Game on: How Turkey became a mobile gaming powerhouse

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Turkey has been in a severe economic crisis for several years. Last month, inflation hit an annualized rate of 73.5% – the highest level since 1998. Ankara’s credit rating plummeted.

In stark contrast to President Recep Tayyip Erdogan’s financial failure, Turkey’s mobile gaming industry has seen unprecedented growth and prosperity in recent years. According to a new report from research firm Sensor Tower, Turkish mobile phone manufacturers’ revenues totaled $160 million in the first quarter of 2022 — a 37% increase from the same quarter in 2021. The report shows that Turkey overtook Italy and for the games manufacturer became the fifth largest mobile communications provider in Europe in terms of total user revenue (after Germany, Great Britain, France and Russia).

Turkey in particular has become a hotbed of hyper-casual games, games with simple gameplay designed for extremely short rounds. One such company, Alictus, was recently acquired for $100 million by SciPlay, a social casino company that employs more than 200 people in Israel.

“Casual and hyper-casual gaming is an area that is generating $20 billion out of the estimated $100 billion generated annually by the mobile gaming industry,” Noga Halperin, CRO of SciPlay, told Calcalist. “Just to be clear, social casinos are an $8 billion industry. Today there are almost 3,000 game manufacturers in Turkey; about 20% of the games that topped the charts in recent years were Turkish games, because the hyper-casual field is booming, not every country that has the desire to expand globally can pull it off.

“The interesting thing about Turkey that has led to the current situation is that games are part of the culture of the Turkish people,” Halperin explained. “If you go back in history, they played backgammon and dominoes and other board games, which is related to their culture. Turkey has around 30 million players out of a population of 84 million. From their strong connection to the game world and from their ongoing economic crisis – the Turks tried to open themselves to the world.”

Despite the far-reaching effects of Turkey’s economic crisis, the country’s mobile gaming sector remains relatively immune. The reason for this lies in the global nature of the industry. Like other software products, while mobile games are developed in Turkey, they can easily reach a worldwide user base, meaning that the Turkish gaming industry is largely independent of the purchasing power of the local economy. However, the economic crisis in Turkey is affecting the employment costs of game developers in Turkey, whose wages are falling due to the surge in inflation. According to the Glassdoor website, game developers in Istanbul earn between $980 and $2,800 a month — a much lower salary than game developers in western countries.

Turkey’s economic instability explains the focus on the hyper-casual genre. Unlike PC games or consoles, which require a huge budget and long development time, mobile game development—and hyper-casual games in particular—takes short time and requires relatively modest budgets. Due to the risk associated with Turkey’s economy, venture capitalists have preferred to invest in companies that are able to market products quickly and generate a return on investment in a short period of time, meaning that hyper-casual is not just a genre, but a business model is itself.

The first indicator of Turkey’s mobile gaming industry was Peak Games, which was founded in 2010. Peak Games can be crowned as the greatest success story of the Turkish mobile industry so far. Pick became the first gaming company in Turkey to become a unicorn, a $1 billion+ startup. In 2017, mobile phone maker Zynga acquired Peak’s card games division for $100 million. Three years later, Zynga acquired the entire company for $1.8 billion.

“Peak Games is like Turkey’s politics,” explains Eitan Reisel, founder and CEO of venture capital fund VGames. Like Playtika, veteran Peak Games spawned other gaming companies. “Peak is the parent company in Turkey. It has been the breeding ground for many companies and entrepreneurs in the industry.” Some of the company’s former employees founded Dream Games in 2019. In January, the company raised $255 million worth $2.75 billion — nearly three times what Dream Games raised six months earlier. Spyke Games, another gaming company, closed a $55 million fundraising round this month; Four of the five founders are former employees of Peak Games.

Reisel added that the knowledge base for the booming gaming industry is universities: “There are amazing universities in Turkey. There’s a lot of innovation out there, and not just in the gaming industry. Some users enjoy and consume a lot of content very creative minds. They are innovative both on the artistic side and in the gaming experience. The Turks are probably better at that than we are,” he admits. “If we’re the country with the knowledge in monetization, they’re the country with the knowledge in art and game design. We’ve made an investment there that we haven’t disclosed yet The biggest investors in the world have already invested in Turkey, for example the NFX fund (by Gigi Levy-Weiss). From a geopolitical point of view, such cooperations will only do Turkey and Israel good.”

One of the advantages of Turkey on the world market is an organizational culture similar to that of the West. This is in contrast to other Asian countries where cultural differences are difficult to bridge. “In our relationship with Alictus – which is the best example I can give – I was shocked that the company culture is similar to ours,” Halperin said. “They started remote work before the pandemic started, so it was easy for them to keep going, but their approach allows employees to be creative and innovate. It is a management that trusts the employees. On the other hand, they also have company meetings aimed at bonding, helping employees to make connections and collaborating remotely. You are very brave, it’s nice to see. It’s very similar to our world.”

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