GDEV isn’t a common name in gaming but it has one of the industry’s most success mobile game franchises in Hero Wars.
The company’s Nexters subsidiary has seen Hero Wars generate more than 190 million total downloads and $2 billion in total bookings since it was released in 2016. That helped propel Nexters, which went public in 2021, to $480 million in revenues in 2022, up 11% from a year earlier. Revenue growth is slowing as mobile game companies deal with new dynamics and a mixed global economy.
I spoke with Anton Reinhold, the COO of international gaming holding company GDEV, on a recent trip to Lisbon, where the company announced its Hero Wars Universe expansion beyond gaming. It is launching an animated movie, comic book and more in the latest move to take advantage of transmedia.
The company is working on separate Hero Wars games for mobile and desktop, titled Hero Wars: Alliance and Hero Wars: Dominion Era, respectively. And it released a Google Play game, the action-RPG game Deploy Heroes in alpha form. And it’s working on hybrid casual games such as Hero Wars Survivor, Dungeon Escape, and Wendy’s Taverna, which delve into the Hero Wars characters’ stories through sequels, prequels and spin-offs.
It also released Raging Blades, a comic book available on Webtoon, the largest online comic book platform, and produced by Light Comic Studio. And its animated film is being produced by Primal Shape, a studio behind сinematic movies for Apex Legends and League of Legends. And it opened Wendy Shop, a web store of unique items, exclusive offers, and special promotions.
Reinhold said it was a natural evolution of the characters and stories crafted for Hero Wars. GDEV has other subsidiaries like Cubic Games and Dragon Machines. We talked about both the challenges and opportunities facing GDEV and its divisions. Among the challenges: the company faced higher operating costs as it relocated people out of Russia in the second half of 2022. Now it is based in Limassol, Cyprus.
Here’s an edited transcript of our interview.
GamesBeat: And the latest, how’s it going? Anything in particular you wanted to update on?
Anton Reinhold: Yeah, actually, here in the Web Summit, I’ll be talking about multi-platform games, how gaming’s future is in spreading multi-platform. So, kind of we are all in a mobile crisis. The new games don’t hit the top-grossing 100 that much as they used to in the past. And the UA is not as easy as it used to be for everybody. So, the capital is not that accessible as it used to be.
And we are at Nexters thinking about what have we built before and what actually can help us of the assets that we have created could move us forward and which trajectory we should take. And we very much believe in building gaming stories and gaming brands. We have invested so much in Hero Wars before, so it is a big brand with so many impressions. We’ve shown our ads so many times to all the users, so a lot of people do recognize our main character. And we decided that we could build upon that and we could maybe go there as people love our game.
We have Hero Wars that’s on mobile and we have Hero Wars on desktop, so on the Web. Those are two separate games, so one is a bit more core game and the other is a lot more casual, so people don’t read that much the story of the characters. We try to show, give to tap, not to provide a lot of time, not to delve into the story like reading texts and texts about the heroes.
On the contrary, our players do that on the Web, so basically on the Web game. So they go ahead and enjoy the story of the world, of the characters and how everything is interconnected.
But still we see that in terms of different side effects, we see that the ads that we show on mobile alone are effective in terms of acquiring users and bringing them to the platform, but there is also this emerging effect that it helps to build the brand on the Web, so people do recognize this game.
Once we noticed that, we decided that maybe there is something to games on mobile apart from, you know, buy a user, monetize user, go ahead, buy another user and go ahead monetize the user.
We are thinking of building a franchise of Hero Wars, so we see that there are very successful stories like Angry Birds, for example. It is a successful franchise, a very recognizable brand with those Angry Birds.
And we are now trying to test the water to see what kind of things we could do in terms of this Hero Wars universe, how we could expand it. We are thinking about making the history of each of the heroes deeper. We have started off with a comic book on Webtoons, and it played off pretty well, so we see that there is a recognition among the community. So our players like this type of format, and the Webtoons have responded also very interested in it.
GamesBeat: The story sounds familiar to me. I remember interviewing Kent Wakeford from Kabam, a COO way back when, and he was talking about how they saw this pattern with iPhone games and a lot of the revenue was all concentrated in the hands of the top 10 games or so. It was starting to feel more like the console game market now.
You know, the new games that were coming up, they used to do like a dozen games a year or something like that, and then they switched to do maybe one game every couple of years, and they came up with Marvel Contest of Champions. They had a big brand associated with it, and that kind of game went to number one, and it sort of arrived at the right time when the market was changing in that market. So it sounds almost like the Apple song had a story.
Reinhold: Yeah, yeah. See, we are not trying to use somebody else’s IP. We already have an IP, and we want to build upon that. So basically, we see that we have invested like so many hundreds of millions of dollars into the UA, so we have already something that is recognizable.
So why not use that to build new games, new cartoon movies, for example, for our YouTube audience that could be very interesting for gaming. So we know that our characters are very likeable, and you can actually build a whole story around them. So some of the greatest names in the free-to-play market say Candy Crush Saga. They don’t have so many characters in the game, and we do. So our game is based on characters. So this is why we want to kind of wrap this up.
GamesBeat: Does that sound like we’re in a cycle that repeats itself?
Reinhold: Of course, of course. I see also a cycle in mobile market which is kind of similar to the Facebook game. So once the platform was launched, it was craving for users, it was craving for content. And the platform was feeding their users the gaming content, and for game developers, it was like free users.
So they were building very cheap, but having many, many millions of installs that were free, that were organic. And then it all became like a red ocean with the UA with very high prices for every user, and then it all went to mobile. And mobile kind of has the same pattern. So now it’s like a red ocean, and being only on mobile in this red ocean, it’s really hard to beat those top 10 games and provide something new.
Because they have tons and tons of content. They have invested so much money into building every game, even more than any AAA title that goes in console. For example, Playrix has, or say, I don’t know, any other company maybe has like 500 developers building just one game. And how could the new developer beat them?
GamesBeat: How many are there on your team as well, and how much does it get dedicated to something like Hero Wars?
Reinhold: I think around 400 people at Nexters work in Hero Wars, both in marketing and the development team. So it’s also a big team.
GamesBeat: And how many all together are there?
Reinhold: At Nexters studio there are around 600 people.
GamesBeat: So how do you make use of the other 200? Are they spread across a lot of games?
Reinhold: We have another game that’s a farming game with adventures. So we have those two streams. We have the Midsport stream with Hero Wars as the main flagship product, and we have the casual streams. We used to have a casual game of the same type on Facebook and on mobile.
We saw that it’s very appreciated by the audience, but back then the monetization was a bit off.
And we have built a game that’s called Island Hoppers. It’s also both on mobile and on web. So the progress is interconnected. Once you progress on web, you can go on mobile and play there and go back. Those are two main things that we do, so the Hero Wars and Island Hoppers.
We have an R&D department as well that is looking for new games, exploring new genres.It’s built basically on a small cell team basis, like five or six people, working on getting a small prototype that they try on Facebook and see how it works. And then they go to retention one test.
So they do the retention day one. They look at the benchmark. If it was beaten, they move to the fifth stage. If not, then they have a few tries to make it better, and then they just throw it away and go next.
GamesBeat: How did you guys do as far as pulling people out of the areas? Did you guys have people that you had to move? Are they all in different countries?
Reinhold: Yeah, great question.We had a pretty big team based in Russia before the war. Once the war started, we decided that we wanted to move everybody out. We didn’t want to have any people located in Russia. We have closed all our subsidiaries there and have moved. So we have opened a few offices. The biggest one now is in Armenia. That’s a former Soviet country. And another one is in Kazakhstan. And we have got a few European locations as well that are not yet offices, but we have got subsidiaries there when we are thinking about opening offices there.
GamesBeat: And the headquarters is?
Reinhold: It is in Cyprus. And so we have moved part of the team to Cyprus and the rest of the team to Armenia and Kazakhstan. And of course, around 10% of the team is now diverse in different countries, like remotely in different countries, like in Serbia, in the U.K., in Germany, in Georgia, all over the place.But nobody, nobody, so everybody, we have taken everybody out. Of course, it cost us a fortune.
GamesBeat: Did a lot of people leave the company just to stay as well, or did you actually manage to get most of them out?
Reinhold: We have let some people go last year. So we decided that the plans for the growth by x-ing the number of big games that we have is not going to happen. And we have let go around 25% of the company. But for the most part, we have managed to keep the core team. Of course, there were a few cases when people didn’t want to leave and they just stayed in Russia.
GamesBeat: And then, I guess, bigger companies are even saying that they are not going to do new games anymore.
Reinhold:They are not what?
GamesBeat: They are not really doing new games anymore. Like Warner Brothers, maybe the biggest example of that, where they said, no, we are just going to do our franchise games. We are not going to invest so heavily into new games. We have no brands right now. So it seems like you are going in that direction and you are not going that far. Because you still are creating some brand new things.
Reinhold: I would say that Hero Wars for us is a great IP already. And basically, building new ways to play our characters, so build new gameplay around the old IP, that is something that we think could work for us. So basically, we are using the IP as a great theme.
That is very wide. It is a generic fantasy game with which Interi connects different kinds of heroes from different worlds. You can have a Robocat and you can have a medieval knight that can blast swords from the sky. They live in the same world. So basically, you can do an idle tycoon in this setting or you can do a runner in this setting. And it would kind of expand on the story and not kill the story.
GamesBeat: Do you have more flexibility with the IP?
Reinhold: Yeah, we believe so. It could be also a direction to buy some IPs that are already on the market and to use them for our R&D projects. We are exploring on that as well.
GamesBeat: You guys haven’t done much of that before?
GamesBeat: Buying other companies?
Reinhold: We did. Just before the war started, we have closed a few deals. The biggest one was the acquisition of Pixel Gun 3D. That is a very big online mobile shooter game in pixel setting. It is the number three pixel game out there after Minecraft and Roblox. It is really big and the audience is huge. We are operating that game and we are going to launch on Steam in a few months. We have over 150,000 wishlists, add-ons.
We also have purchased less than 50% stakes in a few companies like RJ Games and companies in Royal Ark. They do mid-core games. We have experience and we are building relations with the developers right now.
GamesBeat: I just wonder if the market stays this way for a while now or if there are still lots of changes to come?
Reinhold: You mean the mobile market?
Reinhold: From what I see, the revenues are going slightly down. The downloads are going slightly down. We see this year that hyper casual doesn’t work anymore and this is a huge change. Basically, we are losing placements in terms of promoting our games. This is not an easy situation.
If we add on the hybrid casual games to this mix, they are not only providing the ad placements for our games, but they are also competing with the games bigger than themselves for the ad impressions. This makes the environment a lot more competitive and the margins lower given that the economy is not in a great shape. Basically, people don’t have that much money to spend on games.
This tells me that the market won’t be easy next year. I think that everybody wants to see the next big thing on the market. Our take on this is that the franchise is built from mobile and spread around into different other platforms and media could be this new big thing. What do you think?
GamesBeat: So much of it, I think, people have said was economy driven. When we had more economic downturns happening, that was where mobile was impacted because those fans weren’t as committed to the IPs as they were.
So they lost more users, I guess. They gained a lot of users during the pandemic and they lost a lot of users too. Whereas the console games didn’t lose as many users. Or loyal console game users.
It feels like we have another year of that to go through. Where there’s tougher economic situations for players.
So then you would logically have the whole industry keep losing for a while so that the economy improves. That sounds like a difficult operation.
Reinhold: Totally agree with you. What we see on our web project, which is kind of under the hood because there are not many sources of tracking the competition from outside the company.
We see that we are not losing as many users as the mobile market as a whole and that’s our mobile product. So basically our player base stays really loyal. We are building on top of that, so trying to give as much value as we can to those users. Provide them with new gameplay, new things to spend their time with. So this is kind of why we think that building something more than just an app on the mobile platform could be a turn.
GamesBeat: Do you see this as more investment in live operations or do you see it as something different? I guess it’s more investment in what you might call a transmedia.
Reinhold: This is how we think about it.
GamesBeat: At the same time, is live operations still getting a lot of investment?
Reinhold: Of course. Live ops has been a priority and remains in focus. Building seasons, building something for players to spend time on in-game, that’s very crucial right now. So they need to be entertained.
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