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Alex Chachava pulled off a difficult extraction last fall when he acquired much of My.Games and moved the company’s operations out of Russia because of the geopolitics around the Ukraine war.
Back in September 2022, VK announced it sold all of My.Games to Chachava, managing partner of LETA Capital, for $642 million. By December, My.Games set up its headquarters in Amsterdam and established offices in Cyprus, Korea, Spain, China and Finland. Now Chachava is the “chief alchemist” and owner of My.Games and he is making moves to re-establish the big game publisher outside of Russia.
In April, he announced that the company would relaunch a new version of Warface, a popular shooter game, under a new brand name. The old Warface game in Russia is now owned by Astrum Entertainment, which is an entirely separate entity from My.Games. But Chachava said My.Games has 1,500 people and much of the core of the old company, and it has plans to draw Warface players to its new title.
In line with its global expansion strategy, My.Games has placed its emphasis solely on international business development and enhancing the infrastructure for its widely distributed team. One of the moves is also happening as it sets up an office in Abu Dhabi.
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One of the company’s strategies is to focus on the Middle East, North Africa, Pakistan and Turkey (MENAPT) markets, where gaming is growing fast but is far less dominated by established brands than in other regions. There are roughly 377 million players in that region, compared to 210 million in the U.S.
I talked to Chachava about these moves and his views on the geopolitics around gaming. Here’s an edited transcript of our interview.
GamesBeat: How did this whole journey with My.Games get started for you and [what led you to] decide to buy the company.
Alex Chachava: I have several answers. Let me start with my previous steps and business career. So I made my first capital on B2B software… enterprise software. I started my first company 20 years ago. Together with my partners, we built a quite successful B2B software SaaS company. It was even a little bit before SaaS, so it was just regular B2B software out there on SaaS.
Around 10 to 11 years ago, I started my own VC fund. It was not a very typical VC fund, because I was the biggest LP, so I was investing my own money. We are a VC vehicle, and we have made many successful investments in my mind. My most successful investments have been in B2C software. One of them was a ride-hailing app, where I am still a shareholder. It’s called inDrive. It’s like the second biggest ride-hailing app after Uber, and then there’s Novakid — it’s a learning platform [for kids to learn English]. It’s probably the biggest of its kind in Europe, and I realized how competitive, and how complicated it is doing B2C business compared to B2B.
At several points in my career, I’ve had touchpoints with the gaming industry. Personally, I’m a racing guy and for me, the top competition is Formula 1. But in entrepreneurship and in business, for me, the top competition is the video games sector, because it’s a massive business. There must be around four billion to five billion people playing computer games and thousands of studios are competing on a relatively fair playing field for users’ attention. In my view, this is the most competitive and challenging market in the world.
Maybe this is a bit emotional, but when I had the opportunity to buy My.Games at a relatively attractive valuation, for me it was like an entrepreneurial challenge.
For sure, I did this deal as an investor and as an entrepreneur because I have a clear vision and a clear strategy for what I want to achieve. But there is an emotional part too.
I’m really into racing. I mentioned Formula One and that I do some racing competitions. And previously in life, I played a lot of football (soccer). Soccer is the top competitive sport maybe not in America, but certainly globally. So, the gaming industry seems to be the most competitive industry. For me, it is interesting to be successful there as well, because in a sense all entrepreneurs are like athletes.
GamesBeat: And I guess, you know, in some ways, it was a big opportunity to be able to buy My.Games, but I also wonder how big a shock it was, you know, to have those circumstances arise, you know, with the war, and know, the fact that something had to be done with some of these Russian companies…
Chachava: Yes, definitely. I would say that strange and terrible things have occurred over the past few years. But I would say that starting with COVID, strange things were happening in global markets, including in gaming. And all of these earthquakes. I will say what happened to during the last couple of years, albeit after this terrible war. And now we have an economic slowdown and even decline. And not only in the gaming industry but even across the economy as a whole.
We are approaching very tough times globally, I assume. And there are even more challenges ahead. It was easy to be in the gaming business in 2021, when the market was growing in the double digits. But now it’s much more challenging, especially for companies who had some presence in Eastern Europe, Russia, or Ukraine. Countries in Western Europe are not feeling very safe right now. Because you know, it’s a terrible and relatively big conflict.
That’s why My.Games will soon be opening additional hubs and offices. We have our two main offices in the Netherlands and Cyprus. When we add a new one, it’s not just having an additional office for us: I like to call them “hubs” as it’s a new dimension to our strategy.
Our next hub will be Abu Dhabi, because you know, the MENA region is growing very fast. In fact, it’s still growing even now, when overall market has been declining. MENA is reported to be the fastest-growing video games market. The number of players is over 370 million men and women, and we see huge interest from local players and local investors. They wish to invest and they want to launch a big new gaming conference for this region.
It’s also important because MENA is kind of a gateway to the whole Arabian market, to the North African market and even to some Asian markets. It’s it’s very convenient to do business with India for example from the UAE.
The opening of our new Abu Dhabi Hub is a strategic move for us, as we intend to be much more active in the Middle East. Previously, our major markets were Europe and the US, and now with this new hub, we are opening a new chapter. We will definitely still be very active in the US and Europe, but we realized that our world is very big and there are many gamers outside the West. We plan to be much more active in the East, and we know our titles can be successful there as well.
GamesBeat: Yeah, how hard was it to find the right value for the acquisition of My.Games? I think you got it for maybe less than one-time sales and the previous year, right? But what was a good way of looking at how valuable was at the time that you bought it?
Chachava: Well, you know, M&A multiplies can vary a lot, depending on the momentum of the market or the situation in the country. And sometimes it gets crazy, like in 2021. Or sometimes it’s crazy when, for example, a Saudi company acquires an American company, like we saw recently with Scopely. There, the multiplies were not disclosed, but we know the total revenue and we know more or less the revenue of Scopely and the overall value of the transaction.
As for My.Games, it was the opposite situation. As you know, many Western companies were selling their Russian assets for very cheap. Avito, for example, was acquired by a local investor. Avito is the biggest marketplace [and classified listings] site in Russia. It was once valued at $6-7 billion, and now when South African investor Naspers sold their stake it was valued at just $1.5 billion or something like that, so four times cheaper. So my acquisition was more or less in line with this new market pricing because last year it was mainly deals with Western investors like Goldman Sachs, and Morgan Stanley, which had a big portfolio in Russia and they were leaving. As I know, there were several potential buyers, and it was a very competitive process. This price was quite fair for that situation. Because after the acquisition, we had to fully exit Russia. It was a bit less than 20% of our sales, but still an important market for us.
So, definitely My.Games lost some value because we had to exit an important market. But still we have an amazing portfolio of titles. We have amazing studios. And we are looking forward. Our strategy is to to be one of the leading European gaming companies. In just this year and next year alone, we have roughly 15 big new titles coming. Some of those games are already in development and testing, while some are further along, but we have huge plans.
I’m hopeful that we will continue our growth and that we can build and release many new hits. Because gaming is always a hit-based, hit-driven business, we are focusing on new titles right now. And this is our core strategy, to develop new games.
GamesBeat: And how big a challenge is going to be to take the gameplay of Warface really, and the engineers who, who created it, and then create something that the player will still like and play, even though it doesn’t have the Warface name? That’s a very different kind of business challenge than we usually see, right? That you have to take an existing game, and try to get the audience to move over to a new game that is kind of like the same game? It’s so different than anything that’s ever happened really…
Chachava: Well, we have seen it many times in the past when game developers took a popular gaming title and remastered it to re-engineer it or make it more modern. The core experience was very much the same for gamers, but they added new technologies, new graphics, and sometimes new gameplay. Many successful series have done it. Fallout, for example — it’s two different games, but with the same soul. Or even with Counter-Strike we saw something like a new generation. There are many other examples. We plan to do our best to create a new game based on the great style and experience of that game, because sometimes we do it with our existing titles and add new features, writing new gameplay.
For example, for our leading title War Robots, we’re adding a new PC game based on the same story, let’s say. And it’s kind of like a thread when you play with platforms and want to integrate your audience, bringing your mobile game to new platforms. Because trying to attract a completely new audience segment is very expensive. So we are investing more in branding, we are investing more in-game quality, and interacting more with our existing audience to improve our user acquisition model.
GamesBeat: And then the Abu Dhabi move what what kind of opportunity is that?
Chachava: Abu Dhabi is extremely interesting. It’s a very convenient hub for our new direction of operations. Covering not only the Arabian market, but also African and partly Asian markets. So it’s a new step for us into several new territories.
We have had great support from the UAE officials. They have been great. Our Abu Dhabi Hub will be at Yas Creative Hub. It’s a very nice campus built by the Abu Dhabi authorities to support the creative industry and to give companies new opportunities to develop their business in the region. Ubisoft has an office there too, and many other gaming studios and developers are there. Nvidia has a relatively big office. YAS Creative Hub has a very modern infrastructure for cloud gaming and for developing games. I’ve been there many times. it’s a very convenient place to work, and we’ve had excellent support from Abu Dhabi Investment Office and AD Gaming, the organization set up to assist gaming studios and gaming companies do business in this region.
We can see they are investing heavily in gaming platforms and conferences, so we see good opportunities here. Especially when the Western markets are declining. From a competitive, when the market is not growing competition becomes fiercer. But we see that we can support our growth and ambitions to develop business in new regions, which are new and still growing. And we see that it will be easier to operate in Asia as well as have a large hub office in Abu Dhabi.
GamesBeat: I guess, in what way… you know, I think, I think My.Games has learned, I guess the importance of where your headquarters is, and in what country, I guess. But we also have such a different world after COVID, now, where so many people are working remotely… like in what way does it still matter, you know, where your company headquarters is and where your offices are?
Chachava: Well, maybe I’m a bit old-fashioned, but I prefer to work in the office and I prefer to see the faces of my colleagues and partners. But the reality is reality. After COVID the reality is that our habit is to work remotely. For many, it’s not even a habit, it’s their new lifestyle.
When I look at my kids or our younger employees, for them, it’s the new normal. So for them, being in the office every single day is not what they prefer. But we see hundreds of our employees, for them they’re just changing places where they live from time to time and for them, they they even can’t say where their home is, so we have to adapt if we want to attract talent to our company and to our industry.. One way of doing this is to open these new regional hubs. Soon, we will have six or seven hubs in different parts of the world where our team can at least once a week or once a month see our employees
face to face.
But I don’t think it is possible to bring all those people back to the office five days a week. So yes, we have like the biggest office right now we have in Limassol, Cyprus.
Our headquarters are in Amsterdam, historically, and we are opening this brand new hub in Abu Dhabi. We also opened up an office in Armenia for those who don’t want to live too far away from Russia because they have elderly relatives or such reasons. And yes, we are now thinking considering opening several more hubs. Turkey for example, because Turkey is a very interesting market: lots of talent, but the economic situation is not great. There are many new studios in Turkey. It’s another promising place, and a lot of people from Russia moved to Turkey, because it was one of the easiest and quickest places to relocate to.
GamesBeat: I don’t know if you know, the word diaspora, that well…I do wonder what the Russian gaming diaspora is going to look like. And in 10 years, you know, in some ways, you know, the mass migration is very tragic. And a lot of ways it’s also an opportunity, I guess, and I wonder how it’s all going to turn out, like, you know, the ends, we’ve probably never had such a large migration of gaming people ever, you know?
Chachava: Well, it’s a great question and a very strategic one, a very serious one. One of my passions is history, and I have spent a lot of time analyzing migration of large people groups from the Jewish migration, two centuries BC. That was probably one of the great migrations, but we have seen many other waves of migration: the Indian migration to the U.S. or the Chinese migration. What was the outcome of all these? Well, there is a statistic I’ve seen that right now 44% of unicorn founders are first-generation immigrants. So you know, when somebody with talent completely changes his life, his style of life, and
immigrates, definitely, it’s a complete change, but he still wants to do business and he still wants to create something new. Yes, it’s much more challenging for him, because he is creating this new business in unknown environments. Even if he has already done business globally, when he moved, and his family changed their environment, their country, you have so many new things to solve, you are out you’re definitely out of your comfort zone.
But on the other hand, your commitment to building a great new startup project or game is much higher than if you had stayed in your comfort zone because you just have bridges burned and you want to prove to this world, which is not very nice, which has started to be not very comfortable for you, you want to prove to the world that you can be successful. That you can still bring value to this world.
So to answer your question directly, yes, I believe that 10 years from now, we will see many strong companies started by or run by entrepreneurs not only from Russia, but also from Belarus, and Ukraine because the Ukrainian gaming industry is also very strong. There are many great games that came from Ukraine. And those teams are still operating. You know, here in Cyprus, 15k-20k people came from Russia, and roughly 15k came from Ukraine. So the two biggest diasporas in Cyprus are Russian and Ukrainian.
What’s more, most of the diaspora are from IT or gaming — gaming is around half of them, I think. I have even seen an interesting situation when Ukrainian and Russian gaming and IT guys collaborate, and it seems to be one diaspora and not two diasporas. And I know even several families that have been created between Ukrainian and Russians here in Cyprus; they both moved to Cyprus, fell in love and created a new family. And this, this gives me a little bit of optimism about our future.
GamesBeat: That’s a very thoughtful answer. I guess, in some ways, you know, you have a lot of the same people. I wondered if, you know, and maybe you also wondered if people would still view My.Games as a Russian company, you know, and whether, whether or not, you know, it had a headquarters somewhere. But it seems like the fact that people had to move and, you know, be in a very different country, that, that, that has really been accepted that it’s, it’s a new, different company, now that it’s going to a different location.
Chachava: So, we can’t change our roots. It’s a reality that we have Russian roots and we have many employees who came from Russia. But we have been an international company already for many years if you look at our key markets globally. Our team has also been very international now for many years and we keep hiring great new international talent.
When we make such moves, it’s it’s an even bigger commitment against all this situation. It shows we are truly a global business, and we want to achieve all our ambitions, all our aims. For most of my colleagues, they had to become an immigrant to keep pursuing their passion to make great games. That’s a big commitment and huge challenge, because if they fail, they will be in big trouble in an unknown country with family and so on. But they are doing it and I respect them for that.
I feel that we can prove to the market that we are still a very transparent, very efficient company creating great new games for the global industry – despite all these terrible circumstances that we must manage.
GamesBeat: And how many people do you have now and how does that compare to you know, before the whole move?
Chachava: We have roughly 1,500 people working at My.Games — a little bit less than it was before because some people physically can’t move because their parents are ill or something else. But I can say many great gaming studios, and all, like 99% of the core people, or people who, who are really like the creative class of game designers, we were lucky to keep them in our company.
So the company is still very strong. And we, we were lucky to keep all our greatest talent inside. So we can move forward, and we will move forward.
GamesBeat: How much disruption did you see in the big change? And then, did anything get better?
Chachava: We’ve faced a lot of challenges, but we have a lot of opportunities and new technologies coming to gaming as well. This year is all about AI: it’s the biggest challenge probably. But with AR and VR we also see how different platforms are starting to converge with each other. So maybe in the near future, we’ll see the unification of gaming platforms. For example, you could start playing on mobile and
continue on console… or the big screen will be played from mobile because you know, the number of players with a remote using mobile as a platform is increasing very fast.
So we’ve entered a very interesting time. The economic situation is rather tough, and it’s definitely impacting the gaming industry. COVID is over, so the old lifestyles are trying to come back, but they will never fully come because we know we have changed already.
And we see many new technologies approaching IT and gaming as well, which definitely will change games very soon, and the way we develop those games. So, it’s a very interesting period of time. And challenging. And you know that even the word for crisis in Chinese consists of two characters: one for opportunity and the other for threat.
We’re approaching a very opportunistic period, but a very challenging one at the same time. I don’t like when terrible things happen, like wars, earthquakes and so on. But I do appreciate situations that require you to be very creative, very ambitious and very focused, to overcome the challenges you face. This is something that motivates me to keep doing business and to seek out new deals.
GamesBeat: And it seems like geopolitics has affected the game industry a lot more than ever. And I wonder if you have some advice for companies that have to have to deal with the realities of geopolitics.
Chachava: As I mentioned, my passion for history brings me a lot of advisors from the past and advice given by great scientists or great writers. I’m not sure which advice to choose or how to formulate it…. I think the best advice is to focus on your core business, your core activity, and what are you doing. Take excellent care of your family and your team. Stay hungry, stay foolish, and be very ambitious.
Because human beings have so much inner power and inner drive inside us. We can’t even imagine how, what we can do, what we can achieve until we start this. So, my advice is to believe in yourself, be very ambitious, be very foolish and be very hungry. And everything is possible, even if everybody is against you.
GamesBeat: Those were some very good answers. I do wonder if you have any particular answer that you give when people ask you about the war. Or anything that they seem to want you to say about it, I guess if your employees want to hear an answer about your views on the war, or any investors want to hear that or just any, you know, anybody really asking that question?
Chachava: I made a very clear statement the next day after this terrible war started and you can find it on my social media networks. We signed a petition together with other Russian and Ukrainian VC investors and entrepreneurs — nearly one thousand people signed that petition.
So this clear statement was made…and, as I said in my post, I definitely hate any type of war, but I try to focus on what I can do. I am focused on positive things that I can do for society and for the market, for the global economy. I never was involved in any type of politics. I have always been just a private entrepreneur, dreaming about what kind of good value I can bring, and earning a little money to reinvest in other good startups or interesting ventures.
GamesBeat: Very good. Thank you very much for the interview.
Chachava: Thank you very much. Great questions. It was a pleasure to speak with you. Hope you have nice weather and a nice conference in Dubrovnik. It’s an amazing city and the castle is one of my very favorite castles in Europe.
GamesBeat: Yeah, it’s beautiful.
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