Business on the table: how to make a billion on games
Now the company is registered under the Cyprus offshore Hobbyworld Limited, among the co-owners are Mikhail Akulov, Ivan Popov and other shareholders (Akulov and Popov do not disclose their names). Publishing employees own small options.
Hobby World in numbers
more than 1 million games in 2015
From 290 rub. up to 9 thousand rubles. The price for Hobby World games varies, the average bill for one box is 900–1300 rubles.
More than 1 billion rubles. amounted to Hobby World's revenue in 2020
4% from each box sold
$10–15 thousand to develop a board game
The profitability of the most successful games reaches 100 %
About 7 billion rubles. amounted to the volume of the Russian board games market in 2020
More than 50 thousand titles of board games have been released worldwide
Source: Company data, Discovery Research Group
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To the west
Hobby World works in three directions: buys licenses of Western games and adapts them for the Russian market; buys, develops and releases original games by Russian authors; sells licenses for the release of Russian games abroad.
Akulov began developing the first direction back in 2002, when he bought a license for the game Die Siedler von Catan from the German publishing house Franckh-Kosmos Verlags and began releasing it on the Russian market under the name “Colonizers.” “It was a breakthrough for the industry: strangers came to the exhibition, met one of the leading companies in the gaming industry and received the right not only to buy boxes translated abroad, but a license to release this game in Russia themselves,” recalls Akulov.
According to Akulov, Western companies were reluctant to give licenses to the Russian market: it was more profitable for them to produce everything in one place and sell ready-made boxes. Akulov and Popov, despite difficulties with quality, found local production more profitable: it allowed them to reduce the selling price by 25–50%. In addition, selling boxes is not so profitable for the seller, says founder Dmitry Kibkalo. If we are talking about a foreign brand, the percentage of royalties in favor of its owner reaches 8–10%, and their total amount can exceed hundreds of thousands of dollars, says Akulov.
The criteria for selecting games are simple. “The game should be unique - not a mixture of existing engines, but a one-of-a-kind mechanism. And Mikhail and I should like it,” says Ivan Popov. At the same time, the game must be wrapped in a beautiful shell and be adapted to the market. “For example, the very famous game Carcassonne was originally conceived as a game about a pilgrimage to the Holy Land, but now it is more of a puzzle about assembling a castle, which sells millions of copies around the world,” he gives an example. But, despite experience and numerous tests, the game may fail. “For example, one of the games that is in the top 3 American sales, King of Tokyo, sells very poorly in Russia,” Akulov gives an example. “And the game “Load and Drive,” on the contrary, has been withdrawn from sales all over the world, but it sells well here and in Brazil.”
The search for authors in Hobby World is carried out by the production department, which then begins to finalize the games. If a Western game can be adapted and released in a month, then in the case of original games, the finalization process sometimes takes more than a year. The authors receive royalties of 4% from each box sold. When signing an agreement, the publishing house pays them an advance in the amount of royalties for half the minimum circulation (about 2-3 thousand copies), and then the authors receive a percentage of sales every six months. Only professional authors, whose several games are published in thousands of copies, are able to fully support themselves through royalties - for most developers, this is a hobby that brings additional income. According to Akulov, the game is completely right,” he says.
There is also a third way - selling Russian licenses to the West. So far, Hobby World has about ten games that are actively sold in Western markets, including “A Find for a Spy,” “The Viceroy,” and World of Tanks: Rush licensed by Wargaming. In 2020, the company released about 150 thousand copies of its games in Western markets (in Russia - 1 million), in 2020 it expects to sell more than 300 thousand. In Russia, Hobby World supplies most of its partners with games at a 35-40% discount from retail prices, then in the case of Western wholesale companies, the discount on the game can reach up to 60%.
Photo: Vladislav Shatilo / RBC
Production
When purchasing a license for Western games, Akulov and Popov produce most of the components in Russia, except for plastic ones, which are usually purchased in the West. “The production of plastic is quite expensive, and it is more profitable to use it when Western companies collect global circulation in all territories. These are individual figures, and the production of each of them separately will be quite expensive,” says Akulov.
Hobby World had its first elements of its own production back in 2010: contractors did not provide the required quality of work, recalls Akulov. “At first we left the assembly of elements to ourselves, then we started doing more on our own. We print the entire million games ourselves, only ordering individual elements from contractors,” says Akulov. Over time, they began to produce more and more on their own, and now the company organizes a full production cycle of board games, not counting the production of cardboard and printing pictures, at a factory in Tver.
From the idea of a game to the moment when a box with a finished board game appears on a store shelf can take from several months to a year, and the cost of developing one game can cost $10-15 thousand, says Akulov. At the same time, the profitability of successful games can reach up to 100%, he says. For some games, profitability can reach 300%, says Mosigra founder Dmitry Kibkalo. “If we take the direct cost of paperwork, including royalties to the author, then it is 26% of the price on the shelf. But you need to understand that the product has been produced - then it needs to be stored, delivered, distributed, etc. The store has an average markup of 100%, and a huge part of it is lost on logistics. The final cost of the product is much higher,” explains Kibkalo.
Besides Hobby World, only two Russian board game publishers - Mosigra and Zvezda - maintain a full cycle of game production, including post-printing, card cutting, etc., says Kibkalo. “This is a specific type of production that must be loaded. The business is quite seasonal, and if there is no load outside the season, smaller publishers cannot afford it,” he says. According to him, Mosigra retailed games worth 525 million rubles in 2020. According to Mikhail Akulov, Hobby World's turnover in 2015 amounted to 1 billion rubles, including foreign sales (he does not disclose profits).
Spreading
At first, Akulov and his partners sold their products through bookstores and small specialized board game stores and did not want to build their own chain. “We developed as a publishing house and initially worked with small specialized stores that sold board games, because such stores develop the market the most,” recalls Akulov. As a result, Hobby World shareholders entered into a partnership agreement with the Hobby Games chain (Lavka Miracles LLC), which has 12 of its own stores (six in Moscow, two in St. Petersburg, the rest in Russian regions, as well as in Kyiv and Minsk) and eight franchised The network is engaged in retail sales of the publisher's games, and also serves other retail projects, for example, a merchandise store for Wargaming and the HobbyWorld.ru website. According to SPARK, Hobby Games is 99.9% owned by Hobbyworld Limited.
“Initially, Hobby World was the only publisher we collaborated with, but we almost immediately expanded to three or four more overseas publishers. Now more than 20 brands supply us with goods,” Andrey Kuleshov, deputy director of Hobby Games, told RBC. At the same time, the share of Hobby World products in sales of the Hobby Games network is about 40%, says Kuleshov.
According to Kuleshov, Hobby Games purchases goods from the publisher Hobby World at a 35–50% discount (the discount varies for different types of games) and sells them at the price recommended by the publisher. All Hobby Games stores, both owned and franchised, operate at the same prices. In addition to board games, they sell accessories for them, comics, and fantasy literature related to the universes in which the games are developed. According to Kuleshov, one store brings in an average of 1 million rubles. revenue per month, and about 50 purchases are made per day with an average bill of about 600 rubles. About 60% of sales are made online, however, most people come to pick up games themselves to have time to play them before purchasing, Kuleshov says. According to SPARK, the revenue of Lavka Miracles LLC in 2014 amounted to 76.5 million rubles, and net profit - 1.5 million rubles.
Currently, about 20% of all Russian Hobby World products are sold through the Hobby Games network. The rest is sent to customers directly, to bookstores in Moscow, as well as to other chains, including Metro, Media Markt, O'Key, Respublika, Seven spans, Games of Growth, Correct toys IQ Toy etc. When working with small stores, Hobby World tries to meet halfway and ship small quantities of goods for a minimum amount of 15 thousand rubles, says Mikhail Akulov. “We create individual orders for stores. If a store wants two Munchkins, one Carcassonne and three Considerations, we place an order,” he says. According to Andrey Kuleshov, this is a valuable quality when working with a publishing house: “If we take too many games, then we will be limited in quantity, and the next game may appear on our shelves later than competitors in other stores. In addition, it is impossible to predict which of the purchased games will become a hit and which will lie on the shelves for a long time.”
In 2011, Hobby World launched a franchising program for stores wishing to operate under the Hobby Games brand, and opened the first franchise store in Kaliningrad. To expand the network, the company’s founders will not charge franchisees a lump-sum fee or royalty until the end of 2020 and expect to open two more of their own and 15 franchise stores during this time.
Future
According to Discovery Research Group, the size of the board games market in Russia in 2020 amounted to about 7.5 billion rubles. - almost 30% more than in 2014. The crisis had almost no effect on the demand for board games, largely because although their cost is comparable to going to a cafe or cinema, they can be played many times, Mikhail Akulov is sure. Prices for games from Hobby World range from 290 rubles. up to 9 thousand rubles. per box. True, sales of games in the upper price category still dropped by almost 50%. “Games with a lot of plastic components have become more difficult to sell because they are produced in the West and their price has risen accordingly. It has become more difficult for the consumer to spend 9 thousand rubles. to a board game, despite the fact that it is replayable many times,” says Akulov.
According to Akulov, the Russian market for board games could potentially reach up to $100 million after the crisis. “This is the potential that can be sold in Russia, and we want to occupy this entire market,” he is convinced.
Board games club
A profitable business idea is to open a tabletop entertainment club.
To implement such a business idea you will need from 500,000 rubles. The first step to opening a club will be registering an individual entrepreneur. Next, we look for premises: buy or rent it. It is recommended that the board game club be located in the city center, near metro stations, parks, and shopping centers.
The next stage of implementing the idea is renovating the club. The decor of the room can be done, for example, in the style of a puzzle.
It is possible to offer various games:
- monopoly;
- table soccer;
- backgammon;
- lotto;
- mafia;
- crocodile.
To attract visitors, it is recommended to conduct an advertising campaign. Information about your club can be distributed on the Internet, on the radio, in magazines and newspapers.
Handing out business cards is a simple but effective way of advertising. You can do an interesting promotion - visitors who present a business card will receive a 5% discount. You can periodically hold open days and distribute club cards with discounts and bonuses for visiting and purchasing. It is possible that information about the club will be distributed by the players themselves.
It is recommended to provide visitors with the opportunity to buy their favorite board game.
Board game store
To open a store you will need from 600,000 rubles. First, think about the location of the room. Make sure there are no competitors nearby. The room should be spacious and bright.
We do repairs, install display cases, shelving, furniture, and a cash register. Your business should be different from other stores. To do this, we divide the room into sectors. Each sector will correspond to a certain type of product:
- dynamic;
- intellectual;
- abstract;
- games that involve physical abilities.
We install tables and chairs in the sectors so that customers can play and understand the needs
Do they need a toy? It is recommended to ensure that sellers know the rules and can clearly and quickly explain them to the buyer.
Before purchasing toys from a supplier, analyze which ones are in greater demand and what the age of the customers is. Nowadays, games based on books, comics and films are in great demand. The age of buyers is varied: from 7 to 63 years.
The next stage of implementing the idea will be advertising tabletop entertainment. It is recommended to create an online store. Free shipping is available when ordering multiple toys online. Discounts and discount cards can be a real option to attract customers.
An original advertising idea would be to sell out toys before new ones become available. You can also have a sale on the store's birthday. It is recommended to offer small customers to choose one day every month when the sale will take place.
Recruitment
How to make more money on computer games – as a team? No matter how strict it may sound, in order for a single newcomer in the gaming business to be able to enter the relevant market and stay there at least a little, it will take a lot of effort and money. The times when, after creating a game, almost anyone could become rich and famous have sunk into the water. Now teams are working on similar projects. But even with a well-coordinated team, it is very difficult to enter the global computer games market.
The selection of personnel must be approached with the utmost seriousness, because the production of computer games cannot be entrusted to just anyone. Many hire only those specialists into their team who have at least 4 years of university study behind them. A mandatory requirement that developers must have is knowledge of computer science, engineering and applied mathematics. But such geniuses are very, very few.
The problem of the lack of qualified specialists is also that in Russia, unlike the West, there is not yet a single educational institution that would train specialists in the computer industry. Therefore, you will probably have to create special training classes in which you can improve the knowledge of young specialists in a particular field. And these are also costs, and considerable ones.
Relevance of the business idea
Hosting board games in a foreign language will set you apart from your competitors: anti-cafes and similar gaming venues.
It is easier to find supporters in English, so we recommend starting a business in this language. To attract more interested people, launch a conversation club in English. Organizing a conversation club is very simple. It is enough to come up with several relevant topics for discussion and announce the event.
Buy a ready-made business in the field of board games
It is possible to purchase a ready-made business in the field of tabletop entertainment . The advantages of the purchase will be:
- customer base;
- contracts with suppliers;
- premises for a store;
- ready advertising campaign.
To purchase a ready-made business you will need from 550,000 rubles.
In the tabletop entertainment business, it is possible to purchase a franchise. If you buy a franchise, its main advantage will be a well-known brand. In this case, you will have to follow all the instructions of the franchisee, for example, the area of the store premises, pricing policy, and product range. The cost of a franchise starts from 600,000 rubles and depends on the popularity of the store brand.
