How Alex Chachava extracted Warface maker My.Games from Russia and what’s next

Alex Chachava pulled off a tough extraction final fall when he acquired a lot of My.Video games and moved the corporate’s operations out of Russia due to the geopolitics across the Ukraine warfare.

Again in September 2022, VK introduced it sold all of My.Games to Chachava, managing accomplice of LETA Capital, for $642 million. By December, My.Games set up its headquarters in Amsterdam and established places of work in Cyprus, Korea, Spain, China and Finland. Now Chachava is the “chief alchemist” and proprietor of My.Games and he’s making strikes to re-establish the large sport writer outdoors of Russia.

In April, he introduced that the corporate would relaunch a brand new model of Warface, a well-liked shooter sport, below a brand new model identify. The previous Warface sport in Russia is now owned by Astrum Leisure, which is a wholly separate entity from My.Video games. However Chachava stated My.Video games has 1,500 folks and far of the core of the previous firm, and it has plans to attract Warface gamers to its new title.

Consistent with its international enlargement technique, My.Video games has positioned its emphasis solely on worldwide enterprise growth and enhancing the infrastructure for its extensively distributed staff. One of many strikes can be taking place because it units up an workplace in Abu Dhabi.

One of many firm’s methods is to give attention to the Center East, North Africa, Pakistan and Turkey (MENAPT) markets, the place gaming is rising quick however is much much less dominated by established manufacturers than in different areas. There are roughly 377 million gamers in that area, in comparison with 210 million within the U.S.

I talked to Chachava about these strikes and his views on the geopolitics round gaming. Right here’s an edited transcript of our interview.

GamesBeat: How did this complete journey with My.Video games get began for you and [what led you to] determine to purchase the corporate.

Alex Chachava: I’ve a number of solutions. Let me begin with my earlier steps and enterprise profession. So I made my first capital on B2B software program… enterprise software program. I began my first firm 20 years in the past. Along with my companions, we constructed a fairly profitable B2B software program SaaS firm. It was even a bit of bit earlier than SaaS, so it was simply common B2B software program on the market on SaaS.

Round 10 to 11 years in the past, I began my very own VC fund. It was not a really typical VC fund, as a result of I used to be the most important LP, so I used to be investing my very own cash. We’re a VC automobile, and we now have made many profitable investments in my thoughts. My most profitable investments have been in B2C software program. One in every of them was a ride-hailing app, the place I’m nonetheless a shareholder. It’s known as inDrive. It’s just like the second largest ride-hailing app after Uber, after which there’s Novakid — it’s a studying platform [for kids to learn English]. It’s in all probability the most important of its form in Europe, and I spotted how aggressive, and the way difficult it’s doing B2C enterprise in comparison with B2B.

At a number of factors in my profession, I’ve had touchpoints with the gaming business. Personally, I’m a racing man and for me, the highest competitors is Method 1. However in entrepreneurship and in enterprise, for me, the highest competitors is the video video games sector, as a result of it’s a large enterprise. There have to be round 4 billion to 5 billion folks taking part in pc video games and hundreds of studios are competing on a comparatively honest taking part in area for customers’ consideration. In my opinion, that is probably the most aggressive and difficult market on the planet.

Possibly it is a bit emotional, however once I had the chance to purchase My.Video games at a comparatively engaging valuation, for me it was like an entrepreneurial problem.

For positive, I did this deal as an investor and as an entrepreneur as a result of I’ve a transparent imaginative and prescient and a transparent technique for what I wish to obtain. However there may be an emotional half too.

I’m actually into racing. I discussed Method One and that I do some racing competitions. And beforehand in life, I performed numerous soccer (soccer). Soccer is the highest aggressive sport perhaps not in America, however actually globally. So, the gaming business appears to be probably the most aggressive business. For me, it’s fascinating to achieve success there as nicely, as a result of in a way all entrepreneurs are like athletes.

GamesBeat: And I assume, you understand, in some methods, it was an enormous alternative to have the ability to purchase My.Video games, however I additionally surprise how massive a shock it was, you understand, to have these circumstances come up, you understand, with the warfare, and know, the truth that one thing needed to be accomplished with a few of these Russian firms…

Chachava: Sure, undoubtedly. I might say that unusual and horrible issues have occurred over the previous few years. However I might say that beginning with COVID, unusual issues have been taking place in international markets, together with in gaming. And all of those earthquakes. I’ll say what occurred to over the last couple of years, albeit after this horrible warfare. And now we now have an financial slowdown and even decline. And never solely within the gaming business however even throughout the financial system as an entire.

We’re approaching very robust instances globally, I assume. And there are much more challenges forward. It was simple to be within the gaming enterprise in 2021, when the market was rising within the double digits. However now it’s rather more difficult, particularly for firms who had some presence in Japanese Europe, Russia, or Ukraine. Nations in Western Europe will not be feeling very secure proper now. As a result of you understand, it’s a horrible and comparatively massive battle.

That’s why My.Video games will quickly be opening extra hubs and places of work. We now have our two most important places of work within the Netherlands and Cyprus. After we add a brand new one, it’s not simply having an extra workplace for us: I wish to name them “hubs” because it’s a brand new dimension to our technique.

Our subsequent hub will probably be Abu Dhabi, as a result of you understand, the MENA area is rising very quick. In reality, it’s nonetheless rising even now, when total market has been declining. MENA is reported to be the fastest-growing video video games market. The variety of gamers is over 370 million women and men, and we see big curiosity from native gamers and native traders. They want to make investments they usually wish to launch an enormous new gaming convention for this area.

It’s additionally vital as a result of MENA is type of a gateway to the entire Arabian market, to the North African market and even to some Asian markets. It’s it’s very handy to do enterprise with India for instance from the UAE.

The opening of our new Abu Dhabi Hub is a strategic transfer for us, as we intend to be rather more lively within the Center East. Beforehand, our main markets have been Europe and the US, and now with this new hub, we’re opening a brand new chapter. We will certainly nonetheless be very lively within the US and Europe, however we realized that our world may be very massive and there are various avid gamers outdoors the West. We plan to be rather more lively within the East, and we all know our titles might be profitable there as nicely.

GamesBeat: Yeah, how onerous was it to seek out the fitting worth for the acquisition of My.Video games? I believe you bought it for perhaps lower than one-time gross sales and the earlier 12 months, proper? However what was a great way of taking a look at how beneficial was on the time that you just purchased it?

Chachava: Properly, you understand, M&A multiplies can fluctuate loads, relying on the momentum of the market or the state of affairs within the nation. And typically it will get loopy, like in 2021. Or typically it’s loopy when, for instance, a Saudi firm acquires an American firm, like we noticed lately with Scopely. There, the multiplies weren’t disclosed, however we all know the whole income and we all know roughly the income of Scopely and the general worth of the transaction.

As for My.Video games, it was the alternative state of affairs. As you understand, many Western firms have been promoting their Russian belongings for very low cost. Avito, for instance, was acquired by an area investor. Avito is the most important market [and classified listings] website in Russia. It was as soon as valued at $6-7 billion, and now when South African investor Naspers bought their stake it was valued at simply $1.5 billion or one thing like that, so 4 instances cheaper. So my acquisition was roughly in step with this new market pricing as a result of final 12 months it was primarily offers with Western traders like Goldman Sachs, and Morgan Stanley, which had an enormous portfolio in Russia they usually have been leaving. As I do know, there have been a number of potential consumers, and it was a really aggressive course of. This value was fairly honest for that state of affairs. As a result of after the acquisition, we needed to totally exit Russia. It was a bit lower than 20% of our gross sales, however nonetheless an vital marketplace for us.

So, undoubtedly My.Video games misplaced some worth as a result of we needed to exit an vital market. However nonetheless we now have a tremendous portfolio of titles. We now have wonderful studios. And we’re wanting ahead. Our technique is to to be one of many main European gaming firms. In simply this 12 months and subsequent 12 months alone, we now have roughly 15 massive new titles coming. A few of these video games are already in growth and testing, whereas some are additional alongside, however we now have big plans.

I’m hopeful that we’ll proceed our progress and that we will construct and launch many new hits. As a result of gaming is all the time a hit-based, hit-driven enterprise, we’re specializing in new titles proper now. And that is our core technique, to develop new video games.

GamesBeat: And the way massive a problem goes to be to take the gameplay of Warface actually, and the engineers who, who created it, after which create one thing that the participant will nonetheless like and play, regardless that it doesn’t have the Warface identify? That’s a really totally different type of enterprise problem than we often see, proper? That you must take an present sport, and attempt to get the viewers to maneuver over to a brand new sport that’s type of like the identical sport? It’s so totally different than something that’s ever occurred actually…

Chachava: Properly, we now have seen it many instances prior to now when sport builders took a well-liked gaming title and remastered it to re-engineer it or make it extra fashionable. The core expertise was very a lot the identical for avid gamers, however they added new applied sciences, new graphics, and typically new gameplay. Many profitable sequence have accomplished it. Fallout, for instance — it’s two totally different video games, however with the identical soul. And even with Counter-Strike we noticed one thing like a brand new technology. There are numerous different examples. We plan to do our greatest to create a brand new sport based mostly on the good type and expertise of that sport, as a result of typically we do it with our present titles and add new options, writing new gameplay.

For instance, for our main title Warfare Robots, we’re including a brand new PC sport based mostly on the identical story, let’s say. And it’s type of like a thread if you play with platforms and wish to combine your viewers, bringing your cellular sport to new platforms. As a result of attempting to draw a very new viewers section may be very costly. So we’re investing extra in branding, we’re investing extra in-game high quality, and interacting extra with our present viewers to enhance our person acquisition mannequin.

GamesBeat: After which the Abu Dhabi transfer what what sort of alternative is that?

Chachava: Abu Dhabi is extraordinarily fascinating. It’s a really handy hub for our new route of operations. Masking not solely the Arabian market, but in addition African and partly Asian markets. So it’s a brand new step for us into a number of new territories.

We now have had nice help from the UAE officers. They’ve been nice. Our Abu Dhabi Hub will probably be at Yas Inventive Hub. It’s a really good campus constructed by the Abu Dhabi authorities to help the artistic business and to present firms new alternatives to develop their enterprise within the area. Ubisoft has an workplace there too, and lots of different gaming studios and builders are there. Nvidia has a comparatively massive workplace. YAS Inventive Hub has a really fashionable infrastructure for cloud gaming and for creating video games. I’ve been there many instances. it’s a really handy place to work, and we’ve had glorious help from Abu Dhabi Funding Workplace and AD Gaming, the group set as much as help gaming studios and gaming firms do enterprise on this area.

We are able to see they’re investing closely in gaming platforms and conferences, so we see good alternatives right here. Particularly when the Western markets are declining. From a aggressive, when the market just isn’t rising competitors turns into fiercer. However we see that we will help our progress and ambitions to develop enterprise in new areas, that are new and nonetheless rising. And we see that it will likely be simpler to function in Asia in addition to have a big hub workplace in Abu Dhabi.

GamesBeat: I assume, in what approach… you understand, I believe, I believe My.Video games has realized, I assume the significance of the place your headquarters is, and in what nation, I assume. However we even have such a special world after COVID, now, the place so many individuals are working remotely… like in what approach does it nonetheless matter, you understand, the place your organization headquarters is and the place your places of work are?

Chachava: Properly, perhaps I’m a bit old school, however I want to work within the workplace and I want to see the faces of my colleagues and companions. However the actuality is actuality. After COVID the truth is that our behavior is to work remotely. For a lot of, it’s not even a behavior, it’s their new way of life.

Once I have a look at my youngsters or our youthful staff, for them, it’s the brand new regular. So for them, being within the workplace each single day just isn’t what they like. However we see tons of of our staff, for them they’re simply altering locations the place they reside infrequently and for them, they they even can’t say the place their house is, so we now have to adapt if we wish to entice expertise to our firm and to our business.. A technique of doing that is to open these new regional hubs. Quickly, we can have six or seven hubs in numerous elements of the world the place our staff can a minimum of as soon as per week or as soon as a month see our staff
nose to nose.

However I don’t assume it’s doable to carry all these folks again to the workplace 5 days per week. So sure, we now have like the most important workplace proper now we now have in Limassol, Cyprus.

Our headquarters are in Amsterdam, traditionally, and we’re opening this model new hub in Abu Dhabi. We additionally opened up an workplace in Armenia for individuals who don’t wish to reside too far-off from Russia as a result of they’ve aged kin or such causes. And sure, we at the moment are pondering contemplating opening a number of extra hubs. Turkey for instance, as a result of Turkey is a really fascinating market: numerous expertise, however the financial state of affairs just isn’t nice. There are numerous new studios in Turkey. It’s one other promising place, and lots of people from Russia moved to Turkey, as a result of it was one of many best and quickest locations to relocate to.

GamesBeat: I don’t know if you understand, the phrase diaspora, that nicely…I do surprise what the Russian gaming diaspora goes to appear to be. And in 10 years, you understand, in some methods, you understand, the mass migration may be very tragic. And numerous methods it’s additionally a possibility, I assume, and I’m wondering the way it’s all going to end up, like, you understand, the ends, we’ve in all probability by no means had such a big migration of gaming folks ever, you understand?

Chachava: Properly, it’s an incredible query and a really strategic one, a really severe one. One in every of my passions is historical past, and I’ve spent numerous time analyzing migration of enormous folks teams from the Jewish migration, two centuries BC. That was in all probability one of many nice migrations, however we now have seen many different waves of migration: the Indian migration to the U.S. or the Chinese language migration. What was the result of all these? Properly, there’s a statistic I’ve seen that proper now 44% of unicorn founders are first-generation immigrants. So you understand, when any individual with expertise utterly adjustments his life, his type of life, and
immigrates, undoubtedly, it’s a whole change, however he nonetheless needs to do enterprise and he nonetheless needs to create one thing new. Sure, it’s rather more difficult for him, as a result of he’s creating this new enterprise in unknown environments. Even when he has already accomplished enterprise globally, when he moved, and his household modified their setting, their nation, you’ve so many new issues to unravel, you’re out you’re undoubtedly out of your consolation zone.

However alternatively, your dedication to constructing an incredible new startup mission or sport is far increased than in case you had stayed in your consolation zone since you simply have bridges burned and also you wish to show to this world, which isn’t very good, which has began to be not very snug for you, you wish to show to the world that you would be able to achieve success. You could nonetheless carry worth to this world.

So to reply your query immediately, sure, I consider that 10 years from now, we are going to see many sturdy firms began by or run by entrepreneurs not solely from Russia, but in addition from Belarus, and Ukraine as a result of the Ukrainian gaming business can be very sturdy. There are numerous nice video games that got here from Ukraine. And people groups are nonetheless working. , right here in Cyprus, 15k-20k folks got here from Russia, and roughly 15k got here from Ukraine. So the 2 largest diasporas in Cyprus are Russian and Ukrainian.

What’s extra, many of the diaspora are from IT or gaming — gaming is round half of them, I believe. I’ve even seen an fascinating state of affairs when Ukrainian and Russian gaming and IT guys collaborate, and it appears to be one diaspora and never two diasporas. And I do know even a number of households which were created between Ukrainian and Russians right here in Cyprus; they each moved to Cyprus, fell in love and created a brand new household. And this, this offers me a bit of little bit of optimism about our future.

GamesBeat: That’s a really considerate reply. I assume, in some methods, you understand, you’ve numerous the identical folks. I questioned if, you understand, and perhaps you additionally questioned if folks would nonetheless view My.Video games as a Russian firm, you understand, and whether or not, whether or not or not, you understand, it had a headquarters someplace. Nevertheless it looks like the truth that folks needed to transfer and, you understand, be in a really totally different nation, that, that, that has actually been accepted that it’s, it’s a brand new, totally different firm, now that it’s going to a special location.

Chachava: So, we will’t change our roots. It’s a actuality that we now have Russian roots and we now have many staff who got here from Russia. However we now have been a global firm already for a few years in case you have a look at our key markets globally. Our staff has additionally been very worldwide now for a few years and we maintain hiring nice new worldwide expertise.

After we make such strikes, it’s it’s a good larger dedication towards all this example. It exhibits we’re really a worldwide enterprise, and we wish to obtain all our ambitions, all our goals. For many of my colleagues, they needed to grow to be an immigrant to maintain pursuing their ardour to make nice video games. That’s an enormous dedication and big problem, as a result of in the event that they fail, they are going to be in massive hassle in an unknown nation with household and so forth. However they’re doing it and I respect them for that.

I really feel that we will show to the market that we’re nonetheless a really clear, very environment friendly firm creating nice new video games for the worldwide business – regardless of all these horrible circumstances that we should handle.

GamesBeat: And the way many individuals do you’ve now and the way does that examine to you understand, earlier than the entire transfer?

Chachava: We now have roughly 1,500 folks working at My.Video games — a bit of bit lower than it was earlier than as a result of some folks bodily can’t transfer as a result of their mother and father are unwell or one thing else. However I can say many nice gaming studios, and all, like 99% of the core folks, or individuals who, who’re actually just like the artistic class of sport designers, we have been fortunate to maintain them in our firm.

So the corporate continues to be very sturdy. And we, we have been fortunate to maintain all our biggest expertise inside. So we will transfer ahead, and we are going to transfer ahead.

GamesBeat: How a lot disruption did you see within the massive change? After which, did something get higher?

Chachava: We’ve confronted numerous challenges, however we now have numerous alternatives and new applied sciences coming to gaming as nicely. This 12 months is all about AI: it’s the most important problem in all probability. However with AR and VR we additionally see how totally different platforms are beginning to converge with one another. So perhaps within the close to future, we’ll see the unification of gaming platforms. For instance, you can begin taking part in on cellular and
proceed on console… or the large display screen will probably be performed from cellular as a result of you understand, the variety of gamers with a distant utilizing cellular as a platform is rising very quick.

So we’ve entered a really fascinating time. The financial state of affairs is quite robust, and it’s undoubtedly impacting the gaming business. COVID is over, so the previous existence are attempting to come back again, however they are going to by no means totally come as a result of we all know we now have modified already.

And we see many new applied sciences approaching IT and gaming as nicely, which undoubtedly will change video games very quickly, and the best way we develop these video games. So, it’s a really fascinating time period. And difficult. And you understand that even the phrase for disaster in Chinese language consists of two characters: one for alternative and the opposite for risk.

We’re approaching a really opportunistic interval, however a really difficult one on the similar time. I don’t like when horrible issues occur, like wars, earthquakes and so forth. However I do recognize conditions that require you to be very artistic, very bold and really centered, to beat the challenges you face. That is one thing that motivates me to maintain doing enterprise and to hunt out new offers.

GamesBeat: And it looks like geopolitics has affected the sport business much more than ever. And I’m wondering if in case you have some recommendation for firms that must must cope with the realities of geopolitics.

Chachava: As I discussed, my ardour for historical past brings me numerous advisors from the previous and recommendation given by nice scientists or nice writers. I’m unsure which recommendation to decide on or methods to formulate it…. I believe the perfect recommendation is to focus in your core enterprise, your core exercise, and what are you doing. Take glorious care of your loved ones and your staff. Keep hungry, keep silly, and be very bold.

As a result of human beings have a lot inside energy and inside drive inside us. We are able to’t even think about how, what we will do, what we will obtain till we begin this. So, my recommendation is to consider in your self, be very bold, be very silly and be very hungry. And every little thing is feasible, even when everyone is towards you.

GamesBeat: These have been some superb solutions. I do surprise if in case you have any explicit reply that you just give when folks ask you concerning the warfare. Or something that they appear to need you to say about it, I assume in case your staff wish to hear a solution about your views on the warfare, or any traders wish to hear that or simply any, you understand, anyone actually asking that query?

Chachava: I made a really clear assertion the following day after this horrible warfare began and you will discover it on my social media networks. We signed a petition along with different Russian and Ukrainian VC traders and entrepreneurs — almost one thousand folks signed that petition.

So this clear assertion was made…and, as I stated in my put up, I undoubtedly hate any sort of warfare, however I attempt to give attention to what I can do. I’m centered on optimistic issues that I can do for society and for the market, for the worldwide financial system. I by no means was concerned in any sort of politics. I’ve all the time been only a personal entrepreneur, dreaming about what sort of good worth I can carry, and incomes a bit of cash to reinvest in different good startups or fascinating ventures.

GamesBeat: Excellent. Thanks very a lot for the interview.

Chachava: Thanks very a lot. Nice questions. It was a pleasure to talk with you. Hope you’ve good climate and a pleasant convention in Dubrovnik. It’s a tremendous metropolis and the fortress is one in all my very favourite castles in Europe.

GamesBeat: Yeah, it’s lovely.