Wargaming’s CEO explains free-to-play, and discusses the death of the retail model


Although this E3 is going to be dominated by the two towers of Sony and Microsoft as they unveil their new hardware, the show has always  been an event that helps to determine the trends that will influence the gaming industry for years to come beyond just the new releases. One trend that is undeniably reshaping the way we look at gaming is the free-to-play movement. At its heart is Wargaming.net, the makers of the World of Tanks, who celebrate 15 years in gaming this year.

Victor Kislyi

Victor Kislyi

Headquartered in Minsk, Belarus, Wargaming.net has found incredible success with the free-to-play model. World of Tanks has proven itself around the world as a gaming juggernaut, and shown the path to a profitable free-to-play model that many others have aped. In Russia alone it is played by millions, and it is gaining popularity in most markets. It hasn’t hit the same heights in America, China, or Korea, but the game is managing to carve itself out an audience.

As Wargaming celebrates its 15th anniversary, the company is looking ahead. World of Warplanes, a combat flight sim using World War II planes, is in beta and preparing for release, while World of Battleships is currently in alpha. We recently spoke with Wargaming’s CEO, Victor Kislyi, about the free-to-play model and the difference between a god F2P and a bad one is. We also discussed the company’s rapid, global growth, and saying goodbye to a 5,000 year old financial model.

So Wargaming turns 15 this year – how big is the company, exactly? 

“…how can you possibly keep selling a digital product off the shelves using the same business model 5,000 years ago?”

Right now there is only one game generating revenue for us, which is World of Tanks. Fueled by World of Tanks’ success, we now grew up to 1 and a half thousand people globally. We have 40 offices, starting from Sydney, Singapore, Seoul… a bunch of European cities… Berlin, Cyprus for the business headquarters… Paris, London… San Francisco. We recently acquired Chris Taylor’s Gas Powered Game, a veteran, legendary game development studio. In Seattle and Chicago, that’s Day One, that’s primarily a console developer.

So World of Tanks still keeps growing in everything-wise. We opened new territories, like recently South Korea, while our numbers of players is growing in every territory, including Russia. We’re probably looking at 55 million registered users. Our combined CCU – a metric all our games use – the combined global CCU is 1.3 million that are playing at the same time. That’s global – if you combine Russian CCU with American, with European and Chinese, and Korea and Southeast Asian… you’ll get 1.3 million peak CCU, which is a very impressive number.

world-of-tanks-screenshot-3How did you guys decide to switch to the free-to-play model?

This year we celebrate 15 years of our company. We always were making games, for the box. Real-time strategy, turn-based strategy. Then five years ago we realized that this [retail] business is going nowhere, it has to be digital. This is what I said, my favorite quote of my own is, “how can games, which are in essence a digital products, it’s digital zeros and once operating inside a CPU, how can you possibly keep selling a digital product off the shelves using the same business model 5,000 years ago?” In Ancient Egypt they were selling tomatoes in the market place. Tomatoes cannot sell digitally, you have to have actual tomatoes in your hands. But digital product has to be distributed digitally.

How is World of Warplanes coming along?

World of Warplanes is still in closed beta. We had some, let’s say challenge, with the control scheme. If you make it too hardcore, too realistic… we admitted publicly that our previous controls were not suiting it. You don’t want to make it too arcade, because the serious guys will laugh at it. So we have to find this medium, where it’s still realistic in terms of aerodynamics and flight model, and visual, and authenticity of war planes and their component, but we want a 35 year old guy to be able to come home from work, download for free this wonderful game he just saw some advertising, kind of looking cool, and start playing, and start enjoying it, and flying, not crashing after 10 minutes, 5 minutes. We made a couple of prototypes inside the game, and even outside the game, realized and focused on them, and picked the control scheme that is very original, but allows you to literally start playing with W, A, S, D and a mouse in a matter of minutes.

So you reworked the control scheme from scratch?

You cannot fool anyone… if your product is not THE best, somebody else will be earning that. You cannot fool yourself, you cannot pretend that you are THIS, when you are not. You cannot fool your consumer in a fast moving digital ecosystem. So that’s why we admitted that yes, we had problems with controls. We needed an extra couple of months to fix that, so that is what we do. Right now it’s fixed.

wowp_cbt_image_07Yeah, I hear that often, ‘you can’t fool people…’

Quick, within a couple of hours your dirty trick will be revealed, if you do a dirty trick.

So what makes a good free-to-play game? 

“You cannot have the velvet rope, you cannot have a door where you have to buy a golden key to open it to go further down your journey. This is bad free-to-play, this will not survive.”

It’s easy. First of all, psychological: people love free stuff. In poor countries, in rich countries… [It’s why things are] 99 cents instead of a dollar. People love free stuff psychologically. In game, especially given the option of other games – how was it before in box product, that’s still being used in console market. You read some previews, maybe run a demo, but the game still costs $60, and you cannot enjoy it before you actually go shop for it, pay $60, then you open it up, install it, and then you have to sit through 24 hours to see if you like the game or not. What if you don’t like it?

But how do you monetize it?

This is the beauty and curse of it. The beauty is that it gets people a lot of free stuff and they download it 10 times more than a pay-to play game… approximately – so it’s a good user base. On the other hand you have to create that free experience for him, even if he does not pay, because 70-percent of people will never ever pay anything. And then you have to connect those monetization options for the players, some of them deliberately, because you cannot force them. You cannot have the velvet rope, you cannot have a door where you have to buy a golden key to open it to go further down your journey. This is bad free-to-play, this will not survive. We’ve seen a lot of those games. You cannot sell significant battlefield advantage for money, or even tony battlefield advantages are considered bad tone by the community.

There’s no one universal free-to-play style that’s free to play. Every game, a kid’s game, a housewife game, I don’t know, Farmville, World of Tanks style of game… they’re all different types of games, and their monetization schemes are all different. Like movies, there are lots of genres: there are horror movies, there comedies… the same for free to play, there are different genres, different audiences, different platforms like iPad, PlayStation, Pc. So your free-to-play has to be tailored for your particular game and your particular audience. And it’s always changing, it’s never perfect, so it’s never ending research and development.

World-of-Warplanes-US-Carrier-Based-Aircraft-Teaser_10What are your thoughts on free-to-play on next gen?

During the first base, the install base will be how many? A couple of million? That’s nothing, that’s like a day of operation in China. It will be slow and painful for them. Yeah, when they have like 200 million consoles, yes, we’ll jump in it. 

Where is Wargaming specifically seeing the biggest growth globally?

Russia probably is a little closer to the saturation because in Russia we have CCU, big CCU, 815,000, very close to nearly a million online concurrent players, which is a very big number … the population is 160 million, so it is a big amount of population playing, so the saturation will happen sooner. Then the rest of the world is a blue ocean. With 7 billion people… The economy? Crisis schmisis. People are getting cell phones, smartphones, 3Gs, even in some areas where there are no roads, they have connection. So it’s all looking good, and the thing is that the old retail, pay-to-play, and [also things like] paper newspapers, are all dying off. This 5,000 year ecosystem is crumbling into the sea as we speak, so all those people can be freed up to try to have new forms of entertainment.

World of tanks esportsSo I say for the next couple of years it’s blue ocean and Wild West. Make the best possible game ever, with graphics, visuals, monetizations, expansion, whatever… just make the best game for the girls, the kids, for guys like me that like military. Put it out there and provide kick ass service, and you’ll be golden.

Where is free-to-play in general really exploding right now?

Well, China and Korea… Korea is saturated. It is the motherland of those games, so you actually carve your market out as a general rule out of Korea.

U.S.A. is for us an emerging market. If you combine Canada you have over 400 million population, and we have, like nothing. In America it is a success financially, very successful. [But] in comparison to population ratio and World of Tanks popularity in Russia, America is nowhere. So we still have 1,000-percent growth potential. So only markets with potential are attractive. Take Brazil. You say “yeah they don’t have payment options and the internet is not that good,” but if you are one of the first movers, there is less competition. There are no huge Brazilian companies making free-to-play online games. So it’s only a bunch of Western companies that dare to go there to establish service. So you can be the first Brazilian, or the number one Turkish game, which would make for good revenue for you as well, at least to offset the development cost.

You mentioned Korea as a saturated market, while Brazil is developing. Korea has arguably the best Internet on the planet, while Brazil has a lot of areas that are out of touch. So how does the state of technology effect free-to-play?

Even mother Russia, somewhere in Siberia guys play World of Tanks. Of course, in Indonesia or Malaysia, where there are like 3,000 small islands, that’s a problem, yes. But in the U.S., Europe, it’s ok … The biggest challenge is gameplay, how it appeals to that market, how beautifully you monetize, and how do you service.

World of Warplanes

A lot of your work is currently keeping the growing infrastructure up and running, but how far down the road are you looking? Are you looking five or ten years down the road?

There’s no sense in stopping. Let’s put it like this. We have this big world as a platform. We acquired the Sydney company, and now we own our own platform, which was meant to be licensed out, so pretty much the acquisition of a studio, we just hand them the platform

So you’ve talked about the possibility in the future of unifying the games, and having World of Tanks and World of Warplanes possibly co-exist together, so we might see a player controlled dogfight in support of a player controlled tank battle. How far away is something like that?

“This 5,000 year ecosystem is crumbling into the sea as we speak, so all those people can be freed up to try to have new forms of entertainment.”

I’ll be honest with you, right now we have our hands fully occupied with the polishing of [World of Warplanes], because it has to be a kick ass, top notch, best of the best, 120-percent enjoyable aircraft dogfighting experience. Let’s see how we can do that. [The upcoming] Battleships, the same thing, and then we’ll think.

Are you going to continue your expansion? Any new offices or hires coming?

Yes. I always keep saying that I want people out there to hear that. I’m not an expert on oil of enterprise solutions, it’s just this crumbling of the old civilizational models of the physical and a version of this connectivity. Everyone is connected and mobile. It means that the whole world is pretty much your playground, or market. It’s a pity and shame if you cannot realize and grasp that, because it will be crowded soon. There’s still a couple of years, but soon it will be very crowded.

Do you see a lot of reluctance to break from the retail mold and go free-to-play, or are developers willing to embrace it?

Yes, but good free-to-play is a rocket science, because there are so many elements, including the visuals and the typical high production values… it’s just a big investment in models and connectivity, but there’s also a lot of creativity, which has to happen, especially in the monetization and gameplay part. So it’s hard to do, you have a lot of good people working together for a long time.

For example, the problem with the West, game development or any IT, is job hoping. In San Francisco, you have a job, and then a company doesn’t make a successful product first, so you leave, or you get a better offer, so you leave. There are so many cases where they just job hop, so people don’t keep expertise inside. But you know, some of our people work for me for pretty much 15 years, and there’s a lot of veterans that ten or eight years.

Expertise and teamwork, all are kept inside. So I really hate to see people leave. You have bring them through a very scrutinous admission process, but as soon as he is in and spends some time with the company, he is the knowledge base. You don’t lose him, you promote him.

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