Last month, around the launch of the MY.GAMES label which has supplanted both My.com and Mail.ru, I was able to interview the Marketing Director Elena Grigoryan. Not only did we talk about the launch of the new brand, but strangely something closely linked to today's earlier news of the company looking to fully fund it's very first AAA title for consoles.
One thing I should say is that in transcribing the interview, I've tried to remain as close as possible to the exact words. However, as always, I've tidied up areas as best I can - particularly necessary due to the use of a translator - George, a lovely chap - between myself and Elena.
Chris Wray: Hey! Thanks for taking the time and hope you're both well?
George: Thank you very much for your desire to have an interview, it's good to have you here. Shall we start?
Chris: That sounds good to me. So shall we start with a description of the company, the position it's in and what's actually changing?
Elena Grigoryan: I'd like to start at the beginning by saying that the holding company, Mail.ru, was founded in 2005 in Russia. At that time the company's main focus was on media projects and internet services specifically tailored for the Russian market. Later on, the holding company founded a games division with the main focus on developing and publishing games for the Russian audience.
Only in 2013 did it start its expansion into international markets, that's when the My.com brand was founded. The reason for this was a simple one, the linguistic comfort for both players and developers. From then, both My.com and Mail.ru existed in parallel, with My.com for Europe and the US with Mail.ru specifically for the Russian market. For the last several years the games division has become one of the most successful for the Mail.ru group, accounting for one-third of the group's total revenue with more than $100 million during Q1 this year, equal to 33% of total revenue. The major part of this revenue coming from international markets, despite the fact that two years ago international revenue was only around 30% of games revenue. Not only are international markets the major source of growth in revenue, but also the increase in the player base we have, where we have more than 540 million players registered on our games worldwide.
It's due to this growth in the global market we have a clear understanding that we have to create one single brand for our games division, where we now have MY.GAMES. This will allow us to enhance our existing gaming infrastructure, making it more transparent and comfortable for all players around the world.
Chris: So am I correct in my impressions that all titles will now forego Mail.ru and My.com, releasing on MY.GAMES?
Elena: Yes, exactly. All of our projects will now be released under the MY.GAMES brand.
Chris: Will this be something that happens to all future releases as well as currently released titles? What exactly is the overall goal of creating MY.GAMES rather than expanding on My.com?
Elena: As of today we are both a developer and publisher of our games on all platforms: PC, Consoles and Mobile. We have our own in-house games development, as well as games from our partners where we represent ourselves as a publisher. For example, this year we are launching Conqueror's Blade in Russia, Europe and the US, one of our most anticipated MMO's.
Chris: I am looking forward to Conqueror's Blade, I've played and covered it a fair amount already.
Elena: Oh, that's great! Meanwhile, in Russia and CIS territories, we are launching another MMO called Lost Ark, from Smilegate. It's worth mentioning that for our partners, we act as a gateway for the Russian and western markets. Besides these releases, in terms of publishing from our partners, we already have several releases on the mobile platforms which were developed in-house here at the Mail.ru offices in Moscow. We also have more games to come later this year which are in-house developments.
Our overall goal is to make our gaming portfolio more diverse, where we will have our own development projects here, as well as projects from our partners where we will publish them on different markets. As I mentioned before, we're also focused on conquering all of the gaming platforms.
Chris: When it comes to monetisation, will there be any changes in how you operate? Will you be continuing with free to play titles or moving into more traditional publishing also?
Elena: The major part of our games are distributed as a free to play model, but we are monitoring closely, with high interest, the emergement of new models of monetisation. For instance, the previous few years we have seen that a large part of our revenue comes from advertising. Mobile, in particular, has around 20% of revenue come from advertising. That's the reason why we're really interested in looking at the hyper-casual genre and how it's growing right now. Beside that, we're also experimenting with other models of monetisation like pay-to-play or subscription services.
Chris: Interesting, does this mean that current titles like Conqueror's Blade could become a subscription-based game?
Elena: We're in close partnership with Booming Games on this project. The monetisation model will be decided primarily by the developer, so we'll try to keep what was in mind by the developer originally.
Chris: Moving back to my previous question on publishing. While you will understandably be continuing in which has made you grow already, will you also be looking at publishing one-hit traditional titles, such as indie projects or even larger-budget Titles?
Elena: Traditionally, our expertise and the genre in what we specialise in are massively multiplayer online (MMO) games. We have some experience in creating single-player products, but most of the time we perceive these experiences as a big experiment for us. We really want to stress that we want players to interact with each other and this is why we prefer going into MMO's more.
Chris: Mail.ru, the parent company, is - to my knowledge - one of the largest tech companies in Russia with email, social media and other services. Will you be using these tools to promote the titles domestically and internationally, expanding your reach?
Elena: Yes, you're right, Mail.ru is a Russian IT tech giant. The group has been developing communication and internet services. The company unites the leading email service, the major social networks, advertising platform and a number of e-commerce services which allow us to effectively promote products on the Russian and international markets.
As a part of the Mail.ru group, we have access to these tools and promotional instruments and use them in our daily work. Mostly, we utilise them to achieve our goals in the Russian market. As I said before, due to the fact the major part of our revenue comes from international markets, that's the reason we believe the international market is our way of achieving further goals.
Chris: So what is the overall aim of this expansion?
Elena: Internally, we've set a goal to achieve 80% of the total revenue from international markets by 2022.
Chris: 80%, a high target. Does this mean you'll be expanding the offerings of your games both in variety as well as to the audience you are publishing to, as well as focusing on specific countries and their preferences - for example, Asia and mobile titles?
Elena: We have made several attempts in this direction and our projects are being published all over the world in 180 countries. For many of our mobile projects, the Chinese market is one of the key sources of revenue. For instance, our mobile project War Robots, the key audience is in the US and in Japan. Here at Mail.ru, we understand that to expand our business into Asian markets is a challenging task - it's a challenging task for every western company.
We're always trying to establish connections and good partnerships with local players in the Chinese market to make our expansion more successful there. We do understand that looking at the Chinese, and Asian market in general, more than 50% of total gaming industry revenue comes from those territories. In our case, they don't represent such a large amount so it certainly is a growing point, though we understand there will be challenges along the way.
Chris: Do you not see very particular and unique challenges, such as the regulation of titles in China as well as how games are played and paid for?
Elena: There are many aspects to these challenges, to be honest. Regulations coming from the government could be a big barrier for both western and local companies. The mentality difference could also be a big factor here. That's the reason why we try to not simply localise the games with language, but also to implement functional features, such as the interface, which will be welcomed by local players. Here is where we come to our local partners, where they will recommend how we develop and change titles, as well as how we upgrade them.
Chris: Beyond those specific examples, there are also challenges in public perception and possible regulation on monetisation aspects like loot boxes. How is the company, as you publish free to play games which as a genre has a tendency to contain these aspects, looking towards these changes?
Elena: We monitor all of the changes which are happening not only in Asia but also the US and European markets regarding governmental regulations and we try to react to these regulations and adapt ourselves to these new rules.
Chris: Still, there is always the issue of finding a balance between the monetisation that suits different areas and game types. Will you look to avoid more controversial methods, such as loot boxes, and move towards the direct selling of content through microtransactions or subscription models?
Elena: We're always in search of new ways of monetisation for our games which are more comfortable for players. If one day, we find that this or that monetisation model is more successful for us, we could apply it.
Chris: So with the promotion of MY.GAMES and the renewed push, will you look to develop and release more titles? How far
Elena: As far as I remember, we have ten or eleven in-house projects which are being developed across our ten in-house development studios. It's a common thing for a studio to have several projects in operation and some in active development. Many of these ten projects should also be published this year.
More broadly, we have more than sixty projects active or in operation. If you look at our history, we have published more than one hundred and fifty games, the major part of which have been developed in-house.
Chris: Much like with Conqueror's Blade and booming games, you're also publishing third-party titles. Will you be looking to expand this further and increasing your reach and variety?
Elena: We have different initiatives here at Mail.ru group. We have the publishing department which is in constant search for partners in terms of publishing. Also, we do have the investment arm of our games division that was founded two years ago at Mail.ru, which is quite unique in both the Russian and international markets because we've created a specific investment division within the games department.
Due to the fact we are developers ourselves, we understand the hardship and hustle other developers can face during the journey towards the end of the project and development. Game development itself, as you know, is a difficult and high-risk business.
Chris: Indeed, there are always titles that fail during development and the risk of commercial failure when released.
Elena: Yeah, you're right. That's the reason why the major part of venture funds don't usually support game developers. That's the reason why our investment arm is crucial for our business. We help developers not only with financial support, but we also bring our knowledge and expertise in order to help them grow.
Some developers will receive our help from a production point of view, some with marketing, some with setting up or analytical tools. For the moment, we have fourteen gaming studios within our investment portfolio which is called MRGV.
Chris: So this investment arm is your major way in helping to support and fund games?
Elena: Yes, exactly. Besides our financial support and internal services, we're also making some educational apps for our developers and studios. We help our teams share experience between each other and help to find colleagues to draw more knowledge of game development from. Also, for many of the studios, we are also perceived as the publisher, in case they need our arm as a publisher when they launch their games.
Chris: Will the support you offer be on a game by game basis or is this a general deal, irrespective of the studio?
Elena: We are versatile in this regard, ready to help our partners with publishing and other tools in every stage of game development. This doesn't mean they have to use our help, if they're able to, they can promote themselves by their own rules.
Chris: This seems very hands-off. Do you not influence the development at all or what do you do to keep a close eye on the investments, ensuring the games are on track?
Elena: Most of the time, our relations with partners aren't based on strict and solid KPI's (Key Performance Indicators). We have several internal benchmarks, if these benchmarks shift, the studio could be consolidated by Mail.ru. But, this also depends on how our dialogue with the studio is going on, so if it's not necessary, we're just here to help our partners.
Chris: Interesting, so you will have rough targets in place. Looking at a different area, I'm aware that you operate eSports. Will you be looking to spread further in this area?
Elena: For the moment, our eSports division is being developed in different directions. For instance, we have our shooter, Warface, which is our key eSports discipline. We have been publishing in Russia for the past six years, with the previous two years internationally with the exception of a few territories. On a regular basis, we host eSports tournaments for Warface, with one of the more famous being the Warface open cup which has been organised all six years, twice per year. What we're developing now are different tournaments, hosting both offline and online tournaments for our player base.
The second direction of our development lies within the sphere of an eSports platform. This platform helps other players and companies to host their own tournaments, with the support of major eSports titles. The domain name of this platform is pvp.gg and you can hold tournaments on over ten eSports titles.
Chris: Will you look to expand the number of titles this platform supports and expand it to further users?
Elena: Certainly, we will expand our support for the number of titles this platform supports. Also, our goal is to push the platform to the international market because at the moment, it's more tailored towards the Russian market.
Chris: Will you look towards expanding beyond the Russian market with local eSports events also?
Elena: Our Mail.ru group also has an eSports company, which is one of the leading eSports companies in Europe. Our colleagues there, they develop their business as an operator for hosting eSports tournaments. At the moment, they're organising several big eSports events called Epicenter. In the long run, they plan to organise these kinds of tournaments within Europe, yes.
Chris: With this push, will you also look towards developing eSports focused titles?
Elena: We understand that entertainment and eSports elements, the spectacular ability of the game, is the key feature for an eSports title. Within our current development, we consider this to be crucial, so hopefully, some of our current developments, in the long run, will be considered as eSports titles. Some of them will be eSports oriented from the very beginning, but due to the fact we haven't announced anything I can't share you more details on that.
Chris: When exactly will MY.GAMES become the overarching brand for all of your titles? Do you have a rough timeline?
Elena: As of May the 13th, all of our projects will be released under the MY.GAMES brand. However, due to the scale of our business, we doubt we'll be able to move to the new brand quickly. It will take months to bring all of our projects to the new brand, maybe by the end of the year to finalise it.
Chris: Excellent, thank you very much for your time. Well, all I can say is I'm looking forward to Conqueror's Blade and jumping back into the game.
