Russia-focused online games developer eyes new markets

Reuters News
Posted: Jul 11, 2012 5:17 AM
Russia-focused online games developer eyes new markets

By Tova Cohen

HERZLIYA, Israel (Reuters) - Israel-based online games developer Plarium, whose multi-player game Total Domination has attracted 20 million users in just a year, expects revenue to double annually in coming years as it launches new games and enters new markets such as the United States.

"We are growing very fast," Plarium CEO Avi Shalel told Reuters. "Since the beginning we have doubled revenue every year and we expect this pace to continue."

The private company, which has so far focused largely on Russia and eastern Europe, does not disclose financial data but Shalel said revenue had reached tens of millions of dollars a year and the company is profitable.

Plarium has six new games in the pipeline, including two that will be launched in coming weeks, and is entering new platforms such as Facebook <FB.O> and mobile devices, as well as starting its own standalone website.

Plarium, which was founded three years ago and employs 250 staff, has over 70 million users, mostly in Russia and eastern Europe, including 3 million active daily users.

It started out by developing applications such as a social poker platform for Russia and eastern Europe, initially focusing on the social network VKontakte and then expanding to other sites such as Mail.Ru <MAILRq.L>.

"There was no Farmville, no poker, there was a tremendous need for it but no one was developing it," Shalel said.

Plarium has become the leading developer of online games in Russia and eastern Europe in terms of revenue, though Social Quantum, which focuses on casual games, or non-hardcore games played once in a while, has more users.


"We realized that if we want to go global we must be able to develop original content. We decided to start developing for the hardcore and midcore game audiences with the aim of going international," the 26-year-old CEO said.

Plarium's first original online game Total Domination was launched a year ago and has 20 million users, while its second, Pirates, is approaching 10 million after six months. They are known as "massively multiplayer online" (MMO) games, capable of supporting thousands of players simultaneously.

Plarium has five animation studios - one in Israel, one in Russia and three in Ukraine - and is seeking to open one in the United States.

While users can play the games for free, they must pay for special content and benefits. Plarium is also experimenting with carrying advertising in eastern Europe.

"We don't see it being a main business model in the near future. We want to make sure we don't spoil the user experience with advertisements," Shalel said.

Plarium has two main competitors, Kixeye and Kabam, in the hardcore gaming market. Shalel believes Zynga <ZNGA.O>, the world's largest social game publisher whose games include Farmville, will eventually enter the hardcore market.

"They will need ... to enter new genres and hardcore games will be on their radar. By that time we hope to establish ourselves as the dominant player," he said

Born in Georgia, then part of the Soviet Union, Shalel is a native Russian speaker who moved to Israel as a teenager. After attending university in the United States he founded Plarium with six partners, who used their own money to start the company and did not have to seek out venture capital.

"We are building the company to go public," Shalel said. "We are not looking for an early exit or to sell the company."

(Editing by David Holmes)