21 Nov Interview with Andrey Fadeev, Founder and CEO of GDEV
BF: Cyprus has experienced large growth in its gaming industry, underlined by the huge success of GDEV and its peers. What are the main factors behind this success and the unique segments that local entities excel in?
Andrey Fadeev: We should stress that Cyprus has English law and language and it is part of the EU, meaning that the country could be more interconnected with the US than maybe any other country in the trade block. It stands in the middle of the Western and Eastern worlds and is connected with the world, making it interesting for the gaming industry.
Our gaming industry has come a long way in the last five years. While Cyprus used to be known as a tourist destination, it has now turned into a hotspot for the tech and gaming industry. This didn’t happen by accident, but was helped by our solid working infrastructure, effective tax management, stable economic climate and minimal government interference. Modern entrepreneurs feel empowered here: they have what they need to make things happen and the game development community is now large and still expanding as companies continue to relocate high-class specialists to the region.
The first and main reason why Cyprus is so attractive for game developers and tech entrepreneurs is the intellectual property box regime (IP Box), which slashes corporate income tax to 2.5%. Given that game companies must earn from app store royalties, this is a really huge benefit. There are also other taxes like 12% income tax, 0% on dividends, and 0% on capital gains. All this makes it appealing for business owners and top-tier employees.
The gaming industry is blossoming. Cyprus seems to be nurturing it with the right balance of freedom and support. It is now a place where creativity and development can truly thrive. Taxes are a good incentive to come here in the first place, but I don’t know anyone who stayed just because of that.
BF: GDEV – previously known as Nexters – has grown significantly since its inception in 2010 by you and Boris Gertsovskiy. It’s now one of Europe’s top three independent mobile game developers, with more than 300 million installs and $1.5 billion in cumulative bookings. Please give us a brief history of this incrediblejourney.
Andrey Fadeev: Our history is funny as we didn’t expect any of this to happen. Neither Boris nor I could have predicted how far this would take us, but it’s fascinating to reflect on the path we have travelled.
In 2013, my studio Progrestar released the hit Throne Rush which became a leading game on Facebook. A year later, we realized that joining forces would increase our chances of building something greater, leading to the birth of Nexters with Boris as a founder. We hit the ground running and within two years Nexters released its first hit, Hero Wars. It’s a mobile RPG (role playing game) that has topped the charts for over seven years – according to AppMagicPlatform – and is still being continuously updated and iterated on.
In 2019, we ranked among the top 10 Independent mobile game developers in Europe. In 2020 we reached the top five. Over a third of our revenue stems from the US and we have a global player base nearing 100 million, meaning our stability and growth were solidified.
The following year marked the turning point with our successful Nasdaq stock market listing. We worked really hard, but it was not easy to do everything right. GDEV still is the only Cypriot company listed on the Nasdaq as well as the only European gaming company on the Nasdaq.
During that time we were already actively exploring new areas for growth. That same year, 2021, we first released two new games and commenced negotiations for one of the largest acquisition deals. It culminated in 2022 in a $100 million acquisition that included the renowned Pixel Gun 3D, a unique game from one of our new studios, with almost 200 million installs.
However, 2022 was an incredibly challenging year, bringing not only macroeconomic turmoil and industry-specific difficulties, But also unprecedented geopolitical tension. As a company with Russian origins, we were severely affected.
To remain a global company listed on Nasdaq we had to make significant changes to our operating structure,relocating hundreds of employees together with their families outside Russia, Ukraine and Belarus. Despite this, we finished with excellent financial results.
In 2023, Nexters evolved into GEDV to reflect our development as a holding company, focused on growing our diversified portfolio of studios and franchises. GDEV is a game development and entertainment powerhouse, an ecosystem for game developers and the representation of our current vision of the future.
We are one of the biggest gaming companies in Cyprus and in many ways we acted as pioneers for our marketing approach and open corporate culture with the care of our employees. We cultivated an atmosphere of partnership where the best ideas could come to fruition. Presently, GDEV has more 700 employees around the world and our projects have exceeded 400 million installs. This positions us in the top five mobile developers in Europe.
BF: Can you tell me some of your most popular products and games and their current valuation?
Andrey Fadeev: Our top three games are Hero Wars, which is huge in terms of the number of players and revenues; Pixel Gun 3D which is very famous among people who were young in 2015; and Island Questaway, which is our current rising star, on the way to get to the top of this mountain.
BF: The US is one of your biggest markets as about 35% of your bookings came from there in 2020. Tell me a little bit about your strategy in the US market. How key is it for your company going forward, for your marketing and for your earnings?
Andrey Fadeev: The current strategy of GDEV is focused on growing and enhancing our diversified portfolio of studios and game franchises. We are considering various tools for that, including launching new games within our franchises, expanding into new game platforms and experimenting with non-gaming media. We are also actively looking at potential partnerships and acquisitions that can expedite our strategy execution in gaming.
Gaming is a global business, and our games are popular around the world – but definitely, the Western countries, and the US in particular, have high importance for us. The US is our top revenue-generating market, and we believe that the successful execution of our strategy will help to improve our presence there even more.
Going forward, we are planning to expand and diversify our game studios and franchises. The growth potential is vast, not only in customer acquisition, where we already have substantial experience but also in the iterative development of our company’s projects. In our sphere, sometimes even minor changes can propel gain beyond this current plateau and look at a whole new level of success.
In line with this vision, we are planning to launch several new projects within our existing franchises. We are also venturing into non-gaming media, which represents new growth opportunities. I hope we will see something interesting in the near- or mid-term future.
BF: What has been the impact of your listing on the US market?
Andrey Fadeev: After our Nasdaq listing, we spent around half a year as a public company, then the gaming sphere came under pressure, and all the shares of gaming companies and entertainment companies fell. Because of the geopolitical situation, trading in our shares was halted, and it was incredibly difficult because sometimes people didn’t understand who we were, or what we could do. But we were the only company that was unfrozen.
This gave us a completely clear reputation and if we had somebody in the world who didn’t want to speak with us, it completely disappeared. Now we are a stable business, a stable team, which can go through all the difficulties. We proved that we cannot only survive, but thrive through all the difficulties. Not only the Nasdaq listing, but the unfreezing gave us a clear reputation.
BF: Cyprus has a growing pool of talented professionals in various sectors, fueled by a quality higher education system and government initiatives to attract and retain talent. Your company has a global team split between over 20 countries. How do you assess the level of talent within Cyprus’ gaming sector? What gaps need to be filled?
Andrey Fadeev: Cyprus is very tolerant to expats. It doesn’t matter where our employees are from; their vision and attitude toward the product are what’s important. This enables us not to be confined to just one region, but to enrich our expertise with specialists from all over the world.
We are particularly excited by the rapid growth of the internal tech talent market. It’s expanding and new specializations are emerging. The University of Nicosia is launching a game development program, actually. Our game development industry is highly dynamic, and knowledge that was relevant two years ago may become entirely unusable. What always remains crucial is the ability to learn new things and test hypotheses.
We hold workshops, invite experts for training and support the sharing of expertize, both inside and outside the company. Our standard employee assessment methods are roughly the same as most companies, but we strive to find the stars within our teams. We support those who do not back down from challenges at work. Good speed is the answer. It doesn’t matter what is happening today. What matters is how fast you can learn and how fast you can adapt, and Cyprus’ government and people are quite adaptive.
BF: You also have a proficient R&D segment. What kind of efforts are you making to create products? How are you leveraging the local research community to trigger innovation?
Andrey Fadeev: Companies consist of talent and innovation. At GDEV, in the last 13 years, the desire to make a significant impact on the game development industry is not just words. It’s a real task and daily workflow. We are committed to being on trend and applying new practices that provide multiple growth opportunities. Certainly, this includes using AI to simplify routine tasks like chatbot automation, to free our time for the creative process.
Our belief in an international talent community extends to Cyprus, where we actively participate and help build expertize in the local market. We share this expertize, not only with our portfolio company, but with other businesses.
BF: How would you summarize your current priorities as founder and CEO? What sort of vision do you have for the company and what would you like to achieve in the next few years?
Andrey Fadeev: In this evolving age of IT, AI and robotics, technology steps into roles that were traditionally handled by humans. People will always have a place, especially as our basic income grows and we turn to entertainment services that stimulate creativity and social interactions.
Games are the right form of this interconnection between education and entertainment. That’s why I’m convinced that game development and entertainment stand as one of the most promising and exciting fields for the future. I’ve no doubt of its growth and prosperity and I fully expect GDEV to be a significant player in this market. I have been developing games for over 15 years, and every day offers something new and extraordinary. Whether it’s crafting creative content or focusing on management aspects to ensure the comfort of our team, I find joy in all of it. It feels like an endless marathon, and I’m more than ready to keep running. If anyone out there shares our pace, our passion and our drive, whether as individuals, companies or partners, they should jump on board with us.
BF: What is your final message to the USA Today audience?
Andrey Fadeev: Pursue what you love and search for what inspires you. If you share our passion for games, know that we will do everything in our power to walk this path with you, and meet our audience expectations. We stand at a crossroads, witnessing the evolution of fascinating technologies. It’s a time that demands belief and complete dedication to what we are doing, learning from diverse fields and experiences. We invest our skills, experiences and lives into what we love and it’s always rewarded. That’s why we have not only survived, but thrived as a company. We will continue following this path in the future.