Conquering the $1.1B Russian online games market

Video games, or видеоигр as they are known in Russia, continue to capture audiences. In just two years the market for online, mobile and social games has exploded in Russia, growing from $460M in 2011 to an estimated $1.1B this year. This makes the Russian online games market the second largest in Europe.

If nothing else, the success of World of Tanks ( has proven the viability and financial promise of a success game launch in Russia. Of course, the massive Russian games market has been on the agenda for a lot of publishers, as its population size makes it a prime candidate for substantial market expansion. And so last month EA announced that it would launch a free-to-play version of FIFA World. It appears, for now at least, that new revenue models alleviate the concerns around Russia’s piracy issues.

Russian game market

Why now?

There are two key drivers behind the tremendous growth of the Russian online games market: the strength of the Russian economy caused by strong domestic consumption, and a growing demand for new technology. Today, the country has the highest percentage of social media users in the world and has adopted smartphones at a staggering pace: according to our friends at Nielsen, smartphone ownership today stands at 37%, up from 5% in 2009.

New mobile devices and Russia’s speedy Internet connection (18.72Mbps) help build the momentum. For one, the crown jewel of the Russian games market today World of Tanks is hugely popular, and rivals big hits in the Western markets like League of Legends (Riot Games) in terms of spending.

Social games are a close second, with The Area Farmers topping the list. The game is a farm simulation that has flourished without Zynga’s Farmville present in the local social space. And finally mobile games represent a small but quickly expanding market, growing 36% year-over-year.

These trends, and the projected $1.9 billion in total spending by 2016e, may make the Russian games market seem like a video game gold rush. But there are a number of important factors that make this market different than others. Despite the size of the market, individual gamers behave very differently than those in other European countries, and they underperform in certain metrics (e.g. Russian gamers make an average of 5.5 digital game transactions, versus 9.4 in France, which is an overall smaller market). They also have very different preferences for online payments than those in Germany, France, the UK and elsewhere: bank transfers via so-called kiosks are immensely popular and unique to the Russian market.

The social gaming demographic skews differently than the US and, instead, resembles other emerging markets like Brazil. The social market is also highly saturated and fragmented. Facebook has spent a lot of energy garnering a mere 7M users, making it only the fourth largest social networking site. Companies interested in investing in Russian social games need to be familiar with thriving local platforms, Yandex and VK.

That’s great. But what about piracy?

PC and console games also face saturation, along with a booming black market. Due to high retail prices and poor copyright enforcement, an estimated 70% of video games are pirated. Unsurprisingly, the Office of the US Trade Representative released a report earlier this year that called out Russia as one of the major contributors to game piracy. Bootleg copies, however, do not provide access to online services like Xbox Live and PlayStation Network. Despite these concerns, several of the major publishers are keen on cultivating the Russian games market. Valve, for instance, focuses on providing quality online services and has called piracy concerns a “non-issue.” CEO Gabe Newell claims Russia will soon be their largest European market.

Finally, where iOS dominates most other markets, in Russia Android reigns supreme, both in terms of installed base and spending. The Android share of the smartphone market now totals 36%, compared to 19% for iOS and the gap is only widening. According reports by, Android sales have nearly doubled and now constitute 71% of all smartphones sold in Russia. On the other hand, iOS sales have been sliding and are now essentially tied with Windows at about 8%. The rate of smartphone penetration shows no signs of slowing down, and will continue to be a growth driver for the industry as Russian consumers ‘leapfrog’ to smartphones.


The growth of the Russian online games market is promising, but it is also a market unlike any other. The economic boom that has helped the industry in recent years is expected to slow and local publishers and platforms dominate the industry space, making entry by foreign companies more difficult. Despite the traditional concerns about piracy, online services and the accompanying monetization models could provide an effective solution. We forecast the market to grow another 30% by 2016, and expect more Western publishers to bolster their efforts as they figure out how to navigate this exciting market.

Go here to learn more about our research on the Russian digital games market.

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