members are based in Russia so of course investors are cautious about it yeah and I think there's a there's a section later that we you know our plan is to talk a little bit about those biases and and Arsen you I I I've experienced that as well but from the investor side being behind a certain type of founder um or a nationality of a Founder but having those restrictions from the VC side of saying like hey look we can't just touch we just can't touch the studio um and I kind of want to dive into you know the nitty-gritty of what that actually looks like you know Maria you talked about helping you know a bunch of your portfolio companies

relocate for survival either because they will need to raise funding or they just you know even for the operations perspective you know like you're talking about Revenue recognition um wouldn't be able to do it in Russia so you know arseny you know you chose to move to Portugal can you tell me a little bit about why Portugal and also some of the Hoops that you had to jump through so maybe speaking to the businesses the taxes the legal side sure sure so I have I I took I took some notes and interesting bullet points but I think like I just need to underscore that it's like I just we just can't even pay people in that region anymore like you can't buy lap You Can't Buy Apple laptops in bellarus you can't bring them in you like I don't like if you someone knows how drop me a note um but it's like it's just you can't do business that way like it's crazy um so so even even if for some reason um we wanted to stay I mean it's it's much easier to stay than re change your whole life life you know overnight um it's just it's

becoming prohibitive and it's and like again I'm not political but I just can't you can't run a business that way um and and I think the the urgency was and still is is like you never know what's going to happen tomorrow so like at some point we had like a router that was only like for vpns which you can't have you can't have vpns even though everyone has them but so like you would log into that router just to access everything without issues or like use Facebook like at some point you couldn't use meta because you were based if you had one account that was connected to your company uh that was based in Russia they would just block you from from buying user acquisition so in any case so you know I think I'm stressing that it was just this like it was just everything was chaotic and the timeline was not clear so we had to really quickly make a decision like and and how do you quickly make a decision on on where you're going to move your team at that time we had about I think 30 people there now we have about 55 I mean it's been two years we've grown um in you know all over Europe but we were we were just looking at okay like where can the standard of

living and the cost of living be very similar right because I think that the initial business plan was if if we have we were based in St Petersburg which is the best city in Russia not Moscow Maria um I'm a Moscow fan see it's like a The Clash um we can get back to that later but but the point is where could we live that's going to be similar and you know we don't have to increase pay too much so all the nordics were immediately out Poland was was always out there's some political issues still I think um and then so I think kind of like Barcelona was was one and the other one was was uh Portugal and and like I would love to live in Berlin but but I think it's we just prohibitive on on on our cost structure right so it was kind of like you had a giant table that listed all of all of those things and we found that um Portugal had um very wide English penetration like everybody here in Portugal speaks English like to the point that I'm I forget that that this isn't even the country's national

language um so the getting the getting people in and getting residents is actually fairly easy um so you would just come in like as a visitor and then I would give you a job offer um and then you could apply for um residents on on on behalf of that but also because you have a tech job and because you are University educated you get you can bypass a lot of the um like slowness bureaucracy with with the residents um so Barcelona is very similar but but it doesn't have English um and I feel like Barcelona or Spain is just really oversubscribed um at this point there's there's a lot of tech companies there so I thought okay well we can just hire from Barcelona it's like a two-hour flight people could live here um oh yeah and I also have I also have Amazon Prime written down we never had that in Russia so we have it I can I can buy stuff gosh you order something at 7 p.m. it comes the next day oh my God um but yeah I think I think like um all

of that actually checked out the the taxes are very difficult or complicated we're still working on on optimizing everything but but I mean it was kind of like that um it it seemed when when you have a table like that that's like this is clearly the easiest um and one of our Angels was also based here at the time and and he told me yeah come on down oh nice okay so basically it sounds like you made a feature Matrix of a bunch of different countries around the area and you had to physically again like people physically moved like picked up their families and across the border um with 20 how many people did you move so so it was about four I think the the initial cohort was 20 which is 40 because of plus ones um and then also like you there could be animals and things that was very interesting um but but again it's like you don't need a special Visa you it's legal here to just come in as a visitor and then say hey I I want a job here um

you know this isn't the richest country in Europe so uh it's it's very welcoming in that case and then I think like let me tell you the kind of the end result two years later um I'll start with the bad so the bad is there was mass there's there still is massive xenophobia if you have a Russian or bellarus passport where we were like so zen meaning that folks are afraid not because they're racist but are just afraid of of us as as Russians as foreigners so like it Banks I opened the bank account same day with my US Passport same day at a at a major Bank our staff it took months like months I never realized it takes months to open bank accounts but yeah welcome if you have a Russian or B passport um and then finding apartments was really tough as well and the landlords were were really um it's it's completely legal here to ask for like 12 months forward and of course you know imagine you know you're like a a developer or whatever coming in and and you have to pay you know 12 or $20,000 to just move into a

place kind of nuts so that was very difficult the incredible bureaucracy that's what the bullet point is called incredible bureaucracy I think we just have to get used to it and if you know if you've ever lived in Russia or or any of those countries it's also very bureaucratic um but so all of that kind of stuff leads to burnout and like mental health issues and I think that's the biggest problem is relocation in general there's always going to be unknowns the feature Matrix is not going to tell you by the way these are the 50 things that you know that you should have known it's the mental health stuff that that really gets you and like I went through it you know it took me a while to get out of it and it's very easy to just drink yourself into happiness and like no that's not the best way to do it um I tried um so uh but now it's been a while and it's getting better we still have a few folks coming coming over that um that are either living in Georgia or Armenia that want to move to um proper Europe I think the good though is that everyone got the residence like everyone's now a resent woo like

I'm I'm European I pay European taxes um and then the the time that we invested into it has make made that um less friction less friction in the future for for folks like we had a guy come in um I think the the other plus and then like and I don't want to get too political is like there's a lot of um like your sexualality or your beliefs is fairly restricted in some Eastern European countries and I've seen you know I've seen some of our folks just open up finally and like stop hiding anything and you know making jokes that you couldn't make and you know other places so I think that I think that beyond that mental health stuff there's also some positive mental health stuff wow that's I mean first of all that's an incredible story and I'm glad that you guys have made it through to the other side it sounds like you know your studio is going to come out stronger um for it and I think that that's a really good call out is that there's so many things that you wouldn't be able to expect or anticipate no matter how much research you did ahead of time yeah um you know

Maria you talked a little bit about your experiences advising some of your portfolio companies have these guys had similar experiences and um can you tell us a little bit about um about that yeah so we're relocated in a couple of teams uh one of the team relocated actually the founder was in the UK but he decided to relocate together with his team to Abu Dhabi uh of course kind of ababi in general uh this kind of countries are kind of neutral uh to Russians or Bel Russians uh and the taxes is very low so he lived in the UK and taxes are crazy there uh and there are some uh kind of government incentives so probably you know that um in Dubai or in Abu Dhabi they put gaming as like big part of their National idea for the future development of the country so for example they have um uh significant cash back on the salary um kind of it's a big

plus uh considering that um it's kind of a major cost uh when you develop a game uh and other cases uh were with Cyprus so we located probably three four five teams to Cyprus uh but with Cyprus it was easier because we have an infrastructure there so we have a legal team uh a relocation team so they help with the uh getting the permit getting visas so the processes for them were quite smooth although I understand like Cyprus it's kind of an island country right so no one uh especially if you lived in a big uh big city so not every person wants to move to Cyprus uh but it ended up that most of our portfolio companies are quite happy with Cyprus um and um I think Cyprus has a very strong Gaming Community so there are dozens or thousands of game developers um it all started um not two years ago but like 10 or 15 years ago

when War gaming uh a big b Russian company moved their HQ there and then other countries from Eastern Europe from Ukraine Russia and Belarus started establishing their hqs and then happened uh the war happened in 2022 of course uh it was easier for many companies to relocate to the place uh where the community was already established and it's very tax efficient uh so I think that uh for companies that develop their own IP there is a special tax regime so the corporate tax can be as low as 2.5% uh so I think I've never seen something like that in uh EU and Cyprus is part of the EU and in general they have more less friendly immigration loss it's easier to get citizenship um there is some issues with the open in bank accounts but again if you uh have a team that can help you with it uh it's more or less okay uh and actually we also had a team that was trying to establish uh an office in

Portugal but uh they found out that the employee taxes are quite high so they decided to freeze this um kind of subsidiary for a while but probably they just didn't do a proper research on some potential ways to optimize it I'm pretty sure that there are some special zones and you can work with it yes yeah what sounds like there's a lot of steps and I'm trying to pick out like what the steps are so maybe you there's some of steps that I've heard are get employee get visas um physically move all the families so find them Apartments find them places where they can live um there seems to be some sort of reincorporation of the company headquarters and there also seems to be a reestablishment of your banking infrastructure um are there steps that I'm missing so all of the steps you named I ran into horrible hurdles in okay um and we we we um thankfully we we bypassed I mean we got through them um I mean from okay

well everyone needs a place to live so why don't we just rent like a huge apartment yeah but then all your staff are going to live with your boss for some point at some point so I had I think the whole company lived with me for a while and I think uh that's uh I thought it's motivation that they find their own place right but sometimes they can't control it and then I think the the the continued issue and and Maria maybe outside of outside of Middle East maybe this is what you guys run into as well because even even even in Cypress they were closing bank accounts for Russians but so um we started we have a we have a subsidiary here in Portugal now that that's kind of like a cost center but we initially ran into tons of trouble with it as well they're like who are all these Russians what's going on like what what's this um and you know we got through it through through the proper channels through legal channels all of that um but it there was definitely a time when you know we didn't have access to banking which was awful I had to I had to hustle not pay anyone for what while um and luckily I hustled enough that we got through it

yeah I think that all the steps you mentioned Alex um I think they're kind of U um yeah true uh and probably the most painful is bank account and again if you don't have an access to the bank account so your business tops so that was uh the kind of uh top tier tax uh task for us to make sure that uh there will be no issues with the bank accounts and uh again it's very painful process right and usually developers uh then they face these kind of legal things uh they all they're very frustrated yes uh and so that's why for us it was clear that we need a separate team who will do with all their request and help these Founders to kind of feel much better we had so this is this is really important exactly so don't forget that these are humans that have cats and whatever and maybe they're not used to paying taxes the same way that you have to pay taxes in Europe so so they get super what what's going on like how do I do this um

and I think the the other one is like um what if there's a delay there's a bureaucratic delay and Europe is all about bureaucracy right so there's a bureaucratic delay that actually forces you to overstay your Visa so we've had that a couple times and and luckily Portugal is smart enough to there's been visa extension programs for like I think the past couple years so so you can overstay but it's legal um it but it is still scary like okay I'm I'm out of my Visa I may get kick kicked out of the EU at this point because I'm overstaying my Visa and then you have we did have the the team that was reassuring um Everybody um I don't know if everyone trusted or believed in the team but those are those are all those things that you wouldn't you wouldn't think about um but I still think that you know big companies that are moving folks around will'll run into them but at the same time what I can see like with an example of Cyprus from one side it's more difficult to open a bank account but from Another Side they

change the law how you can get the citizenship in the country so in might not right now it's much easier to get citizenship it's enough to live like for four years in the country if I'm not mistaken and you're relable to get citizenship well that they still want to take an advantage um from this kind of influx of very talented developers and even if we look at the kind of charts of the economy growth let's say in Cyprus the GDP numbers and Cyprus like twice higher than the average in Europe so I think that's also like this is because U these game developers contributed to the economy a lot well I mean the thing is that I mean it sounds like there's just some massive hurdles and major Hoops to go through right from the investing side you know it seems like your portfolio support a lot of it is actually spent on not optimizing the game but on moving this moving the teams from different countries to another one but espec last 2022 I think was like our major Focus

yeah yeah which is crazy but just to you guys it must be worth it right this Market must be so attractive the developers must be so talented that all of this stuff and all these hoops that you guys have to jump through are worth it and so I want to talk a little bit about you know why uh because you know it sounds like obviously you had to go through all these things to reload your Cate your studio arseny you're obviously building boots on the ground games and really you're investing in those those types of developers but you know why do you guys think the market is attractive and is it because more because of the builders or more because of the consumers right is it because the developers are very talented and those talent and those developers will Target Western markets or is it because those developers uniquely know how to service their own countries where they came from and so delivering and distributing games to the places that you've mentioned Cyprus Poland Russia Etc is that approach is very unique that the West is not able to tap into um yeah maybe Maria

I would love if you could kick us off on this one well I think that the consumer Market uh if we're taking any particular region like Cypress or Poland the consumer Market is still very small and I think economically it doesn't make sense to Target only on these particular regions uh so for us the attract attractiveness uh of the region is in it in it incredible pool of talent uh and and um I think that there are many already successful established companies and there are many teams who are kind of splitting off from the successful companies to start their own Venture um and um uh there have been a big number of um like C development and Outsource Studios that worked for like triaa blackbuster games uh like Call of Duty Far Cry uh Star Wars and many many others and um but the reasion was lack of original Ip but now it's again changed and these uh studios are very well equipped to work in their original

APS and we also see an opportunity here and of course all this region uh they are much more less effective um and um cost effective yeah and uh it doesn't necessarily mean that we invest less money at lower valuations it also means that these companies are much more sustainable and have higher margin in comparison with the US companies for example of course uh again games are Go Global products that yes and it doesn't matter if you sell a Polish Game or the US game if this is the game of the same quality and the same kind of level uh the price will be the same but the development cost can be two or three times uh smaller and maybe this is a question that's particular maybe to triaa but um a couple months ago I did a podcast um on the India gaming market and the kind of the unta potential of looking at Hindu lore for examp um and I think there's a Founder um

Robbie John he basically was um building a game that has kind of like an art style that appeals to like Hindu futurism right and I think one of the things that I found um I don't I definitely don't look it but um I'm completely half polish on my mom's side schan um my mom's my grandmother's name is graina um and you know I was told stories as a child about Baba Yaga about how Baba Yaga was like going to come get me if I was bad and seeing that manifest in the was really exciting for me particularly and do you think that there is kind of like an untapped lore in potentially you know some of the Eastern European countries Russia particularly that there are stories there maybe talking to the narrative triaa side that can be told that aren't being told by studios in the west because I think oftentimes and this might be again controversial uh Russians are always like kind of the bad guy in like video games and movies um and so do you think that there's an opportunity there for developers like to retell that story in

a different framing uh I think it's possible yeah and I think that um like you know um there was the game Atomic uh heart uh in the post like apocalyptic USSR setting and uh I think that uh um the setting contributed to the success a lot and there are some other games like stalker developed by the ukra Ian game that is also quite successful so I think that there is an interest in uh these kind of local stories and in this local lore uh yeah I think that we can see more and more games like that all of those all of those po post-apocalyptic Survival Games stem from stalker yeah exactly right so um and that is from a book an Eastern European book and then a movie and the movie is like if you know you haven't watched it it's really mindblowing um very deep movie but it's in that same setting as stalker then and that's the same thing as Day Z and the same thing

as tarov in fact tarov is called called tarov because of the director of the of the film and all this stuff and like all of that that L that kind of looting survival stuff comes from there and I think what's interesting is like also in the in The Witcher like all of all the stuff that um a lot of kind of those mystical um animals and things are the beasts they're all from Eastern European um cultural and old stuff I think what we haven't really seen is much about um the monarchy the the Russian monarchy and all of that which is really interesting the the thear I mean uh because they just they just threw everything away each time guys fix it um so there's PL plenty of movies but but you know why isn't there an Assassin's Creed in that region I think right now is it's not the time there was that mobile one but but it's not the time to tell that story yet um but it's definitely it's deep and there's so much history um and you know it it it clashes it's part of the Nordic history as well there's definitely so much to talk about

there but I think one of one of my kind of discoveries was kind of this stalker all came from this this story um that that was a very very famous movie um and how that turned into like this weird Survival game so yeah and there's a lot of cool mods if you guys are into gaming whoever's listening to definitely check it out and don't get biased by any politics yeah and I guess for our listeners do you mind giving a recap of exactly a brief synopsis of stalker um to the movie I I mean maybe I'll say it I'll say something like this which is much more emotional than the story the story is very difficult to explain and I'm I'm you know I'm from New Jersey so I'm not so smart but there's a there's a part in there's a part so so the story is that like this guy his name is stalker he's taking people into this Zone um which which it's not very clear what it is but it's kind of there's something going on there and the Zone has a room and the room can fulfill any wish that you have but it'll only fulfill it'll fulfill the

the your deepest truest wish and that's why it's dangerous but there's a there's a um a scene in the movie in the in basically at the the beginning of the second act um when the stalker takes his two guests into the zone and he excuses himself he says guys give me a second don't leave it's very dangerous give me a second and he goes and he lays down in the field because he feels more at home in the zone than out of the zone um and I thought that was that was kind of cool and I feel like that sometimes when I go back to Denny's on New Jersey Turnpike uh or you know when I visit my my family home in in Moscow outside of Moscow yeah I think that the game and the book is amazing so I think that originally there was a game and then turovsky decided to make a movie yeah I okay so um and I think all of them are very different but it's always this theme of you're going to this mystical place um so I and it's it's just a really deep kind of um makes you think a little bit so

and nowadays you can you know now you're doing raids and getting guns and and all that stuff and that's really um it all spawned from that um and you know folks that are Gamers that are listening like those games have been turned into some incredible mods they're completely free and then and stalker 2 is coming out in April I think well I guess that's also a good opportunity to talk about genres right and you're talking about the survival you know extraction with tarub you know what are the genres I guess that you know you're and also AR I want to point out that you're building in the mobile space so I'd love to touch upon mobile genres as well but um you know what genres in do Eastern Europeans particularly want to play and also what genres do you find Eastern Europeans particularly developing you know one of the things that you know you know Japan is famous for jrpgs right and so much so that they have an entire that the category is called jrpg um so um so I think maybe I'll I'll touch on the mobile stuff um and um it's interesting

so my my my role at original games like I'm I'm kind of like I mean I'm CEO but I'm more on the product side and and more on the user acquisition side and less on the technical piece and my co-founder is doing that um so one of my joke questions to every every employee that I'm uh potential employee that I'm interviewing is like what game do you like and it's always Heroes of Might magic it's like always so turn-based turn-based strategy and those are old PC uh turn-based strategy games um I think I think uh if you're from CIS you love strategy games um the turn-based or whatever and it's like and no one ever says you know no one ever says Red Alert it's always like those those old those ones but I I think um and I'm sure like I'm you know feel free to Flame me I'm in LinkedIn um but uh we have to not we have to underscore that you know the the playrix is is you know among the top or the top developer in Europe at this point um doing um mobile casual games

and I actually had the opportunity to to see the founders this weekend last week at this conference just randomly at a dinner um and it's like they these games are so successful and they're not violent um they're all about you know building out a house and all that and um I guess it's m joh or casual um so yeah there's a lot of strong casual developers and and a lot of strong tripa developers MH I would also add I think that many Eastern European uh people they like Counter Strike still yeah so many years uh and um another notable fact that we prefer daa rather than League of Legends although my personal uh preference is for League of Legends uh and also like big notice that no one is preferring Heroes of the Storm so I'm too I'm too slow for those games so I can't comment and also uh free to play big games like War Thunder or World of Tanks but uh for the developers I think

um the like the games are quite diverse so there are casual games as aren mentioned player is a great example but there are also triaa uh like PC and console games uh mostly in a very like serious realistic setting so we're not um developing something like fortnite style games interesting yeah so I think it's like this this question Maybe better to answer on what what they're not what we're not seeing a lot from Eastern Europe and yeah it's like that jrpg stuff and and all of that um tcgs I don't know I mean but like you know there's there's plenty of like double a mobile games like like uh War robots or you know what kek is doing yeah yeah well it sounds like a lot of is also anchored in strategy and again this might be a stereotype but I I feel like every Eastern European grows up playing chess from the time they're two and they just want to just forx chess type mechanics seem to do really well um but

I could be I could be wrong that could be a misconception um let me actually talk about um let me actually talk about uh because I think this is this is on the topic is about the consu the consumer the consumer space in within CIS yes like what what's really working so I think one of the issues um we had is when when we uh okay we left whatever but we shut down um we we essentially abandoned our users in um we had a huge user base in Russia I think 8% of our Dow or 10% of our Dow was in um was in Russia alone and you know if you do the you know doing the formula um the P formula it's it was the same as Europe so we we considered Russia like a tier almost a tier one region and we had to embat in it because okay not only not only did we lose the ability to do use acquisition easily monetization eventually you know stop working as well because you couldn't um Google and uh Apple blocked the ability

to to to use um like cards but I mean you couldn't use Visa cards at some point anyway it was just like a total meltdown um so not only that but um and Maria you tell me if it's the same but like I think that if we showed uh revenue from those regions um that would not count towards a company valuation they would just that would be ignored in due diligence because that's not a stable Revenue stream yeah usually we invest in companies that don't have like Revenue so we don't kind of segment revenue from any regions but yeah it's a valid point yeah good advertisement I don't have any money give me some I don't make any money give me some but um but but that's the thing it's like so okay I lost all this Dow but it wouldn't be it wouldn't bring value to the company you know if you're if we're looking for a next round or or kind of whatever the next step is you know which is a shame and I'm and I'm always thinking of ways to get it back just because it's nice to bump up your top line or your bottom botom line I just but you know but it might just be a waste at this point but if it's multiplayer game sometimes you

just need audience even though it's not pain audience um it still can be beneficial for the game yeah and I guess that's that was a question right is you drive either VI quantity or you know ARP out right and I was wondering if you guys one of you guys could speak to maybe some of the spend habits and how they compare against the west or are they more similar to a region like latam or India which have typically lower arpo across the board um it sounds like you also have payment friction itself so you know that aside imagine that there were no payment friction yeah yeah no no but but before we had performance similar to Europe it's sometimes even better so it was it was easier to to get users and and and our games are like just casual um the only difference I mean the only major difference if looking looking at casual far aways um the one game that has characters they're animals and they're like very specifically animals from like Eastern European not not Eastern European but like European uh forest animals so it's not Australian

forest animals or South American it's it's like you know rabbits and bears and things like that actually no we don't have any bears which is stereotypical Russian thing we don't have any Bears um so it it worked really well in in that region um maybe because it looked like something that um casual players are familiar with I would also say that um audience in this regions they were quite um open to free to uh pay to win models uh so that's why I think uh games like Warface or World of Tanks or War robots were pretty successful in these regions that's a really interesting important distinction yeah the West as well because world of World World of Tanks some of that stuff is like oh get golden ammunition and I don't think you know everyone is percept likes that but I mean if you can buy it why not yeah um and yeah I guess it's like the those are differences between spend habits and spend behaviors the gacha economies that are so successful in the East um Asia right uh might be successful in Eastern Europe as well I don't think folks like subscription

though by the way or is that or is that coming coming up now or used used to because because I think Asia and Southeast Asia are more receptive to to subscription model or am I wrong I'm not sure is that us okay yeah the sub the subscription model I think is predominantly being pushed in the west but um I'm not sure if there's a I guess I'm I'm not as attuned to maybe the the Southeastern Asian market um though that's primarily gacha BAS um but this is you know I think you know we're wrapping up on the top of the hour and I want to move to maybe a final topic that admittedly might be one of the harder ones but you know I think it's very important and that's the perception of the West towards Eastern Europe from the capital deployment side and from the from the funding side and you guys both shared stories in earlier in this episode about feeling like you're facing some sort of bias simply because of the geop simply because of the Geo that you guys are affiliated with um and you know I'm kind of wondering you know what do you think that the Western Market could be doing better to incorporate and support these

the support developers especially in this past couple of years which have been you know arguably very challenging um you know a personal story that I might share is I have a couple classmates um at at school through an NBA program that were from St Peterburg and Moscow right and to go through being on campus in the United States as a Russian citizen right is a relatively hard thing to do because you you know like you talked about xenophobia you just have that fear um and so I guess what could the games industry in the west be doing better than we are today to really kind of you know glue those places back together stop watching Fox News it's sad it's like like I said these cultures that are Waring right now are very very similar it's so sad like it's horrible like stop um and you know stop watching the other news too which is you know on the same level of terrible I think that's the easiest one because honestly

like we have a hard time people in Portugal are always asking where are you from at some I don't want to say I just say American my wife is always like stop you're Russian but it's funny because in America you don't have this stigma so like people are very friendly if you tell them that you're from Russia uh yeah probably just people should be more open uh and realize that uh people who build gaming companies uh they are not in charge of political decisions um and I think just in general probably Western companies should pay more attention to what is going on in these uh regions uh because sometimes it seems like uh well this region uh historically was lack of original APS and probably like nothing is going on there but this is not true uh so I think that there is a lot of opportunity there uh and um it would be smart just to kind of pursue them I think like may maybe one thing I'd like to add um is that like the the all those

all the politicians all those all those decisions are made by people that that are like living in a different decade and some of the biggest tech companies are coming out of those regions and and those folks are like they're like living in our planet on our and um making a big difference and it's like it's just you can't compare it it's like it's like you know different planets different solar systems um and and think like another thing that I have written here and that's the last thing I'll say on this is like I lived in I lived in us for over 20 years and I lived in Russia for about five um when I was when I was growing up and like no drug abuse um everyone was on the same page um literacy wise so so you could be from a little tiny town and you would have the same opportunities as someone from a from a big town you know more or Le more or less compared to um you know if you grew up in the middle of nowhere in the states the opportunities you would would naturally have if you even if you tried I think uh you know Eastern Europe there's this there was always this this

inclusion um on on kind of geographically where you're from and you know and like Muro they were based out of totally like Eastern Eastern Eastern Russia where there's like nothing around um you know or or like a company like maona was from Super Central Russia um so and and like also there was like no gun violence like once in a while not there there isn't these like so there were some things that were just that worked and it's not fair to to think that this is just this awful place I mean I think that that's I think that those are important though and I think that we've discussed those things about like how from the funding side as well you are trying to make sure that you're backing a portfolio company of people that are diverse and from different places right because unicorn success could theoretically come from anywhere right and you know we get to your lens the you know you said the games fund is primarily focuses is on content 70% of your Porco is on content Investments and most of those companies there's at least

one founder or someone on the team from Eastern European descent and I think that's an important emphasis you know we talk about this a lot from also from the uh female entrepreneur side of the more Founders that you back the more female CEOs that you back statistically the more likely they are to succeed and then therefore you will change the makeup of the aggregate population of the success of something of people from that specific region to change people's minds right and I think like you guys are you're obviously building and you're obviously um funding and they're playing a really important role in trying to grow the prevalence of of that region um so that's amazing um but uh yeah I think that like those are those are really interesting thoughts today guys and um I really appreciate like learning a little bit about the actual journeys of you know relocating Studios the way that the market behaves and the consumer potential um let's maybe end on one on one final thing um I would love to hear

a bold prediction um from both of you about the Eastern European gaming Market um arseny maybe you'll go first okay please flame me and and Linkedin I think that um they're going to back down on this payment restriction because it's just it's money like why why is money coming from one place worse than the other I think they're going to back down on that in in at some point I don't know when but at some point and I hope it's not because there's more Wars coming on and they're not blocking whatever but I think it's like they got to they got to bring it back um and then I think companies are secretly returning to those regions anyway and it's just it's like it's like money's money's money you know nice all right good prediction uh yeah I'm quite bullish I think that we will see more Investments and already now we see lots of uh strategic Investments in the region and I think that like BC investments will follow uh so I expect

more deals by the end of this year and more deals next year so I'm quite optimistic that's awesome nice all right bull prediction payments down um and investing up or payment walls sorry down payment submitted up yes um and uh more investment in the region this has been amazing um so guys it's been such a pleasure um there's clearly so much opportunity in this space and it's been been amazing for you guys to share your Journeys um we typically End by asking uh you guys to share some of your contact info in case there's anybody in the audience that is interested in either learning from you more intensely or joining your studio or looking for Investments um so arson Hain you seem to be a LinkedIn Warrior so how yeah I just I just love trolling people there actually I'm old enough that that my first name is just usually my username everywhere um so Twitter Instagram Facebook whatever um and then on LinkedIn I'm I'm around I'm usually active on link then feel free to spam me and I'll get into a trolling fight with you I'll be very happy about that yeah I think you can uh reach me out in

LinkedIn or in case you have like um um a company that you want to Peach so there is a form on our website so check it out uh uh I think it's games fund. VC and you guys are on your first fund second fund uh first fund yeah but soon there will be new announcement all right exciting okay um all right all right guys with that um we're going to conclude and wrap up uh as always if you've got any feedback or ideas hit me up at alexand novic doco um I'm always open to that um and with that we're out and I'll see you next time thank you guys for coming on thank you if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five-star review and if you want to reach out or provide feedback shoot us an at podcast.co or find us on Twitter and Linkedin plus if you want to learn more

about what navic has to offer make sure to check out our website www.nic.edu and advisory Services again that is www.nic.edu [Music]