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Playrix: Hardly anyone knows this billion dollar gaming company, but everyone knows their ads
Two Russian brothers started developing games in their children's room and built a billion-dollar company over the course of almost two decades: Although Playrix's story is comparatively spectacular, it is outside of the mobile gaming industry in which the company is now mainly is active, has so far been little noticed. OMR traces the history of the silent giant Playrix and shows which marketing levers, some of which have been controversially discussed and criticized, have made the company the largest European game app publisher.
It was a silent triumph: According to the app analytics service provider App Annie, Playrix moved up from seventh to second in the global ranking of the top-selling mobile gaming companies in 2020. This puts the company founded in Russia (the headquarters are now in Dublin) in front of well-known industry heavyweights such as Activision Blizzard, Zynga and Supercell. Only the Chinese digital giant Tencent made more money with game apps in the first three quarters of 2020.
The ranking of the world's top-selling mobile gaming publishers for the first three quarters of 2020 (source: App Annie)
$ 1.75 billion in sales in eight months
The recent growth of Playrix is certainly also strongly due to the corona. Encouraged by the fact that this year people around the world had to stay at home for weeks or even months looking for diversion in games, global mobile gaming sales grew at an above-average rate in the second quarter of 2020, according to the app analytics service Sensor Tower : by 27 percent to now 19.3 billion US dollars.
Obviously, Playrix has succeeded in benefiting from this development more than its competitors. In the first eight months of the year, the company's sales increased by 60 percent to 1.75 billion US dollars, as the two founders Dmitry and Igor Bukhman (35 and 38 years old) told Bloomberg in September. Thus, by the end of August 2020, Playrix had generated as much revenue as in the whole of 2019. The sharp drop in click prices on the major digital platforms (which we also reported on in March) would have helped.
Most of Playrix's revenue comes from in-app purchases, Dmitry Bukhman told Bloomberg in 2019. Only three percent of the income would come from the advertising marketing of the apps. No public information can be found on the profit that Playrix generates.
From high school and college students to billionaires
Playrix had already grown extremely strongly in the years before 2020; and at the same time also the “Personal Net Worth” of the two founders. In 2019, both were included in Bloomberg's annual “Billionaires Index” for the first time. At the time, the US business media estimated the two bukhmans and their fortunes (which should largely be based on the value of their company) each at $ 1.4 billion. This year, according to Bloomberg estimates, the value is said to have more than doubled to 3.9 billion US dollars each.
Again, that fortune is likely largely due to the value of Playrix. The company now employs 2,500 people worldwide and is apparently worth billions of dollars. This is all the more remarkable because Dmitry and Igor Bukhan claim that they have never raised outside capital in their entire entrepreneurial careers. Playrix is apparently solely in her possession.
A university professor as a source of ideas
The beginnings were small: In the mid-1990s, Dmitry and Igor Bukhman got a Pentium 100 PC from their parents in their children's room and thus came into contact with gaming for the first time, as they said in an interview in spring 2019. In 2000, Igor, the older of the two, began studying mathematics in Vologda, the brothers' hometown north of Moscow (Dmitry was still a student at the time). At university, Igor meets a professor who sells games he has developed himself on the Internet, and Igor shows how it works.
Igor and Dmitry start programming their own games and also offer them online. "Back then, the model of games being sold was that you could play a few minutes for free and then pay," says Igor. Little by little, their sales increase. When they were earning more than $ 10,000 a month for the first time in 2004, they founded a company - Playrix was born.
From browser to Facebook to mobile games
The Russian startup will take part in all stages of development in the digital gaming industry in the coming years, starting with casual gaming in the browser on sites like Majorgeeks.com and Download.com, and later Yahoo and AOL. Later, the two brothers switch to the "free-to-play" model, in which the games are free, but the players pay for certain functions or items (in order to advance faster, save time or gain advantages over other players) .
Then they join the boom in social gaming via Facebook (the most well-known representative at the time was certainly the game “Farmville” from the company Zynga) and enter the mobile gaming market early in 2010. In the years that followed, they brought out many games that still generate the majority of the company's income: "Township" (2013, a mixture of Farmville and the city-building game Simcity), "Fishdom" (2015), Gardenscapes (2016 ) and Homescapes (2017).
One candy-crush blend after the other
The last three games are so-called "Match 3" games, in which the players have to arrange three identical symbols in a row. The concept has a long history in the gaming industry, the roots of which go back to the 1980s. In the past two decades, the browser game “Bejeweled”, then “Candy Crush Saga” by King Games (from 2012) on Facebook and mobile has enjoyed great success.
Apparently inspired by the “Candy Crush” success, the Bukhman brothers will be launching a “Match 3” game each year from 2015 onwards. “We're not saying we're the most innovative company in the world,” Igor Bukhman told Venturebeat in 2016. The company wants to produce hit games. “We don't clone. We're creating something new based on something that has already proven successful.
"Meta-Games" for dopamine release
The biggest innovation that the Bukhmans have in the world of "Match 3" games is that of the so-called "Meta Games" - a second game level. In the "get three in a row" rounds, the players earn "stars" which they can then exchange for something. In Gardenscapes they restore, decorate and plant a garden; Renovate and beautify a house in Homescapes. "This genre variation became very successful and other companies started to copy us," Dmitry Bukhman told Bloomberg in 2019.
Using the storytelling elements of the meta-game, the Playrix team succeeds in creating so-called “core loops” for a long time. "Core loops" in the language of gaming developers refer to the basic core of a game and refer to a sequence of actions that the players have to repeat over and over again. The concept is based on a principle from behavioral psychology: so-called "Compulsion Loops" (German: Zwangsschleifen) target the reward center in the brain and the release of the happiness hormone dopamine. In this way, the Playrix developers succeed in encouraging the players to open the app and play again and again.
"LiveOps" are supposed to increase the return rate
So-called “Live Operations”, or, for short, LiveOps, are also intended to contribute to player loyalty: The mobile gaming industry uses this term to describe the practice of constantly changing and expanding games, even if they are already on the market optimize by measuring the respective results. "The key is to keep updating and improving our games," Dmitry Bukhman told Venturebeat. "We pay a lot of attention to getting players to keep coming back to the game." Some players would play Playrix ‘games for years because of this.
On the marketing side, the Playrix team relies on a variety of different advertising media, the results of which are also constantly measured. The “Facebook Ads Library” currently shows around 650 different ad variants for Gardenscapes, for example, and 760 for Homescapes.
"Ads versus Reality"
Playrix is repeatedly criticized for misleading advertisements, not only in app store reviews and online forums, but most recently, for example, by the British advertising regulator ASA. The displays often show scenes and game variants that have nothing to do with the actual gameplay of Playrix ‘Games. Currently it is mostly logical puzzles (often so-called “pull the pin” puzzles) that are intended to stimulate the user (not infrequently in so-called “playable ads”) to attempt the solution themselves. But they have nothing to do with the underlying "Match 3" gameplay of most Playrix hits.
Misleading advertising is nothing new - not even in the gaming industry. But apparently the spread of this practice in mobile gaming has increased significantly in the past two years; various industry media and experts have recently dealt with the phenomenon of "fake ads". Even an anonymous YouTube channel is solely dedicated to the topic of fake ads and, in its videos, some of which have seven-digit views, juxtaposes advertisements for the games with the actual so-called “gameplay” according to the motto “Ads vs. Reality”.
Come for the puzzle solution, pay for the virtual garden bench
The reason for this practice is probably that logic puzzles are much easier to get users to download a game (because they really want to try the solution); However, the range built up in this way can be monetized much more easily using the "Match 3 Core Loops". The biggest problem, however, is that as soon as users discover that the game they have downloaded is actually based on a completely different principle, they no longer open the app or even uninstall it.
How Playrix adapts the app icons and app store screenshots to the ads (Source: Deconstructor of Fun)
The Playrix creators have therefore apparently perfected the principle of "fake ads" in such a way that they "defake" the "fake ads" again, as the two gaming experts Buğrahan Göker and Michail Katkoff in the industry blog "Deconstructor of Fun" in a detailed analysis that is well worth reading. Not only do they adapt both the app icon and the app store entry (including screenshots) to the puzzle or other game principles shown in the most successful advertising media, they also integrate the respective puzzle as a "mini game" into their hit games. The aim is to bind the user to the game via the “mini game” and then monetize him via the basic “match 3” mechanism.
With trendy "mini games" to new target groups
It is possible that the inclusion of the trendy “mini games” will even help Playrix marketers gain new target groups that they would otherwise not reach, as Jonathan Fisher from the app store optimization tool provider Storemaven wrote in a blog post speculates. Because the large digital platforms (especially Facebook and Youtube) on which the gaming companies buy their users, automatically display ads to those users who have already shown interest in certain types of game. Advertising for "Match 3" games would also be displayed in front of all those users who are already "Match 3" fans.
Through the interaction of these methods, Playrix has grown enormously in the past few years. On the one hand, a strong position in Asia (which Playrix has evidently built up primarily through cooperation and strong localization) should have contributed to growth. On the other hand, the two Playrix founders have bought twelve mobile gaming studios over the years, including the Cypriot publisher Nexters, who pioneered “pull the pin” fake ads with its hero wars roleplaying game and possibly the inspiration for the adaptation of the principle to the great success games from Playrix.
"We don't sell for three billion"
Unsurprisingly, The Information reported rumors in 2019 that Playrix would be sold for $ 3 billion, and the Bukhman brothers denied the report to Bloomberg shortly afterwards. Many would have advised them to join forces with a large company or to go public; However, various investment banks have also contacted them. But: "We won't sell for three billion," said Dmitry Bukhman with a smile to the US business media. Since then, the value of the company is likely to have risen significantly again. A clue for the current valuation of the company is provided by Bloomberg's assessment of the "Personal Net Worth" of 3.9 billion US dollars each.
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