KupiKod: "Indie projects in Russia can earn from 5 to 50 million rubles"

About how profitable the business of topping up Steam accounts in Russia is, whether it's possible to enter this market today, as well as the size of the Russian gaming market and how much foreign AAA and indie titles can earn in it — we spoke with Anton Chernov, CEO of the platform KupiKod.

Aleksandr Semenov, Chief Editor of App2Top: Anton, hello! Let’s start with introductions. Please tell us about yourself and how KupiKod was founded. What story lies behind the service?

Anton: Hello. There’s not much to tell about myself, I've been launching companies in different fields for the past 10 years. I'm a programmer by education but have never worked in that role. Before taking on managerial positions, I was involved in marketing.

We launched KupiKod six months after Visa and MasterCard left Russia. We saw the payment problem people were facing and aimed to solve it. Initially, we didn’t plan to engage with games—only to assist with payment for services like iTunes, YouTube, Microsoft Office, and others. However, during the launch, we realized the gaming market was significantly larger, which required addressing payment issues there.

We were very reluctant to create our own website and other infrastructure, and we tried to enter through marketplaces (Ozon, “Yandex Market”, Plati), but as we worked, we realized that the marketplace didn’t provide anything and only took away.

We first started with topping up Steam accounts, then began selling keys, then gifts for Steam, and later moved on to topping up mobile games.

Topping up game accounts and selling keys are essentially bypassing sanctions. From this position, can we say that this business operates in a gray area?

Anton: We don’t use illegal schemes, nor do we sell accounts, cheats, or anything of the sort, so I personally don’t consider this business gray. Also, there is no ban in Russia on foreign companies operating in the country. Foreign companies now choose for themselves whether to work in Russia or not.

For example, three years ago you could easily buy something on Amazon, iHerb, Facebook*, Steam, and others. All these companies didn’t have and still don’t have legal registration in Russia. But nobody said or says Amazon is a gray company operating illegally in Russia. KupiKod operates on the same principle as Amazon.

Developers and publishers know very well that the money comes from Russian users, and they do nothing about it. They simply cannot physically receive it right now. If they could, everything would work. We provide this opportunity. Essentially, we cover for developers and publishers who pretend not to work in Russia.

What are the main risks today for this business?

Anton:  Additional sanctions. Specifically on games, for example. Software is already being blocked. They might get to games eventually.

Also, attention from the state, from Russia. Nobody has really assessed the gaming market as a whole. Before the sanctions, the money simply went off in an unknown direction to different countries without passing through the Federal Tax Service (FNS). The state probably doesn’t know exactly the size of the market and its audience, but is beginning to understand. The next step is the regulation of games. The state will begin to decide independently which games can be sold in Russia, and which cannot. And honestly, that’s the direction we're heading in. Essentially, they will introduce labeling for games and that's it.

Let’s talk about the market size a little later, but for now, let’s focus on how profitable the business of account top-ups and key sales is, considering that one of the competitive factors is commission?

Anton: The question might need clarification. How profitable are marketplaces? For example, Ozon. Well, obviously profitable, since Ozon has been operating for over ten years and hasn’t closed. But how profitable is Ozon as a company? Unprofitable throughout its existence. The business itself is profitable. There’s no super high-margin like in jewelry, for example. But there are large turnovers.

Regarding KupiKod, as a company, it’s unprofitable because it's in the growth stage. It’s currently only occupying the market and not providing dividend income. Once we realize there's no more room for growth, we’ll start fixing profits. When that will be, and if that moment will ever come — is hard to say.

Would you say that key sales and account top-ups are two different markets, two different niches?

Anton: Both yes and no. For the end user, if we're talking about topping up Steam and buying keys for PC, it's one market.

The market is fundamentally divided into three platforms — PC, mobile, and consoles. Keys, direct top-ups, or gifts are just methods of getting the game on an account. In the end, people want to buy games or make in-game purchases, and how to do that is up to the individual. Users are in one segment. There are stores that, for instance, sell keys but don’t top up Steam and vice versa. For them, these are different niches. But we don’t divide it that way. For us, it’s divided only by platforms.

By the way, which is done more actively — buying keys or topping up accounts?

Anton: Accounts are topped up more frequently. It's a habit that's hard to change. Steam has been ingraining the habit of purchasing within their platform for years. People usually buy keys if they are trying to save money. Sometimes a game key is cheaper than the game itself on the platform. Keys cannot be returned if the game is disliked, while platforms offer that possibility. Moreover, it’s easy and quick to pay from the platform account, without searching for where to buy a key.

How competitive is this market/these markets in Russia today? How many companies are there to share the market with?

Anton: I think the competition is very weak. The market is mostly monopolistic. For instance, there’s still no analogue to FunPay. And that's logical. If “Yandex” or “Sber” could create FunPay, gamers would get a better product. As an entrepreneur not owning “Yandex,” I dislike that it intrudes everywhere — it's very hard to compete with corporations; they have governmental backing and endless funds. However, everything they touch gets better instantly. In the end, we get a monopoly with all the ensuing consequences.

Is it possible to enter the market of account top-ups/key sales now?

Anton: If three years ago a startup could enter this market, now it’s impossible without funds. You need to prepare at least 100 million rubles just to make a small appearance.

What market share does KupiKod have?

Anton: I can’t tell you that; it's sensitive commercial information.

Okay. Let’s talk a bit more about competitors. How much has the entry of VK Play as one of the resellers affected the market and you?

Anton: It hasn’t affected us at all. From the outside, it might seem like banks and VK Play are competing with KupiKod, but in reality, they’re only competing with each other. I don’t want to elaborate on this thought to avoid giving them food for thought. I can only say that corporations solve their different problems by topping up users’ Steam wallets. They don’t need to earn from the top-ups. It’s not an attempt to earn from the service but a battle for users within their ecosystems. That’s not bad, but it’s important for understanding competition.

Personally, I have a warm regard for VK Play. They’re doing a great job and are doing more for the Russian gaming industry than anyone else. They haven’t succeeded in everything yet, but it takes time.

What do you think about its appearance overall? Will it cannibalize other key sources considering its capabilities?

Anton: At this point, I don’t know what to think. I’m not at all worried about the domestic market—the more competition, the better. But the fact that sanctions are bypassed not just by sanctioned banks but essentially by a state company is alarming. Policies could be tightened, and we might lose access to games.

Regarding cannibalization — if they don't optimize logistic key routes, then no. Once they optimize, they could absorb small shops. However, keys are a specific commodity. Cheap stolen keys won’t disappear, and VK Play won’t risk selling those. End users generally don’t care where the key comes from if it works and the price is right.

In one of your past interviews, you mentioned aiming for the service to be viewed not as a store but as a platform for finding games. Can you elaborate?

Anton: We want all users to find something useful for themselves in our service—whether they buy games or download them for free. Whether they buy from us or VK Play. For this, we need to aggregate a lot of information and compile accurate recommendations. Gather data. We envision the platform as a sort of social network in the future, where users interact, share content, plan to play together, organize tournaments, make friends, find games, and can buy or top-up games natively there. This model comes with many legal risks, but we’re looking for solutions.

Interesting, I hope it works out for you all. Now let's move on to the data you have access to. It’s rare to find estimates of the Russian gaming market’s turnover (monthly/yearly). You're among the few who can make this estimate since payments go through you. Obviously, with a certain level of approximation. The question is: what do you estimate the Russian gaming market for PC and consoles in rubles?

Anton: That’s a difficult question. Approximated data and their interpretations are guesswork. My gut tells me that the Russian gaming market for PC and mobile will collectively reach 200 billion rubles by the end of 2024.

What's happening with the market dynamics? Generally speaking, is it growing annually/shrinking? Or has it reached a plateau and is staying more or less stable?

Anton: Definitely growing and will continue to grow.

Can you share sales distribution for PC/console games?

Anton: Our numbers here won’t be relevant because console products do very poorly at KupiKod. But we presume that consoles account for about 7% of the previously mentioned over 200 billion rubles. The share is likely to grow because hardware prices for PCs are increasing, and computers are beginning to become a “luxury,” while console game subscriptions offset high prices of individual games. It used to be that you spent a little more on a PC and then played either free or very cheap games. Now a PC with console-level specs costs much more than the console itself.

Have you studied what Russians primarily buy, the genres/directions of games? Or which titles are consistently in the top charts? Any unusual findings here?

Anton: Of course, like any business, we monitor trends and genres.

Primarily, action and shooter games like Helldivers 2, Battlefield 2042, and Red Dead Redemption 2 are popular. This isn’t surprising since these genres have long captured the broad audience’s attention.

Secondly, there is significant interest in games with developed storylines and open worlds such as The Witcher 3: Wild Hunt and Cyberpunk 2077: Phantom Liberty.

Additionally, I can confidently say that games from various genres—from racing simulators like Forza Horizon to indie projects like Lethal Company—find a large audience in Russia. This indicates the broad interests of Russian players who aren't confined to major AAA projects but also support diversity in their choices.

In July, at the “Gaming Industry” conference, at a roundtable on the Russian market, I asked: “How much can a video game earn in the Russian market?” Unfortunately, I didn’t get an answer. I’m sure you have the answer.

To begin, it's important to note that developers rarely publicly share data on their games’ revenues, especially for Russian projects that remain in the market. Thus, tracking the number of copies sold is challenging. But if we talk about foreign titles, excluding the most popular ones, the revenues for AA games can range from 50 to 200 million rubles. These games typically have medium budgets and attract niche genre fans.

Regarding indie games, their earnings are usually lower, but they can be successful if they trend. Depending on quality, marketing, and genre, indie projects can earn in Russia from 5 to 50 million rubles. With the right strategy, both AA and indie games have every chance for success.

Given this, do you think it’s possible to recoup production budgets solely in the Russian market, as some companies are trying to do today?

Anton: It all depends on the budget and genre of the game. If we're talking about small indie projects, then yes, recouping costs in the Russian market is quite possible. For example, studios developing games with budgets up to 10-15 million rubles can cover these expenses with Russian sales if the game becomes popular among the local audience.

But when it comes to AA level or especially AAA projects, that becomes more challenging. Take Atomic Heart, for example. The game's development cost tens of millions of dollars. Recouping such a sum solely through the Russian market is unlikely. For these projects, it's important to reach an international level to ensure sufficient sales volume. Therefore, most large Russian companies aim for an international audience to ensure profitability.

Interesting, thank you. And a final question about your plans. In your conversation with our Belarusian colleagues, you mentioned the company plans to invest in development and publishing. Can you tell us more about this initiative?

Anton: That's right. We plan to allocate a non-repayable grant of 1 million rubles.

Concerning publishing, we are still gathering data and conducting some preparatory work. We need to resolve a number of legal issues. In the initial stages, we plan to assist with monetary logistics and marketing. In the second stage, we’ll assist with development. And in the third stage, we’ll move to full production, where we can adjust game mechanics and advise on monetization.

Understood, thank you very much for your responses! Good luck to you!

*Belonging to Meta, a company recognized as extremist in Russia. Meta’s activities are banned within the country's territory.