The world economic situation has been far from stable in the last few years. There are lots of reasons for this, but now we are interested more in the results and consequences. A question we looked at was, “What country was affected most?” To answer the question simply, it was Russia. The currency rate dropped by half the previous amount and inflation rocketed to an enormous 20%. Such a situation can force people to tighten their belts and stop paying for games. That’s what you may think at first, but is this really the case?
This is where Xsolla enters the stage with explicit data for this case. We will not disclose any specific names, but we can guarantee that all the information is 100% precise and based on real data.
There were a medley of things to look out for in order to generate a suitable data set:
- Big game project with revenue more than $20,000/month and 300+ payments a day to have reliable data on revenue changes
- Exclusive to Russia as we were interested in the payment activity following the economic crisis
- Not less than 2 years on the market and no major changes during the research period
- No seasonal changes. We were able to avoid these as the research goes from mid-autumn to the second month of spring and the only season that substantially affects game revenues in Russia is summer
- No changes in pricing policy during the research period
Basically, we tried to find a project that decided to drift through the waves of the economical problems within the Russian region. We eventually found one that matched all the criteria and was ideal for the case study.
Game Currency and USD/RUB
The next step was to detect and measure the changes in USD revenue as a result of currency rate fluctuations. Game currency cost is directly bound to the RUB rate in our case and the most obvious way not to lose USD revenue because of this was to re-bind it to the USD cost. With the increase of USD/RUB rate, the cost of game currency would also increase. According to this logic, in the situation that occurred in the last 6 month on the Russian currency market (USD/RUB rate jumped from 36 to 60) the game currency cost should have also been increased by almost twice the previous amount with the volume of sales resting on the same level only to keep up with the pace. In our case, this didn’t happen and the cost of game currency in relation to RUB wasn’t changed.
This decision had a few reasons:
- Such changes could easily push away the current players from buying any currency at all
- The cost of living as well as salaries in Russia didn’t double. Inner financial regulators slowed down the fall by bailing out in the economy
- New players would face a rough donation policy with high barriers of entry
We formed a graph of the RUB and USD revenue and the results exceeded any expectations. As you can see, with the increase of currency rate, the RUB revenue went up correspondently. No increase like that was detected in any previous periods. It suppressed any potential USD revenue downfall and even supported traditional holiday peaks.
The only push back moment was on the peak of the crisis in mid December, also known as Black Tuesday, when the rate jumped 20 points in two days and no one was able to react properly or quick enough. However, the game was able to restore it’s USD revenue level in two weeks and have no drops after that.
To have a better understanding of what really happened we built a graph that shows USD revenue in relation to average revenue per payment (ARPP) and payments per day (PPD). As you can see, ARPP lost half of its value during the last 6 month. That one is easy to explain: 1000 RUB paid in September would bring the developers about $28 and in February it would only be $17. The harder thing to comprehend was: Why did the number of payments double in half a year with no in-game conditions directly changed?
This graph made it clear. It shows how many users paid for the first time on each day and proves that there was no game popularity boom which could provoke an increase in payment count. If this were true, then the amount of new paying users would raise drastically. So only one explanation was left: players started to make purchases more often.
All of this data leads us to some interesting questions and conclusions. Why was a product of no vital necessity able to sustain itself in such a harsh economic environment? Why did players start to pay almost twice as much with no in-game reasons to stimulate it? Can we say that the game industry is a crisis-resistant business? Is it reasonable to expand gaming businesses in economically weak regions?
Key Factors & Findings
Key factors to answer the first two questions:
- People having less spare money decided to spend more time at home. That means more time playing.
- Stress pushes people to spend more on entertainment and personal satisfaction.
- Giving up on some luxurious types of entertainment (dedicated shopping and restaurants), people start to spend more on cheaper alternatives (games and cinema). These can also be supported by the fact that the Russian box office sales in February 2015 were the highest they’ve been in the last five years.
Rapid growth of the gaming industry should be pushed forward not only by advancing technologies, but also by expanding to the less developed regions where good investments hold out greater returns.
- All graphs created with Capsidea.