There is a growing number of companies that create computer games – a product with high added value, in demand around the world. While IT-outsourcing giants sell time and knowledge of Ukrainian programmers to foreign customers, the industry of computer games development is gaining momentum in Ukraine. This is reported by the Internet edition “DNEPR. Home”, with reference to “Economic Truth”.
Dozens of IT-companies create in our country a final product with high added value – computer games. All of them at once get on the world market with a turnover of 137 billion dollars.
The income level of some Ukrainian game developers reaches millions and tens of millions of dollars a year. In Ukraine, the vast majority of game developers for mobile devices, PCs and game consoles are focused on creating a finished product. This is exactly what the country’s raw materials economy is in dire need of.
The world doesn’t count money for games
More than $137 billion will be earned by computer game creators in 2018. This forecast is given by the Dutch company Newzoo, engaged in consulting in the gaming industry. In 2017, this income amounted to $108 billion. Already now, the gaming industry is ahead of the film industry in terms of revenue and catching up with the sports market.
Experts from leading research companies predict that the gaming market will continue to grow in the coming years, both in terms of revenues and the audience of players. This makes gameplay one of the most promising areas for investment in the world.
The mobile gaming market is particularly fast growing. He has made a stunning leap over the past 10 years. Back in 2012, it was the smallest segment of the market, and in 2018 it will provide more than half of all industry revenues – $ 70 billion.
Ukraine follows the mobile trend
Ukrainian GameDev is developing rapidly: just in the last few years more than 30 new companies have appeared in the field of game development. Half of the country’s regions have such studios. Dozens of studios employ from a few people to several dozen people.
But there are companies with 100, 500 and more than 500 employees. Most of the game developers are concentrated in five major cities of Ukraine, where there are strong technical universities: Kiev, Odessa, Kharkiv, Dnipro, Lviv.
Most companies have one to five released games on their account. And more than 76% of Ukrainian studios use their own funding to create games. It should be noted that the Ukrainian developers accumulate their own funding by fulfilling orders for large foreign gaming studios.
Following the world trend, Ukrainian studios develop the most games for mobile devices on Android and iOS. In the game genres prefer action games, puzzles, strategies.
Game industry risks
Despite an annual turnover of hundreds of billions of dollars, it is very difficult to make money in it, especially large ones.
The gaming industry is a very risky thing,” says Artem Mironovsky, the founder and head of the Ukrainian game studio Red Beat. – Therefore, it is in the segment of venture models.
Out of ten games, maximum one takes off. But if it takes off, the game can raise a thousand percent of the ROI (return on investment). World of Tanks (the game of the Belarusian studio Wargaming.net, EP) cost four million dollars in development. Now they earn half a billion dollars a year. But this is how top products fly up.
Kiev-based computer games developer. Its experts participated in creation of series of cult games Halo, Cossacks 3. The company worked in projects of such world giants as Crytek, Ubisoft.
Mironovsky has many examples when the game cost $ 0.5 million in development, but the market has not earned anything. While creating a game is a complex and meticulous preparatory process.
Before the beginning of creation of the game the developer forms some hypotheses about what kind of game mechanics or what kind of game style will be popular in a year and a half, what will be the average check from the user and so on, dozens of hypotheses. On their basis, created games.
But in this industry, as in the movies, you can make a quality product, to conduct a grand marketing, but the game fails. It’s called “didn’t come in. In the gaming industry, the game “does not stop by” all the time. Therefore, the development of games – it is a high-risk, although high-margin business.
How do they make money from games
Paradoxically, hundreds and billions of dollars make free games. The free Belarusian game World of Tanks earned $471 million in 2017. There are a lot of models of earning on such games.
According to the co-founder and head of the Ukrainian gamebrew studio iLogos Development Vasily Chernomorov, game owners earn money for advertising inside the game and on domestic purchases made by players.
However, these are key models of monetization of games for mobile devices. Games for PC and consoles are still mostly paid – you buy the game and play.
It was founded in 2006 by a group of like-minded enthusiasts in Lugansk. Now the company is divided into two parts. Directly iLogos moved to Germany and continues to develop games.
In their portfolio the successful game Megapolis and Shadow Fight 2. iLogos Development is located in Kiev and specializes in remodeling games for PCs, consoles or mobile devices, as well as in gamification of business applications.
The level of game quality is high enough now,” says Chernomorov. – If you make a game now that you spend a little money on and still have a high quality, the likelihood that you will get your money back is very high. But the fact that this game will be a hit chance 1 to 100 or 1 to 500, because the market is very saturated. The AppStore has a million apps.
Kiev’s LookInAr game studio focuses on developing a fantasy style shooter (“shooter”, EP) for the HTC Vive Pro virtual reality (VR, EP) system.
According to Vahe Melikian, the head of LookInAr, small studios enter the virtual reality games market now is beneficial in terms of low competition in the market, especially from large developers. Big players do not want to spend money on creating VR-games, because there are still few VR-devices in the hands of the population.
The company appeared in 2016 and immediately started developing applications and games for virtual and augmented reality. “This was the main idea behind the creation of the company.
We felt that this was a very fast-growing market segment on a global scale. Our roots and investments are completely different. We wanted to diversify our assets a little bit and go a little deeper into IT”, – CEO Vahe Melikyan said.
To earn money at VR-games, the studio most often uses the subscription model. It is difficult to earn yet, because the market is small. The studio will sell its games through Steam, the world’s most famous online digital game distribution service.
Since we don’t have much experience in distributing games, we plan to entrust it to professionals,” says Melikyan. – You have to share a part of the profit (about 30%, EP), but you’re getting more sales.
Skiles of the Ukrainians
As I have already said, game development outsourcing is not a very frequent phenomenon, that’s why foreign companies are eager to open their offices in Ukraine,” says Mironovsky. – An example of the company Ubisoft, which already has two offices in Ukraine: in Odessa and Kiev. 500 people are sitting in the Kiev office of Wargaming”.
According to him, foreign companies open offices in Ukraine because we have a good technical education.
Programmers we have can be found in quite a large number. These are people with a normal educational structure, so they can be taught the specifics of the industry. The same situation with artists: a good academic school, a lot of talented people.
“If we have quality technical and artistic staff, our prices for their services are several times lower than in North America and several times lower than in Europe. Therefore, it makes Ukraine a very attractive country for opening offices. The quality, which is given out by the developers from Ukraine, is higher than the traditional outsourcing zones such as China or India, and the price list is at or below the level”, – explains Mironovsky.