It is known that the gaming scene in CIS has political, legal, and regulatory challenges that make it hard to develop games or deploy investments into the region. But if you do it right, my guests, Maria Kochmola, Managing Partner at The Games Fund, and Arseny Lebedev, CEO and Co-Founder at Original Games, think it’s worth it. Today they both sit down with your host, Alexandra Takei, Director at Ruckus Games, and we discuss why going through the hurdles of employee relocation and headquarter restructuring are worth it in the long run. What do these challenges mean for a studio, and what is the lasting impact? What precisely is the Eastern European (CIS) gaming market in terms of countries and geos, and what are the games they are looking to make and play? Most importantly, what are some of the misconceptions the west has about the region, and what can games do to bridge the gap? That and more in today’s episode. 


We’d also like to thank Overwolf for making this episode possible! Whether you're a gamer, creator, or game studio, Overwolf is the ultimate destination for integrating UGC in games! You can check out all Overwolf has to offer at

This transcript is machine-generated, and we apologize for any errors.

ALEX: What's up everyone, and welcome to the Naavik Gaming Podcast. I'm your host, Alex Dekay. And this, of course, is the interview and 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: challenges and opportunities in the Eastern European gaming market.

Eastern Europe has always been considered EMEA, aka emerging in the video games market, with countries like Poland, home to renowned CD Projekt, or, because I'm half Polish, I'm obligated to say CD Projekt really standing out as hotbeds 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 charged environments that are subsequently impacting regulations, ability to fundraise, 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, which countries or territories. And then we're going to examine the space from a couple different lenses. 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 go vroom? 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 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.

And so welcome to the podcast.

ARSENY: Thank you.

ALEX: Yeah. My next guest is Maria Cochmola managing partner at the games fund. 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 and our small games community.

So welcome to the pod Maria.

MARIA: Thank you. Hello. Thank you for having me here.

ALEX: Yeah. All right, folks, this is gonna be really good. 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 how things, how do people do things differently?

So before we kick off gave you guys some brief intros, but would love for you guys to introduce yourself to the audience with specific attention to your career 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.

Arseny, how about we start with you?

ARSENY: Okay, so you actually said the intro that I had written down. But I'll talk about my career towards this geo. So I've been in games 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. But my first I had an agency that had its development based in St. Petersburg, Russia. And that kind of drew me to the region. And since then, my career has been always in that region. And with original games, we decided to, to leave the region recently. Talk about that.


ALEX: Yeah. I'm really excited to dive into that story. I think it'll be, it's going to be really interesting. And then what's your biggest misconception?

ARSENY: Yeah. So this is, 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 world point of view the culture there is actually quite similar between those countries.

And I feel like that's a misconception. So it's again, from a very far point of view, culturally, all those geos are very similar, good work ethic, maybe even the same language. And I think folks may not understand that they look at them as different countries, but, on the work ethic and worldview point of view is very similar.

ALEX: Maria would love to get your take on that, but also would love to hear about your background and also whether or not you agree with our city or whether or not you have a different misconception.

MARIA: I was a long time gamer before, but, I started my career in management consulting and worked for a couple of private equity and VC funds, generally VC funds.

And in 2017, I got an offer to join MGVC. 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 skillset. So I accepted the offer and I joined MDBC as investment director.

And again, it was 2017. So we're the first investor in the region, in the Eastern European region. And I think we were just in general, the first five vC funds in the whole world. And I think it was also great for me to start the career in the gaming from the strategic side. So I can have an access to all the portfolio companies, more than 100 of our games to all this data and keep your eyes and like daily meetings with development.

Publishing departments. So it was quite cool and I led around 35 investments. And so we contributed to the success of these companies and six out of these 35 investments were eventually acquired by my games. So it was internal exits for us. But at the same time, I witnessed the rise of the VC in the industry.

So I've seen that many kind of us VC funds established many funds in Europe. And There was an opportunity in Eastern Europe. So the region was lack of investment, VC capital 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.

It's an early stage VC fund, and we invest mostly in developers while we still have an allocation for infrastructure and tools. And our primary region is Eastern Europe. Although we can invest globally. So we have companies in the U S in Nordics, but still 70 percent of our portfolio is based in Eastern Europe or consists of founders who are from the region.

ALEX: Very nice.

MARIA: Yeah. And talk about misconception. So I think that one of the misconception is that there are many successful companies that. Have let's say 1 billion plus revenue. So there's a very successful big companies, but most of people are not aware that they have like Eastern European origin, of course, in most cases, these companies are structured somewhere else.

And another thing is that many people tend to believe that Europe is very solid in terms of, and homogeneous in terms of its gaming scene. But this is not true. I think that there are several hubs and they're quite disintegrated. So there is nordics there is UK and there is Polish and some other hubs.

And if you have an access to the Nordics pipeline, it doesn't necessarily mean that you understand what's going on in Poland and vice versa.

ALEX: Yeah. So it's a little bit of an interesting clashing misconceptions, but from different angles, right? Arsena, 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, the platforms being. Heterogeneous versus homogeneous. That's really interesting. And actually, that might be a great way to start, right? Talking about, you just mentioned the Nordics, Poland, Eastern Europe.

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 Nordics as? Are they? So Maria, maybe I pass that to you. How do you actually lay out your market map geography wise?

MARIA: Yeah, I think that there are two well established centers.

It's Poland and it's Cyprus. And again, I understand that Cyprus is not Eastern Europe, but the game development scene in Cyprus, it consists of 99 percent of founders who are from Russia, Ukraine, and Belarus. So that's why I also add Cyprus when we're talking about Eastern European developers.

So there are some emerging hubs like Serbia, Hungary like Armenia, Georgia but there's still quite niche but still there are two. Things that combine all of these countries. So it's the incredible pool of talent and the cost of development. They're just much less than in the U S let's say.

And you were talking about Poland. It's a very well established region with lots of successful companies and with lots of startups. And just recently I was checking the statistics in the steam wishlist. And this is incredible that. Poland alone contributes to 15 percent of top 200 games in the Steam wishlists 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. And in Poland, we also see the trend that many. Top tier developers, they are leaving established companies and launching their own kind of startups.

And we see as a natural progression of them ecosystem development so that at some point this. Big mature companies. They have some restrictions for ambitious developers, and these developers want to pursue some other opportunities with their own venture. And just within the last six months, we've seen probably five startups, X CD project, red who raised, who were raising funds and successfully raised funds.

Either from strategics or from the games fund. So right now we have three companies in Poland. And I think this trend will continue but in terms of the games that are present in the Polish market, I think that it's mostly PC and console games. And I think historically it was mostly like story driven.

Premium games although right now it's expanding to corporate multiplayer experiences as well

ARSENY: interesting so when you left out ukraine belarus and russia. Is it because the companies are not based there? There's tons of games, tons of leading games that are made in those regions and they should be considered part of Eastern Europe, no?

MARIA: You mean Belarus, Ukraine alone right now?

ARSENY: The question is the question that I interpreted was what is Eastern Europe? How do you define this? You mentioned Cyprus and Poland. I feel like you're missing half the geo.

MARIA: 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.

ARSENY: And that's why Cyprus is like the middle ground right now, right? Everyone's there and everyone's been there for a while.

MARIA: Yes. So many developers from like Ukraine and Belarus and Russia, they moved to Cyprus. I think that we also see the influx of Belarusian and Ukrainian developers who moved to Poland.

Not Russians, right? Yes. Yeah. But I think it's also boosted the Polish ecosystem.

ALEX: That's really interesting, I think, because it seems that a lot of things have changed for this region over the past two years 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 where the developers might be native nationality to another region, but are relocating to another region. I think you've actually, you've had experience doing exactly that, where you took a studio that was reload.

That was, I think, initially maybe founded in Russia and you relocated to Portugal.

ARSENY: Yeah, we can talk about it in detail a bit longer. And if you want, I think it's interesting to, to make that separation, right? Even if it's a fully Russian team, it's literally.

They're probably in Cyprus, like legally in Cyprus. And that I think that really hasn't changed. There's plenty that have been like that, including ourselves. We weren't in Cyprus. We're in Europe. But nowadays it's like it's impossible to raise money if you have, 100 people in Moscow or whatever.

ALEX: Wow. Yeah. And so again, it sounds like a lot of that, this was about going to be an obvious question, but I wanted to give room to nuance, where I might make an assumption, but why did you relocate? And when did you know you had to do it? It sounds like it was fueled by funding.

ARSENY: Yeah, I think it's all we're not raising, but we're in a good spot.

But I think this was about two years ago when I started the journey. And I think I had a wake up call when we had a investor call and, Play ventures is our lead investor and, really good guys. So Henry calls up and he said, Hey, Arsene, it's not business as usual anymore.

Things are changing and things are escalating. So I think that was a wake up because yeah, I was stuck in a different point of view because, still in Russia, I think. Things are the same, unless you're trying to get some money in. But yeah, I think the wake up call was politically things are escalating and I'm super apolitical.

I don't watch TV or anything, just play video games. But the thing is just doing business there would have been prohibitive. And it was very interesting. We were speaking to 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, blah, blah, blah.

And we were getting funds saying, Oh, sorry you're in Russia by I literally have a letter like that from actually someone you may know, Alex. And I think all of that stuff was like, okay, I probably, we probably need to start thinking about just because the optics, it's like just the optics, but in this case, it wasn't, I couldn't just hide, have a shadow office.

We had to literally, physically move people because even that could have constraints on even our recognizing revenue if we had folks there. Yeah. So that was I think that was the spark and, that was two, two February's ago.

MARIA: Yeah, I can agree with Arsene 100 percent and as the Gates fund, we also had in our portfolio founders who were based in Russia before 2022.

But of course it was obvious that we need to relocate these people and we need to relocate these companies. And as the U. S. fund, we cannot invest in Russia anymore because of the sanctions because of the. Like reputational risks and we like relocated every single person during 2022.

So it was a very shocking and time. But in my understanding, as soon as that team is relocated and this is proved by our portfolio companies so there is no issue to raise money anymore. Yeah.

ARSENY: A hundred percent like, Oh, you're not there anymore. Okay. Here's the money.

ALEX: That's really interesting.

MARIA: And, but of course all investors, like many our portfolio companies, they raise next rounds who by nationality are Russians. And of course they need to provide some representations and warranties that they're not based in Russia and none of the team members are based in Russia. Yeah. So of course, investors are cautious about it.

ALEX: Yeah. And I think there's a, this section later that we, our plan is to talk a little bit about those biases and arsony you, I, I've experienced that as well, but from the investor side of being behind a certain type of founder or a nationality of a founder, but having those restrictions from the VC side of saying Hey, look, we can't just touch, we just can't touch the studio.

And I want to dive into, the nitty gritty of what that actually looks like. Maria, you talked about helping, a bunch of your portfolio companies relocate. For survival, either because they will need to raise funding or they just, even for the operations perspective, like you're talking about revenue recognition wouldn't be able to do it in Russia.

Our city, we, 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.

ARSENY: Sure. So I took some notes and interesting bullet points, but I think I just need to underscore that.

It's 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 Belarus. You can't bring them in. You like it. I don't like it. If you have someone knows how to drop me a note. But it's it's just you can't do business that way. It's crazy.

So even if for some reason we wanted to stay, it's much easier to stay than really change your whole life, overnight. It's just, it's becoming prohibitive. And it's in again, I'm not political, but I just can't, you can't run a business that way. And I think that the urgency was and still is you never know what's gonna happen tomorrow.

So like at some point, we had 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 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 that was based in Russia, they would just block you from buying user acquisition. So in any case, so You know, I think I'm stressing that it was just this it was just everything was chaotic and the timeline was not clear. So we had to really quickly make a decision.

And how do you quickly make a decision 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. It's been two years we've grown and you know all over europe, but 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 we have, we were based in ST Petersburg, which is the best city in Russia, not Moscow Maria I'm a Moscow fan. It's like the clash. We can get back to that later but the point is, where could we live? That's going to be similar. And, we don't have to increase pay too much.

So all the Nordics were immediately out. Poland was always out. There's some political issues still, I think. And then, so I think barcelona was one and the other one was Portugal. And I would love to live in Berlin but I think it's just prohibitive on, on, on our cost structure.

So it was like you had a giant table that listed all of those things. And we found that Portugal had very wide English penetration. Like everybody here in Portugal speaks English. Like to the point that I forget that. This isn't even the country's national language. So the getting the right, getting people in and getting residents is actually fairly easy.

So you would just come in as a visitor and then I would give you a job offer. And then you could apply for Residents 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 like slowness and bureaucracy with the residents.

So Barcelona is very similar, but it doesn't have English. And I feel like. Barcelona or Spain is just really oversubscribed at this point. There's a lot of tech companies there. So I thought, okay we can just hire from Barcelona. That's like a two hour flight. People could live here.

Oh yeah. And I also have Amazon prime written down. We never had that in Russia, so we have it. I can buy stuff. Oh my gosh, you order something at seven p. m. It comes the next day. Oh my God. But yeah, I think all of that actually checked out that the taxes are very difficult.

They're complicated. We're still working on optimizing everything, but it was like that. It seemed when you have a table like that's like this is clearly the easiest. And one of our angels was also based here at the time, and he told me, come on down.

ALEX: 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, picked up their families and across the border.

With 20, how many people did you move?

ARSENY: So it was about four. I think the initial cohort was 20, which is 40 because of plus ones. And then also there could be animals and things that was very interesting. But again, it's like you don't need a special visa. It's legal here to just come in as a visitor and then say, Hey, I want a job here.

This isn't the richest country in Europe. It's very welcoming in that case. And then I think let me tell you the kind of the end result two years later. I'll start with the bad. So the bad is there was massive, there's, there still is massive xenophobia. If you have a Russian or Belarus passport where we were like, so xenophobic, meaning that folks are afraid not because they're racist, but are just afraid of us as Russians, as foreigners.

So like banks, I opened a bank account. Same day with my U. S. Passport. Same day at a major bank. Our staff. It took months like months. I never realized it takes months to make accounts. But yeah, welcome if you have a Russian or Belarus passport. And then finding apartments is really tough as well.

And the landlords were really it's completely legal here to ask for 12 months forward. And of course, imagine, you're Like a developer, whatever coming in and you have to pay, 12 or 20, 000 to just move into a place 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 if you've ever lived in Russia or any of those countries, it's also very bureaucratic. 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. And 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 really gets you. And I went through it, it took me a while to get out of it.

And it's very easy to just drink yourself into happiness. And no, that's not the best way to do it. I tried. So But now it's been a while and it's getting better. We still have a few folks coming over that that are either living in Georgia or Armenia that want to move to proper Europe.

I think the good though, is that everyone got the residents. Like everyone's now a resident, like I'm European. I pay European taxes. And then the time that we invested into it has made that less friction in the future for folks. Like we had a guy come in. I think the other plus, and then and I don't want to get too political is there's a lot of like your sexuality or your beliefs is fairly restricted in some Eastern European countries.

And, I've seen, I've seen some of our folks just open up finally and stop hiding anything and, making jokes that you could make, other places. So I think that beyond that mental health stuff, there's also some positive mental health stuff. Wow.

ALEX: That's, 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, your studio is going to come out stronger for it. And I think 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. Maria, you talked a little bit about your experiences advising some of your portfolio companies.

Have these guys had similar experiences and Can you tell us a little bit about about that?

MARIA: Yeah. So we're relocated in a couple of teams. One of the team relocated actually the founder was in the UK, but he decided to relocate together with his team to Abu Dhabi of course, a Dhabi in general united this kind of countries neutral to Russians or Bell Russians.

And the taxes is very low, so he lived in the UK and Texas are crazy there. And there are some kind of government incentives. So probably, that in Dubai or in Abu Dhabi, they put gaming as big part of their national idea for the future development of the country. So for example, they have significant cash back on the salary.

It's a big plus considering that it's a major cost when you develop a game. In other cases we're with Cypress, so we relocated. Probably three, four, five teams to Cyprus. But with Cyprus, it was easier because we have an infrastructure there. So we have a legal team a relocation team.

So they help with getting the permit getting visas. So the processes for them were quite smooth. Although I understand like Cyprus. It's an island country, right? So no one especially if you lived in a big big city. So not every person wants to move to Cyprus but it ended up that most of our portfolio companies are quite happy with Cyprus.

And I think Cyprus has very strong gaming community. So there are dozens of thousands of game developers. It all started not two years ago, but Like 10 or 15 years ago when Wargaming, a big Belarusian company, moved their HQ there and then other countries from Eastern Europe, from Ukraine, Russia and Belarus started establishing their HQs and then happened the war happened in 2022, of course.

It was easier for many companies to relocate to the place where the community was already established and it's a very tax efficient. So I think that for companies that develop their own IEP, there is a special tax regime. So the corporate tax can be as low as 2. 5%. So I think I've never seen something like that in EU and Cyprus is part of the EU and the general, they have more or less friendly immigration laws.

It's easier to get citizenship. There is some issues with the open and bank accounts, but again, if you. Have a team that can help you with it. It's more or less okay. And actually we also had a team that was trying to establish an office in Portugal, but they found out that the employee taxes are quite high.

So they decided to freeze this 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.

ALEX: Yes. Yeah. It sounds like there's a lot of steps and I'm trying to pick out like what the steps are.

So maybe there's some of the steps that I've heard are get employee, get visas physically move all the families. So find them apartments, find them places where they can live. There seems to be some sort of reincorporation of the company headquarters. And there also seems to be a reestablishment of your banking infrastructure.

Sure. Are there steps that I'm missing?

ARSENY: So all of the steps you named, I ran into horrible hurdles in and we have we thankfully we bypassed. We got through them from, okay 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 that's, I thought it's motivation that they find their own place, right? But sometimes they can't control it. And then I think that the continued issue and Maria, maybe outside of Middle East, maybe this is what you guys run into as well.

Because even in Cyprus, they were closing bank accounts for Russians. But we started it. We have a subsidiary here in Portugal now that's 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?

What's this and we got through it through the proper channels, through legal channels, all of that. But it, there was definitely a time when, we didn't have access to banking. Which was awful. I had to hustle, not pay anyone for a while. And luckily I hustled enough that we got through it.

MARIA: Yeah. I think that all the steps you mentioned, Alex I think that point of yeah, true. And probably the most painful is bank account. And again, if you don't have an access to the bank account, so your business stops. So that was the kind of top tier tax task for us to make sure that There will be no issues with the bank accounts.

And again, it's a very painful process, right? And usually developers then they face this kind of legal things. They all, they're very frustrated. Yes. And so that's why for us, it was clear that we need a separate team who will do with all the requests and help these founders to feel much better.

ARSENY: We had, so 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 they get super what's going on? Like, how do I do this? And I think the other one is like 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 luckily Portugal is smart enough to. There's been visa extension programs for I think the past couple years. So you can overstay, but it's legal. But it is still scary. Okay I'm out of my visa.

I may get kicked out of the EU at this point because I'm overstaying my visa. And then you have, we did have the team. That was reassuring. Everybody. I don't know if everyone trusted or believes in the team, but those are all those things that you wouldn't think about. But I still think that, big companies that are moving folks around, we'll run into them.

MARIA: But at the same time, what I can see, like with an example of Cypress 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 it 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 liable to get a citizenship. They still want to take an advantage from this kind of influx of very talented developers. And even if we look at them kind of charts of the economy growth, let's say in Cyprus, the GDP. The numbers and Cyprus, like twice higher than the average in Europe.

So I think that's also this is of course these game developers contributed to the economy a lot.

ALEX: The thing is that, it sounds like there's just some massive hurdles and major hoops to go through, from the investing side, 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.

MARIA: But. Especially the last 2022, I think, was like our major focus, yeah.

ALEX: Yeah, which is crazy, but to, 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 I want to talk a little bit about, why because, it sounds obviously, you had to go through all these things to relocate your studio. Arsene, you're obviously building boots on the ground games, and really, you're investing in those. Those types of developers, 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, et cetera. Is that approach is very unique that the West is not able to tap into. Yeah, maybe Maria, I would love if you could kick us off on this one.

MARIA: I think that the consumer market if we're taking any particular region like Cyprus 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. So for us, attract attractiveness of the region is. It's an incredible pool of talent. And I think that there are many already successful established companies and there are many teams who are split off from the successful companies to start their own venture.

And there've been. A big number of co development and outsourced studios that worked for triple A blockbuster games. Like Call of Duty, Far Cry Star Wars and many others. And but the region was lack of original AP, but now it's again changed. And these studios are very well equipped to work in their original APs.

And we also see an opportunity here. And of course all this region. They are much more less effective and cost effective. Yeah. And 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 U S companies, for example, of course again, games are global products that yes, and it doesn't matter if you.

Sell a Polish game or the U S game. If this is the game of the same quality and the same kind of level the price will be the same, but the development costs can be two or three times smaller.

ALEX: And maybe this is a question that's particular maybe to AAA, but a couple months ago I did a podcast on the India gaming market and the kind of the untapped potential of looking at Hindu lore.

For example and I think there's a founder Robbie John, he basically was building a game that has like an art style that appeals to like Hindu futurism. And I think one of the things that I've found I don't, I definitely don't look at, but my, I'm completely half Polish on my mom's side, Schwann my mom's, my grandmother's name is and 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 Witcher was really exciting for me, particularly. And do you think that there is like an untapped lore in potentially, some of the Eastern European countries, Russia, particularly, that there are stories there, maybe talking to the narrative?

Triple A 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 Russians are always like the bad guy in like video games and movies. And so do you think that there's an opportunity there for developers like.

to retell that story in a different framing?

MARIA: I think it's possible, yeah. And I think that Gnome there was the game Atomic Heart in the post ecliptic USSR setting. And I think that The setting contributed to the success a lot, and there are some other games like Stalker developed by the Ukrainian game that is also quite successful.

So I think that there is an interest in this kind of local stories and in this local lore. Yeah, I think that we can see more and more games like that.

ARSENY: All of those post apocalyptic survival games stem from Stalker. Yeah, exactly. And that is from a book. And these junior being book and then the movie and the movie is you haven't watched it.

It's really mind blowing very deep movie, but it's in that same setting a stalker and then and that's the same thing as daisy and the same thing as Tarkov. In fact, Tarkov is called Tarkov because of the director of the film and all this stuff. And like, all of that, that kind of looting survival stuff comes from there.

And I think what's interesting is like also in the which are like all of all this stuff that. A lot of kind of those mystical animals and things are the beasts. Are they're all from Eastern European cultural and old stuff. I think what we haven't really seen as much about the monarchy, the Russian monarchy and all of that, which is really interesting, the czars.

Cause they just threw everything away each time guys fix it. So there's plenty of movies 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 it's not the time to tell that story yet. But it's definitely, it's deep and there's so much history.

And it, it clashes or 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 this stalker all came from this story. That was a very famous movie 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

ALEX: Yeah, and I guess for our listeners, do you mind giving a recap of exactly the brief synopsis of Stalker to the movie?

ARSENY: 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 from New Jersey, so I'm not so smart. There's a part in, there's a part. So the story is that this guy, his name is Stalker. He's taking people into this zone which, It's not very clear what it is, but it's 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 your deepest, truest wish. And that's why it's dangerous. But there's a a scene in the movie in the, in basically at The beginning of the second act 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. And I thought that was cool. And I feel like that sometimes when I go back to Denny's. On the New Jersey turnpike or, when I visit my family home in Moscow, outside of Moscow, the game and the book is amazing.

MARIA: So I think that originally there was a game and then Tarkovsky decided to make a movie.

ARSENY: Okay and I think all of them are very different, but it's always this theme of you're going to this mystical place. And it's just a really deep kind of makes you think a little bit. And nowadays you can, now you're doing raids and getting guns and all that stuff.

And that's really it all spawned from that. And 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.

ALEX: I guess that's also a good opportunity to talk about genres, right?

And you're talking about the survival, extraction with Tarkov, what are the genres, that. You're and you also are saying, 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 what genres in do Eastern Europeans particularly want to play?

And also, what genres do you find Eastern Europeans particularly developing? One of the things that, Japan is famous for JRPGs, right? And so much so that they have an entire category is called JRPG.

ARSENY: So I think maybe I'll touch on the mobile stuff. And it's interesting.

So my, my, my role at original games, like I'm I'm CEO, but I'm more on the product side and more on the user acquisition side and less on the technical piece. And my co founders doing that. So one of my joke questions to every. Employee that I'm a potential employee that I'm interviewing is like what game do you like and it's always heroes of my magic It's like always so turn based strategy and those are old pc turn based strategy games I think if you're from cis you love strategy games the turn based or whatever and it's and no one ever says, no one ever says red alert It's always like those old those ones but I think and i'm sure like i'm, Feel free to flame me.

I'm on LinkedIn. But we have to not, we have to underscore that, the Playrix is, among the top or the top developer in Europe at this point doing mobile casual games. And I actually had the opportunity to see the founders this weekend last week at this conference, just randomly at a dinner.

And it's like they, yeah. These games are so successful and they're not violent. They're all about, building out a house and all that. And I guess that's Mastery genre casual. So yeah, there's a lot of strong casual developers and a lot of strong AAA developers.

MARIA: I would also add, I think that many Eastern European people, they like Counter Strike still.

Oh yeah. In so many years. And another notable thing Fact that we prefer Dota rather than League of Legends, although my personal preference is for League of Legends and also like big Notice that

ALEX: no one is preferring Heroes of the Storm

ARSENY: I'm too slow for those games, so I can't comment.

MARIA: And also free to play big games like War Thunder or World of Tanks. Yeah. Yeah. But for the developers, I think the fo like the games are quite diverse. So there are casual games, as Nia mentioned, play Ricks is a great example. But there are also triple A like pc n console games mostly in the very like serious realistic settings.

So we are not developing something like Fortnite style.

ARSENY: Interesting. Yeah. So I think it's like this question maybe is better to answer on what they're not, what we're not seeing a lot from Eastern Europe. And it's like that JRPG stuff and all of that. TCGs, I don't know. But there's plenty of double a mobile games war robots or.

You know what Keck is doing.

ALEX: Yeah. Yeah. It sounds like a lot of is also anchored in strategy. And again, this might be a stereotype, but I feel like every Eastern European grows up playing chess from the time of their two and they just want to just 4x chess type mechanics seem to do really well.

But I could be, it could be wrong. That could be a misconception.

ARSENY: Let me actually talk about let me actually talk about Okay. Because I think this is on the topic is about the consumer space in within C. I. S. Yes, what was really working. So I think one of the issues we had is when we okay, we left whatever we shut down we, we essentially abandoned our users in we had a huge user base in Russia, I think.

8 percent of our Dow or 10 percent of our Dow was in was in Russia alone. And, if you do the, doing the formula the PRS formula, it's, it was the same as Europe. So we consider Russia like a tier almost a tier one region. And we had to abandon it because, okay, not only.

Not only did we lose the ability to do user acquisition easily, monetization eventually, stopped working as well because you couldn't Google and Apple blocked the ability to use Like cards, but you couldn't use visa cards at some point. Anyway, it was just like a total meltdown.

So not only that, but and Marie, you tell me if it's the same, but I think that if we showed revenue from those regions that would not count towards a company valuation, they would just, that would be ignored and due diligence because that's not a stable revenue stream.

MARIA: Yeah, usually we invest in companies that don't have like revenue, so we don't segment revenue from any regions, but yeah, it's a valid point.

ARSENY: Yeah, good advertisement. I don't have any money. Give me some. I don't make any money. Give me some, but but that's the thing. It's okay, I lost all this Dow, but it wouldn't be, it wouldn't bring value to the company. If you're, if we're looking for a next round or kind of. Whatever the next step is, which is a shame 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 line.

I just, but it might just be a waste at this point.

MARIA: But if it's a multiplayer game, sometimes you just need audience, even though it's not paying audience it still can be beneficial for the game.

ALEX: Yeah, and I guess that's a, that was a question, right? Is you drive either by quantity or, arped 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 compared against the West or are they more similar to a region like LATAM or India, which have typically lower ARPUs across the board. It sounds like you also have payment friction itself. That aside now, imagine that there were no payment friction.

ARSENY: Yeah no but before we had a performance similar to Europe, it's sometimes even better. So it was easier to get users and our games are like just casual. The only difference, the only major difference, if looking at casual faraways the one game that has characters, they're animals.

And they're like very specifically animals from like eastern european not eastern european, but like european forest animals, so it's not australian forest animals or south american It's 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 so it worked really well in that region maybe because it looked like something that Casual players are familiar with

MARIA: I would also say that audience in this regions, they were quite open to free to pay to win models. So that's why I think games like Warface or World of Tanks or War Robots were pretty successful in these regions.

ALEX: That's a really interesting, important distinction. Yeah. That's a good point as well, because the

ARSENY: world of world world of tanks, some of that stuff is like, Oh, get the golden ammunition. And I don't think, everyone is percept likes that, but if you can buy it, why not?

ALEX: Yeah. And again, I guess it's like, those are differences between spend habits and spend behaviors.

The gotcha economies that are so successful in the East East Asia, might be successful in Eastern Europe as well.

ARSENY: I don't think folks like subscription though, by the way, or is that coming? Coming up now or used to because I think Asian Southeast Asia more receptive to subscription model or am I wrong?

I'm not sure. Yeah. Okay.

ALEX: Yeah. The subscription model, I think is predominantly being pushed in the West, but, I'm not sure if there's a I guess I'm not as attuned to maybe the Southeastern Asian market. Though that's primarily gotcha based. But this is, I think, 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, 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 funding side. And you guys both shared stories and. Earlier in this episode about feeling like you're facing some sort of bias simply because of the geo simply because of the geo that you guys are affiliated with.

And I'm wondering, what do you think that the Western market could be doing better to incorporate and support these support developers, especially in this past couple of years, which have been. Arguably very challenging. Personal story that I might share is I have a couple of classmates at school for through an MBA program that were from ST Peterburg in Moscow, right?

And to go through being on campus in the United States. As a Russian citizen is a relatively hard thing to do because you've, like you're talking about xenophobia. You just have that fear. And so I guess what could the games industry in the West be doing better than we are today to really address that?

ARSENY: Glue those places back together and stop watching Fox News. It's sad. It's like I said, these cultures that are worrying right now are very similar. It's so sad, like it's horrible, stop and and stop watching the other news too, which is 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 point? I don't want to say I just say American. My wife is always stop, you're Russian.

MARIA: But it's funny because in America, I don't have this stigma. So like people are very friendly if you tell them that you're from Russia. Yeah, probably just people should be more open and realize that people who build gaming companies they are not in charge of.

For political decisions. And I think just in general, probably Western companies should pay more attention to what's going on in this regions because sometimes it seems like this region Historically it was like of original IPs and probably nothing is going on there, but this is not true.

So I think that there is a lot of opportunity there and it would be smart just to pursue them. I

ARSENY: think like maybe one thing I'd like to add. Is that like the, all those, all the politicians, all those decisions are made by people that are like living in a different decade.

And some of the biggest tech companies are coming out of those regions. And the, and those folks are like, they're like living in our planet and our, and making a big difference. And it's it's just, you can't compare it. It's different planets, different solar systems. And I 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 the US for over 20 years and I lived in Russia for about five when I was growing up and no drug abuse. Everyone was on the same page. Literacy wise. So you could be from a little tiny town and you would have the same opportunities as someone from a big town, more or less compared to if you grew up in the middle of nowhere in the States, the opportunities you would naturally have if you, even if you tried, I think Eastern Europe, there's this, there was always this inclusion.

On geographically where you're from and, and like Miro, they were based out of totally like eastern Russia, where there's like nothing around or like a company like my tone. It was from super central Russia. And also, those no gun violence once in a while.

Not there. There isn't these so there was some things that were just that worked and it's not fair to think that this is just this awful place.

ALEX: I think 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 and people that are diverse and from different places, right? Because unicorn success could theoretically come from anywhere, right? And, Maria to your lens. The, suicide, the games fund is primarily focuses on content.

70 percent of your port co 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. We talk about this a lot from also from the 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. And I think like you guys are, you're obviously building and you're obviously funding and they're playing a really important role in trying to grow the prevalence of that region.

That's amazing. But yeah, I think that like those are really interesting thoughts today, guys. And I really appreciate like learning a little bit about the actual journeys of, relocating studios, the way that the market behaves and the consumer potential. Let's maybe end on one final thing.

I would love to hear a bold prediction from both of you about the Eastern European gaming market. Our city, maybe you'll go first.

ARSENY: Okay. Please flame me on linkedin. I think that they're going to back down on this payment restriction. Because it's just, it's money. Like why is money coming from one place worse than the other?

I think they're going to back down on that 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 us, they got to bring it back. And then I think companies are secretly returning to those regions anyway.

And it's just, it's it's like money's money, you know?

ALEX: Nice. All right. Good prediction.

MARIA: Yeah, I'm quite bullish. I think that we will see more investments. And already now we see lots of strategic investments in the region. And I think that VC investments will follow. So I expect more deals by the end of this year and more deals next year.

So I'm quite optimistic.

ALEX: That's awesome. Nice. All right, bold prediction payments. Down and investing up or payment walls. Sorry, down payment submitted up and more investment in the region. This has been amazing. So guys, it's been such a pleasure. There's clearly so much opportunity in this space and it's been amazing for you guys to share your journeys.

We typically end by asking 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. So Arseny, how can you seem to be a LinkedIn warrior? So how do

ARSENY: yeah, I just love trolling people there. Actually, I'm old enough that my first name is just usually my username everywhere. So Twitter, Instagram, Facebook, whatever. And then on LinkedIn, I'm around, I'm usually active on LinkedIn, feel free to spam me and I'll get into a trolling fight with you. I'll be very happy about that.

MARIA: Yeah, I think you can read me out in LinkedIn. Or in case you have A company that we want to pitch. So there is a form on our website. So check it out. I think it's games fund dot VC.

ALEX: And you guys are on your first fund, second fund,

MARIA: First fund. Yeah. But soon there will be new announcement.

ALEX: All right, exciting. Okay. All right, guys, with that we're going to conclude and wrap up as always, if you've got any feedback or ideas, hit me up at Alexandra at novak. co. I'm always open to that. And with that, we're out and I'll see you next time. Thank you guys for coming on. Thank you.

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